Tuesday, September 14, 2004

Why does Hollywood own Congress?

This story in the Economist covers the purchase of MGM studios by Sony, in a consolidation move. One of the most interesting parts of the article is a chart that prints the box office revenue of the top 50 films of 2003.

The interesting part for me is how small the numbers are. I totalled up the revenue on the chart as $5.9B, with the biggest revenue from a single company being $1.2B. For comparison, Apple's 2Q2003 revenue was $1.9B (source), and their annual revenue was $6.2B (Apple's 2003 10-K).

Realized as I was writing this that this is an Apples-to-oranges comparison (if you'll pardon the pun), so I looked up Disney (owner of Buena Vista, with the largest box-office revenues in 2003) to see what their financials are. Yahoo refused to cough up anything useful, so I resorted to Schwab; S&P's report on Disney lists their 2003 revenue as $27.0B from all operations.

So, how much comes from the box office? I'm still looking. Reuter's report breaks down their expenses but doesn't classify their income. Schwab apparently doesn't provide raw data; finally found their 10-K filing with a Google search. In that they break down revenue between Media Networks ($10.9B), Parks and Resorts ($6.4B), Consumer Products ($2.3B), and Studio Entertainment ($7.4B). The Studio Entertainment group contains all of their movie prodution and distribution.

There is no break-down between box-office revenue and home video revenue, so how much of that is box-office is anyone's guess. Several reports from the game industry put total U.S. box office at $20B annually, but since Disney (for 2003) incorporates not only it's own brand but Touchstone, Miramax, Pixar, and Buena Vista, it's probably responsible for a sizable chunk of that.

So the question of how the RIAA and MPAA have so much pull on Congress relative to small box-office revenues is probably that they're drawing on a much larger revenue pool. In Disney alone, both the Studio Entertainment group and Media Networks have a vested interest in IP protection and more DMCA-like laws. Computer companies, on the other hand, tend to be much more laissez-faire, with correspondingly smaller hand-outs to Congress.

Clearly we're not done with this topic.

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