A battle over content pricing


The bill would require that entertainment companies charge fair market value for movie, television and radio content. It is a remedy for the alleged practice of selling content cheap from one portion of a vertically-integrated media conglomerate to another in order to duck fair compensation to the talent that created it.

Laws already on the books "…prohibit any person engaged in business within this state from selling any article or product at less than the cost thereof, for the purpose of injuring competitors or destroying competition." The new bill "…would additionally prohibit the holder of rights in a motion picture, television program or series, or radio program from selling or licensing those rights for less than their fair market value, as defined, where a third party is entitled to receive payment based on the proceeds from the sale or licensure."

Leading the charge in favor of the bill is the Writers Guild or America, which says that "sweetheart deals" between affiliated media companies are becoming standard operating procedure. "When a product is sold for less than the fair market value, the creative talent and Hollywood unions are adversely affected," says WGA.

The Motion Picture Association of America calls this charge a myth, saying the unions "…have repeatedly made this bold assertion, but have not provided any factual support whatsoever." MPAA argues that in most cases, unions are protected upfront by negotiations when program contracts are originally struck.

The California Broadcasters Association has fired off a letter to the state Senate in opposition to the bill. It says, "The vagueness of the term ‘fair market value’ will result in actions that threaten the financial security of your district radio and television broadcasters and will impair the services they offer to your constituents. It is unnecessary and unfair to require your broadcast stations, local advertisers and constituents to suffer the uncertainty" from "costs created by parties and circumstances outside their control. CBA points out that litigation costs created by the new law will be passed on to broadcasters and smaller stations will suffer the most.

RBR/TVBR observation: Any legislation that threatens to impose penalties on one entity or another, pivoting on an issue as fuzzy and gray as fair market value, is just crazy, if you ask us. That’s why the indecency regs are impossible to enforce — one does not need to look any further than the words "fair market value" to immediately think of the three words will logically follow: "arbitrary and capricious."

And if I’m running BrandXXX Conglomerated, what exactly is wrong with BrandXXX Television Productions just handing "The BrandXXX Comedy Hour" to all of the BrandXXX Local Television Group, and sending the audio-only version to all the BrandXXX Local Radio Group while we’re at it? Would our BrandXXX Barbecued Beans have to pay an ingredient fee to for BrandXXX Barbecue Sauce?

MPAA is right — the unions need to get their fair deal up front — and if a given program really takes off, they’ll continue receiving their cut as time goes on. But last thing anybody should wish is to put the government in the middle of something as subjective as an entertainment contract.