A few days ago the Big Six movie studios used their trade org, the MPAA, to raise objections with the Commodity Futures Trading Commission regarding movie box office futures, currently traded in play money form on HSX.com and slated for approval any day now for real money trading on the Cantor Exchange and Trend Exchange. What’s going on here? Why object now? It’s late in the game and the studios have known about the plans to launch these real money futures contracts based on their product for more than a year. Has it really taken them this much time to make up their minds, reach consensus and form a strategy to fight box office futures? Jabcat ain’t buyin’ it.
Intuition tells Jabcat that Hollywood movie studios are objecting now for PR purposes, not becasue they’re really opposed. This is a CYA move in case things go bad. Objecting has little down side and makes the studios look like responsible corporate citizens, a family-friendly bunch who see the finacial mess the country is in and don’t want to offend large segments of the movie-going public by supporting something that may seem akin to gambling. Meanwhile, they’ve probably retained financial advisors and spent oodles of time and money honing their strategies for playing the box office futures markets to hedge their investments on individual films, make some extra dough and reduce their risk in the biggest gamble of all – the film production biz.
If there was a futures contract on whether or not box office futures contracts on the Cantor Exchange and Trend Exchange (TrendEx) obtain CFTC approval and actually launch, I’d go long.