Guilds Take Battle For Increased Profit Participation to California Leglislature

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Guilds Take Battle For Increased Profit Participation to California Leglislature

Wed Feb 27, 2008 @ 11:27AM PST

Posted by Eriq Gardner

Money_corp_20061023 Think that just because the writers' strike was settled, the battle over how to split up the entertainment revenue pie is over? Think again.

Labor guilds including the WGA and the International Brotherhood of Teamsters union are promoting a new bill in the California state legislature that would boost revenue to profit participants from content that is licensed to affiliated cable television networks. The guilds contend that studios undersell programs to cable stations with which they have corporate affiliation.

Sound familiar? The bill (SB1765), promoted by state Sen. Sheila Kuehl, takes direct aim at so-called "vertical integration" claims against studios that create and distribute content and often end up negotiating distribution deals with themselves. The bill would require that studios sell content at the "fair market value" they would fetch in a competitive market. The studios obviously oppose the efforts, arguing, in part, that determining that fair market value is easier said than done.

The topic has long been one of the most heated in entertainment litigation. Cases involving ABC's "Home Improvement," Fox's "The X-Files" and, just last summer, NBC's "Will & Grace," have all included claims that vertical integration has shortchanged profit participants when the shows were sold to affiliated entities. It will be interesting to see whether the Kuehl, a former child actress, can interest her fellow members of the legislature in the issue.

This is the first time the guilds have gotten involved in the issue

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The Hollywood Reporter, Esq. blog focuses on how the entertainment and media industries are impacted and influenced by the law. It is edited by Matthew Belloni with contributions from veteran legal reporter Eriq Gardner and others. Before joining The Hollywood Reporter, Belloni was a lawyer at an entertainment litigation firm in Los Angeles. He writes a column for THR devoted to entertainment law. Gardner is a New York-based writer and legal journalist. Send tips or comments to

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