Even showbiz insiders often miss the mark
I’m going to play — and I’m sure I’m going to lose.Cantor Fitzgerald will be starting its online futures market in April, thus enabling all of us to place bets, with real money, on studio releases. We all know that predicting movie grosses is, at best, a risky business, but we all think we have the answers. Having worked at three studios, I can testify that even the so-called “insiders” don’t have the answers. I learned this during my days at Paramount when the marketing and distribution executives predicted that “The Godfather” wouldn’t appeal to filmgoers. That was not only wrong, it was weird. If the insiders at Warner Bros. had an inkling that “The Hangover” would gross nearly $500 million worldwide, I doubt they would have handed out such a big piece of the profits to director Todd Phillips. He walked away with somewhere around $50 million. On the Hollywood Stock Exchange, playing with virtual money, contracts in “The Hangover” originally were priced at $86 and later rose to $183. On “Paul Blart: Mall Cop,” the numbers went from $27 to $97, and on “Alice in Wonderland” they went from $205 to a high of $293. Those represent tidy virtual profits (or miscalculations). So we’re back to the William Goldman thesis: Nobody knows anything. Having said that, we’ll be buying “contracts” on the Cantor Exchange and playing with real money. Reduced to simplest terms, the system will work like this: Contracts will trade at $1 for every $1 million a movie is anticipated to bring in during its first month. The futures exchange acts as the go-between and makes money off each transaction. A trader (or a distributor) can also “short” contracts if a movie seems to be struggling prior to release. There will actually be two such exchanges, one operated by Cantor Fitzgerald, which has owned the Hollywood Stock Exchange for nine years, and the other by Veriana Networks, embracing Chicago commodities traders. The Cantor operation, run by banking veterans Richard Jaycobs and Andy Wing, figures it could ultimately become an alternative means of raising equity for independent film producers. Approval is anticipated imminently from the Commodity Futures Trading Commission, the government agency that oversees futures markets. Insider trading will be dealt with by imposing limits on the amount an individual (or company) can hedge so that no one can make more money betting against a film than by betting it to succeed. So do I anticipate making money on movie derivatives? Probably not. But I’m already laying down several guidelines: • If critics hate a movie, I’m buying contracts. They all hated “Mamma Mia!” I could have made a killing. • If a playdate is mysteriously moved back and everyone predicts disaster, I’m buying. Consider “Shutter Island.” • If a movie has no “name” players in its cast except for bloodsucking teens, count me in. The same goes for hangover movies. I’m still going to lose my shirt. This year marks the 15th anniversary of the most remarkable disappearing act in Hollywood. That’s when Michael Ovitz left his perch atop CAA to begin his new career as a missing person. Newcomers to the scene might not comprehend the scope of Ovitz’s power over the entertainment industry a generation ago. He was truly a master manipulator. Today Ovitz sightings are so rare that they are topics of industry gossip. If you spot him at a trendy restaurant (likely in New York) or an art auction, he is usually huddled with an unidentifiable stranger who looks like a banker from Dubai. A brief history lesson: Ovitz ostensibly left CAA to become boss of Universal but blew the deal. He instead took the presidency of Disney, but then he blew that deal, too. Ron Meyer, his partner at CAA, took the Universal job. The congenial Meyer is now serving under his sixth ownership change at Universal. Insiders hint he may retire after the expiration of his contract, rumored to be in two or three decades. By contrast, Ovitz, the missing person, has moved into a cavernous new home up Coldwater Canyon. He has a big stash of money. He also has a world-class art collection. For all we know, he may truly enjoy being a missing person.