The Closing of the Net  "original and valuable"  Times Higher Education

As we consider that the cost of the UK government's 3-strikes measures could be as high as £500 million*,  it is a salutory thought the the movie industry  - which the £500 million spend is designed to protect - is enjoying healthy profits which are greater than that in just 3 months. And those profits are far higher than many an ISP will realise, given the need to invest in super-fast broadband.


In the recent run of quarterly financial results, the movie industry seems to be fighting the recession rather better than most. Indeed, it is boasting of good profits  to its shareholders and investors,  and giving them increased dividends.  At the same time it is behind the scenes lobbying the UK and other governments to implement graduated response schemes which will cost tax-payers and consumers money, decrease the amounts that ISPs have for investing in future networks, and risk widespread survellance and censorship.

It is illuminating to see just how well some movie distributors are doing, at a time when some  IT companies are struggling, and even going out of business ( such as Nortel). 

Rupert Mudoch's News Corporation  reported a net profit for the last quarter of

£254 million. The company's shares rose by   7.5 per cent  after it  projected a 20 per cent increase in profits for this financial year. News Corporation, which has £7.3 billion cash in the bank, also increased its dividend to shareholders.

News Corporation owns  the movie distribution company 20th Century  Fox, which  holds the rights to the recent hit movie  Avatar.

Its healthy profits are said to in part due to Avatar, which grossed more than $2 billion in box-office receipts and   is reported to be the second highest grossing film in history - and it has achieved that in spite of  being downloaded 300,000  times . ( Column 1308/1309)


Rupert Murdoch is quoted as saying  "Content is not just king but the emperor of all things electronic."


Meanwhile, rival movie company Disney's new quarterly revenues reported a small rise from $9.6 to $9.7 billion, which in the current economic climate is a good result. However, its profits dropped very slightly from $851 million to $844 million.


Disney's chief executive,  Bob Iger , has endorsed Apple's  new iPad as a  ‘game changer' product. What he appears to mean is that the iPad will give Disney Corporation multiple new opportunities to get its logo in front of children, and to re-capitalise on its old copyrights of cartoons  such as Snow White, as well as more recent Disney copyrighted characters and movies.


Time Warner also reported a quarterly profit of $627 million on revenues of $7.3 billion. The Harry Potter films helped in part to achieve that profit. It will give its shareholders an increased dividend. It plans to commit $2 billion to the repurchase of its own stock.


As governments move to implement Internet censorship measures to protect copyright, it is salutory to consider that these very wealthy and profitable companies are the very companies who will be protected by this legislation. Large global corporations are the major beneficiaries, not the small artist, who in the film industry, is paid off by contract.


*The £500 million cost to implement 3-strikes in the UK is the government's own figure, and it is the cost to the ISPs. Actually I query it, because  it is an NPV calculation over 10 years, and may not reflect correctly the underlying  cost. At the same time, the telecoms industry is expected to bear the £20 billion cost (that's just the UK) to put in super-fast broadband over fibre optic networks.


This article is licensed under a Creative Commons Attribution Non-commercial-Share Alike 2.5 UK:England and Wales License. It may be used for non-commercial purposes only, and the author's name should be attributed. The correct attribution for this article is: Monica Horten (2010) 3-strikes to a profitable movie industry , 10 February 2010 .







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