Monday, June 27, 2005

Hobbit Lawsuits?

In the New York Times: Peter Jackson is suing New Line Cinema, saying essentially that they used the multiple companies of their media conglomerate to make profit without having to pay Jackson his full share. Now I know he's already made a ton of money on this franchise - more than many people will see in their lifetimes, but I am biased on the side of Jackson because the studio certainly did not need to make any additional money through dubious business practices.

"The suit charges that the company used pre-emptive bidding (meaning a process closed to external parties) rather than open bidding for subsidiary rights to such things as "Lord of the Rings" books, DVD's and merchandise. Therefore, New Line received far less than market value for these rights, the suit says.
Most of those rights went to other companies in the New Line family or under the Time Warner corporate umbrella, like Warner Brothers International, Warner Records and Warner Books. So while the deals would not hurt Time Warner's bottom line, they would lower the overall gross revenues related to the film, which is the figure Mr. Jackson's percentage is based on. "

But I think that this case is particularily interesting in light of "small is the new big" thinking. Here we have a very large media conglomerate (AOL Time Warner) and Peter Jackson, who was a relatively small director made big by the same company. Peter Jackson is now big enough to carry some major clout in Hollywood. If this lawsuit goes through, it will strike a blow to the media conglomerates and could impact how they choose to business in the future. I don't think this will bring the big companies down, but they do have alot more at stake in this lawsuit than the few dollars that they saved. If on the other hand New Line wins. It will set a precedent that will cement the power of the large Media conglomerates in the name of free market. It will give the large companies free reign to do whatever it takes to maximize profits. This is one case that I think everybody who is interested in the erosion of choice due to corporate media takeovers will be watching with much interest


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