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Why Hollywood Loves the White House Again


The Feds are cracking down on websites offering pirated films

On June 30 the Homeland Security Dept.'s U.S. Immigration & Customs Enforcement arm used a vacant sound stage at Walt Disney Studios (DIS) in Burbank, Calif., to announce the seizure of nine websites with names like NinjaVideo.net and thepiratecity.org that allegedly traffic in illegal movie downloads. The operation, which involved 100 special agents, follows a separate move by the Federal Communications Commission in May that opened the way for studios to offer cable viewers films at premium prices while the flicks are still playing in theaters.

Hollywood may also get a big win in the pending financial reform legislation expected to pass later this summer that will reshape the regulation of derivatives. Tucked into the current version of the bill is a ban of futures markets in box-office ticket sales such as one planned by securities brokerage firm Cantor Fitzgerald. Hollywood fears such a market would harm the financial fortunes of some films.

"We feel like we've got the wind at our back," says Warner Bros. (TWX) Chairman Barry Meyer, one of Hollywood's advocates of tougher actions on piracy. "We're getting a good hearing on the issues that matter to us."

All this is a change from the last Bush Administration, which focused on concerns over indecent television programming and resisted efforts by cable TV operators to raise prices. Such issues haven't been a priority for FCC Chairman Julius Genachowski, a Harvard Law School classmate of Obama's, who until 2005 served as general counsel for IAC (IACI), an Internet company headed by former Hollywood executive Barry Diller.

Hollywood's biggest win so far has been on movie piracy. Studio executives lobbied the Administration during a meeting in December with Vice-President Joseph Biden to step up its efforts, says A. Robert Pisano, acting chief executive of the Motion Picture Association of America (MPAA). The lobbying group, which had pressed Washington for the last decade to crack down on piracy, says it costs the economy $20 billion a year. Federal officials say they will continue closing down offending websites.

Major movie studios and the industry's lobbying group have been generous Democratic Party campaign contributors. The motion picture industry gave $14.1 million to federal candidates for the 2008 election, with 90 percent of that going to Democrats, according to the Center for Responsive Politics. "A lot of Hollywood types and companies came out pretty strongly for Obama" during the Democratic primaries in 2008, says Andrew D. Lipman, a Washington-based media lawyer with the firm Bingham McCutchen.

Hollywood still has big policy priorities on its agenda. Major movie studios were disappointed by a federal court decision on June 24 that sided with Google (GOOG) in a lawsuit filed by Viacom alleging that Google's video-sharing website, YouTube, didn't act quickly enough to take down copyright-infringing content. Viacom wants new federal rules put in place that would require online service providers to tell offending customers to "stop or your bandwidth will be shut down or throttled," says Scott Martin, executive vice-president of intellectual property at Paramount Pictures, a Viacom unit. Service providers such as AT&T say they currently need a court order to take that action.

Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) says he's trying to build support for even tougher legislation and enforcement. And why not? Hollywood has been good to Leahy, who had a small role in the 2008 Batman movie, The Dark Knight.

The bottom line: In contrast to the last Bush White House, the Obama Administration has been responsive to Hollywood's policy agenda.

Grover covers the media and entertainment industry for Bloomberg Businessweek in Los Angeles. Shields is a reporter for Bloomberg News.

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