B.O. futures exec to defend exchange in D.C.
Media Derivatives CEO to address lawmakers ThursdayMedia Derivatives CEO Robert Swagger will be in Washington on Thursday talking to lawmakers about why a federal regulator's approval this week of movie boxoffice futures trading shows that critics' concerns are unfounded.
Swagger's appointment calendar, however, does not include the person he most wants to see: Sen. Blanche Lincoln, D-Ark., author of an amendment to the Wall Street reform bill that would ban movie futures trading.
"I realize she's in the top 12 of people receiving support from the entertainment industry," Swagger said, "but I hope that doesn't overwhelm her willingness to talk to me, a business owner who followed the rules Congress put in place, during an economic crisis, to build a new business to help the entertainment industry."
Whether Trend Exchange, the commodity exchange that Media Derivatives wants to launch, or a similar effort by Cantor Fitzgerald would help or damage the entertainment industry is a point of contention with major studios, Hollywood talent guilds, movie exhibitors and the Independent Film & TV Alliance. They charge that movie futures are little more than a form of gambling that will create intolerable pressure on their businesses.
Interim MPAA CEO Bob Pisano predicted this week that the practice will "harm the motion picture industry and impose new, substantial costs."
Swagger responded that his opponents are special interests who don't understand how helpful this will be and are angry that the CFTC looked at their objections and swept them aside.
"The MPAA is spreading false information," Swagger said. "They spread it with the CFTC. They spread it with members of Congress. They spread it with trade organizations."
The House of Representatives passed its version of the Wall Street Transparency and Accountability Act in December before movie futures were an issue. Lincoln inserted her amendment in the Senate version in April. It is now up to a conference committee to reconcile the versions, a process expected to be concluded by July 2, when Congress goes on recess. President Obama has indicated he would sign the bill.
So the battle has moved to Congress, where Swagger and Cantor CEO Richard Jaycobs say the deck is stacked against them.
"We don't have a 50-year history of working Capitol Hill (as does the MPAA)," Jaycobs said. "So our great concern is that, notwithstanding a regulator that has diligently evaluated the MPAA's concerns and rejected them, we still have an enormous challenge to get the politicians to hear our story."
Jaycobs noted that as he left one congressman's office recently, a lobbyist for a major studio was walking in. "So in terms of getting face time, I'm fighting six separate studios and the MPAA's lobbying efforts. We're outnumbered, even with Swagger's group, at least seven lobbyists to two."
The MPAA-led coalition is concerned about keeping the Lincoln amendment in the final bill, especially after losing at the CFTC level.
"Yes, we've made our views known to the folks on Capitol Hill, but we never take this process for granted," MPAA executive vp Gregory Frazier said. "However, we're encouraged by what the Senate did, and we've had a pretty solid expression of support from about 40 bipartisan members of the House this week, so we are hopeful."
Frazier said they expect the Cantor Exchange, like the Trend Exchange, to gain approval this month, so Congress is their only hope.
"The CFTC has never, repeat never, denied approving a contract in its history," Frazier said, "and there have been more than 5,000 contracts approved."
If they lose, Swagger and Jaycobs believe it will be about politics and money, not what is right or fair.
"When you follow all the rules but this special interest group can ban you all of a sudden, what message does that communicate to every American who wants to build a business?" Swagger asked. "It says be careful, because even if you have done it as Congress laid it out, you can get significantly damaged."
Naturally, the MPAA and its allies don't agree.
"Since when," Frazier said, "is my right to petition my government dirty pool?"