June 14, 2010
By MICHAEL CIEPLY
LOS ANGELES — Federal regulators on Monday approved a plan by Media Derivatives Inc. to begin trading futures contracts based on box-office revenue, though the film industry has continued to lobby Congress to ban such film-related trading.
After delays to consider objections from movie studios and others, the Commodity Futures Trading Commission approved a request to trade futures and option contracts tied to the opening weekend box-office revenue of the movie “Takers,” a crime thriller set for release in the United States on Aug. 20 by Screen Gems, part of Sony Pictures Entertainment.
The Motion Picture Association of America, which represents Sony and the other major studios, has opposed such contracts, arguing that they will be easily manipulated and may hurt the performance of films, as market players begin looking for ways to affect a movie’s opening.
In approving the Media Derivatives request, the commission said that the exchange created to handle the contracts had obtained an agreement from Rentrak, which compiles box-office numbers for the studios, to bar its employees from trading in the contracts.
The exchange would also require any studio that uses the contracts as a hedge against the performance of its own films to set up a firewall between employees who do the trading and those who work on a film.
In a dissent that accompanied the commission’s approval, Bart Chilton, one of the commissioners, said the need to wall off studio employees from their own films pointed to what he called a “fundamental flaw” behind the approval, since such contracts were intended to help those in businesses manage financial risk.
Last week, 40 members of the House signed a letter telling leaders of the agriculture committee, which oversees commodities trading, of their support for legislation to block or limit film-related exchanges.
By MICHAEL CIEPLY
LOS ANGELES — Federal regulators on Monday approved a plan by Media Derivatives Inc. to begin trading futures contracts based on box-office revenue, though the film industry has continued to lobby Congress to ban such film-related trading.
After delays to consider objections from movie studios and others, the Commodity Futures Trading Commission approved a request to trade futures and option contracts tied to the opening weekend box-office revenue of the movie “Takers,” a crime thriller set for release in the United States on Aug. 20 by Screen Gems, part of Sony Pictures Entertainment.
The Motion Picture Association of America, which represents Sony and the other major studios, has opposed such contracts, arguing that they will be easily manipulated and may hurt the performance of films, as market players begin looking for ways to affect a movie’s opening.
In approving the Media Derivatives request, the commission said that the exchange created to handle the contracts had obtained an agreement from Rentrak, which compiles box-office numbers for the studios, to bar its employees from trading in the contracts.
The exchange would also require any studio that uses the contracts as a hedge against the performance of its own films to set up a firewall between employees who do the trading and those who work on a film.
In a dissent that accompanied the commission’s approval, Bart Chilton, one of the commissioners, said the need to wall off studio employees from their own films pointed to what he called a “fundamental flaw” behind the approval, since such contracts were intended to help those in businesses manage financial risk.
Last week, 40 members of the House signed a letter telling leaders of the agriculture committee, which oversees commodities trading, of their support for legislation to block or limit film-related exchanges.
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