Wednesday, 9 April 2008

Hollywood Babble On & On #81: And Now Politicians Are Involved...

For those of you new to this blog, there's a term I use quite a lot. It's "a self-fulfilling idiocy," a condition where someone tries to solve what they see as a problem, with a plan that can only create new and worse problems, and obviously so at that.

Now this latest chapter in the saga of the self-fulfilling idiocy is all about financial and economic issues, and I know a lot of people find such subject matter tedious. And there's a lot of temptation to keep the short attention spans of male readers by including cheap cheesecake pictures, well I won't go that way...

Okay, maybe a little.

But it's for a good cause.

Because this is info folks interested in the biz of showbiz must know.

The California state senate's judicial committee passed a new law stating that a film can't be sold to a third party for less than its fair market value. (h/t Nikki Finke)

So allow me to explain if you can tear your eyes from Adriana Lima's picture...

Imagine a big media conglomerate: Furious D Media Conglomerate Inc.

Furious D Media Conglomerate Inc. owns a movie studio/distributor (Furious Pictures) and a TV network (The D Channel).

Furious Pictures makes a film that's a big hit. People want to see it over and over again.

TV networks clamour to buy that film for their channels, offering $1,000,000 an airing, because they know it's a guaranteed ratings grabber.

But Furious Pictures doesn't do that.

Instead Furious Pictures "sells" the film's TV rights to the D-Channel for $500,000.

Furious Pictures then goes to the producers, w
riters, and stars, telling them that the company lost money on the sale, and henceforth, there will be no residuals paid to any of them.

Meanwhile millions in revenues get kicked upstairs to the parent company Furious D Media Conglomerate Inc.

Now I've explained how such shenanigans are the root of Hollywood's troubles with ballooning budgets and massive up-front salaries. But no one seemed to listen, and now governments are getting involved.

Now I'm no economist, but as a Canadian I've seen first hand the effect excessive government intervention has on business. It effectively kills it.

The problem is that the media companies are at fault here because their borderline fraudulent book-keeping schemes have made such a law necessary. They have been unknowingly but literally begging for state meddling for decades because of their short s
ighted, and now that it's come, it has them shitting kittens.

My solution.

Make the law useless, but not giving it anything to enforce.

Free markets work best free, so let the films be free-- to be sold at a fair price that the market will bear.

In other words:


Hollywood went from being a movie industry town, to a town of accounting trickery that make Ponzi Schemes look like sensible investments. That's not healthy, and now it's attracted the attention of politicians, which is really unhealthy.

Trust me, it's for the best, you'll see up-front costs
go down when people actually start getting residuals, as well as lower legal, accounting, and lobbying costs.

But just don't listen to me:
That's right, name me head of NBC-Universal, and not only will I run an effective media conglomerate, my methods will provide a business model that'll get the government off your back.

It's either that or move to another state like Mississippi when the bill becomes law, and then be chased from state to state by it until the entire movie business is run from a sweatshop in Indonesia, and you're wondering why you can't get anyone to make or star in your movies.

That's my 2 cents.

1 comment:

  1. I see either one of two things that will come from this end-run: a.) The media companies will attempt to collude, so as to prevent any auction from going through. b.) The media companies will either spin-off or sell their studio production units to the nearest Blackstone Group or KKR that has money. Which, in the corporate world, will make the studios just another vendor.

    Furious D, you won't like B. B will force the talent to cut costs to the barest bone (as anyone from GM-spinoff Delphi to outsourced Call Centers will tell you).