NEW YORK--A Los Angeles Superior Court judge has cleared the way for Michael Jackson to pursue a lawsuit against Universal Music Group for breach of contract. Jackson can now conduct an audit of UMG's

Breaking News

BMI Licenses Songs To Digital Jukebox Firm

By Samantha Chang

NEW YORK--BMI is licensing the public performance of the 4.5 million songs it represents to San Francisco and Tokyo-based Ecast Inc.

Ecast's broadband network delivers music to consumers at bars, restaurants, hotels and cafe via pay-per-use broadband-connected digital jukeboxes. Usage is reported, enabling accurate compensation to publishers and writers.

"Licensing through BMI gives us the right to play millions of songs from 300,000 copyright owners," says Lisa Tiver, vice president of rights and licensing at Ecast.

Tom Annastas, vice president of general licensing at BMI, says licensing the BMI repertoire to Ecast will assure that songwriters are compensated when their music is played on digital jukeboxes.

"Ecast's proprietary technology will bring a higher level of copyright compliance to the jukebox industry and reduce the administrative burden for Ecast, operators, venue owners, and BMI," says Annastas.

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Studios Hint At Digital Cinema Subsidies

By Gregg Kilday

LAS VEGAS (Hollywood Reporter)--In a significant breakthrough, the major film studios say they are willing to subsidize, at least in part, the transition to digital cinema through an independent financing entity yet to be created.

Speaking to theater owners at ShoWest last Thursday, Charles Goldwater, CEO of Digital Cinema Initiatives-the seven-studio coalition created to address the transition to digital-proposed launching a financing entity that would create a pool of capital for the entity to then administer as subsidies to theater owners.

Theater owners in turn would use the subsidies to buy the equipment needed to outfit their theaters digitally.

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Publishers Target Versatile Music Catalogs

By Chris Morris

AUSTIN, TEXAS--Music publishers are increasingly looking for catalogs that have the potential to be exploited in other areas of entertainment, such as film and TV synchronization rights, commercials and ring tones.

That was a consensus of speakers March 19 at a panel discussion at the South By Southwest Music Conference in Austin, Texas.

"Most of the major [publishing] players have pulled back substantially," said Ed Pierson, executive VP/general counsel at Warner-Chappell Music.

Many companies are now offering five-figure (instead of six-figure) development advances, said Pierson, who spoke on a CLE-accredited panel called "Signing and developing Artists in a Declining Economy."

Julian Raymond, VP of A&R and staff producer at Capitol Records, said his label is looking for acts with "a solid base as far as touring and indie record sales."

He noted that many artists these days are wisely marketing themselves via Web sites directed at fans. "You have to," he stressed. The days of unsolicited tapes getting an airing at major labels are long over, Raymond said.

Panelists noted that the megabuck deals of the past aren't available anymore.

"In the lobby of the Four Seasons Hotel, we spent $5 million," Warner-Chappell's Pierson said. "You look that [those deals of the past] and think, 'What the fuck were we thinking?'"

Meanwhile, David Lessoff , director of business affairs at Capitol Records, said his group was increasingly turning to six-to-12-month development deals, under which a band tours and records under a provisional aegis.

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Ford Ramps Up Product-Placement Efforts

By Gail Schiller

LOS ANGELES (Hollywood Reporter)--At the behest of its biggest client, Ford Motor Co., advertising giant J. Walter Thompson is restructuring its branded entertainment division to bolster Ford's efforts to place its vehicles in music, film and TV productions.

The reorganization will streamline Ford's Hollywood-oriented marketing activities by establishing a single entity that will handle deal-making for Ford's eight automotive brands.

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Jackson's Contract Suit Vs. UMG Advances

By Samantha Chang

NEW YORK--A Los Angeles Superior Court judge has cleared the way for Michael Jackson to pursue a lawsuit against Universal Music Group for breach of contract.

Jackson can now conduct an audit of UMG's books dating back to 1994. The pop singer filed the suit March 19 in L.A. Superior Court.

In the same case, Judge Emilie Elias last Wednesday dismissed several of Jackson's royalty claims against UMG, ruling the entertainer couldn't claim royalties from record sales prior to 1994.

Jackson is accusing UMG of violating a 1980 agreement to pay him royalties from recordings he made with the Jackson 5 and as a solo performer from 1969 to 1976 for Motown Records, which is now owned by UMG.

In the suit, Jackson claims he reached a settlement with Motown in 1980, under which he gave up royalty rights for songs released before then, but that Motown was to supposed to pay royalties for previously unreleased materials and songs re-released on best-of compilations.

The judge last Wednesday limited Jackson to seeking damages for alleged nonpayment only as far back as 1994.

Jackson is seeking an accounting of royalties and unspecified damages. He also wants the 1980 settlement voided and seeks ownership of his Motown master recordings.

"We are confident the [claims] will ultimately be dismissed," says a spokesman for UMG, a unit of Vivendi Universal.

Los Angeles-based attorney Brian Wolf represents Jackson.

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Washington Report

Brazil, U.S. Team Against Piracy

By Brooks Boliek

WASHINGTON (The Hollywood Reporter)--Members of the Brazilian Congress and U.S. government officials are joining forces in the war on piracy.

Members of Congress' Anti-Piracy Caucus and members of the Brazilian House of Representatives Parliamentary Inquiry on Piracy signed a joint declaration condemning Internet piracyat an event hosted by American copyright holders last week.

U.S. copyright industry executives praised the action as a good first step for Brazil, a longtime copyright scofflaw.

"We, as representatives of the Congress of the United States of America and the Congress of the Federative Republic of Brazil, are dedicated to fostering the artistry of authorship, performance and production of creative works," the declaration reads. "We condemn those who pirate the works of our respective peoples."

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Congressmen Push Radio Localism Bill

By Samantha Chang

NEW YORK--Two House Energy and Commerce Committee members are pushing for legislation aimed at protecting local radio broadcasting and more strictly enforcing the licenses of satellite radio companies.

Rep. Chip Pickering, R-Miss., and Gene Green, D-Texas, say the "Local Emergency Radio Service Preservation Act" stresses that Digital Audio Satellite Radio licensees can't circumvent their obligation to provide national audio programming by inserting local content into their network of ground-based repeaters.

"The Federal Communications Commission licensed satellite radio to be a national-only radio service," said Green. "This bill will enforce the Commission's original intent."

In the past, several members of Congress have asked the FCC to look into satellite radio's plans for its terrestrial repeater network. In December, XM Satellite Radio signed an agreement affirming that it would not use its ground-based repeaters for local programming.

A few weeks after signing that agreement, however, XM announced plans to distribute local content via its national channels. The Pickering-Green bill would require the FCC to examine whether this practice is consistent with its intent.

NAB president Edward Fritts is onboard with the proposed legislation. "NAB strongly supports the satellite radio legislation introduced by Reps. Pickering and Green.

"Localism is the hallmark of our free, over-the-air, radio system, and this bill will ensure that satellite companies be held to the standard upon which their licenses were granted," Fritts says.

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Writers Guild To Rerun Election On Labor Probe

By Peter Kiefer

WASHINGTON (Hollywood Reporter)--The Writers Guild of America West will re-run its fall election under the auspices of the U.S. Department of Labor.

The settlement, reached last Tuesday after seven weeks of investigation, calls for the guild to rerun its presidential election by Sept. 20--a year earlier than expected.

The settlement allows Eric Hughes, former runner-up to the presidency who filed the original DOL complaint, to participate in the new election.

"We completely agree that holding a new election for president is the best way to validate the voting rights of all guild members," says Daniel Petrie Jr., who took over as WGA West president two weeks ago.

Petrie is the third WGA West president in a three-month span, following the resignations of Victoria Riskin in January over eligibility issues and her successor, Charles Holland, two weeks ago over credibility issues.

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Ring Tunes Stirs Payment Debate

By Cole Sternberg

WASHINGTON--As the wireless industry moves from polyphonic ring tones to ring tones using actual master recordings, observers say artists should be aware of how labels will treat the use of the master recording.

The next generation of ring tones, known as ring tunes, or master tones, are actual copies of the master recordings, and in many ways are comparable to the digital downloads being sold by retailers such as iTunes or Napster 2.0.

Users will be able to download tracks for use on their cell phones as ringers, which can be played on-demand. Wireless companies and record labels may offer these downloads as excerpts of the songs or as full-length tracks.

This new revenue source raises the issue of how artists will be compensated. In a traditional recording contract, the artist's share of ring tone revenues could potentially be paid under two different clauses, depending on the type of sale and the record label's treatment of that sale.

First, ring tone rights could be treated as a license to a third party. The current polyphonic tunes fall within this category, and commonly pay the artist 50% of label revenues from ring tone licensing agreements.

The issue becomes more complicated when the ring tone is actually from a master recording. If the agreement provides for a 30-second clip, it could still be considered a licensing agreement because it is not a download of the entire product but a portion used for a specific circumstance by a third party.

When the entire song is sold, the record label may construe the transfer as a sale of a digital download by a new distributor, i.e., the wireless carrier, not as a third party license.

As a classic sale, the artist would be owed only his royalty percentage of retail or wholesale price, a percentage significantly lower than the 50% owed on third party licenses.

Attorneys and managers should be aware of this when negotiating recording contracts. If the language of the contract is not clear in its treatment of ring tones using master recordings, the label may likely treat such ring tunes as traditional sales. As traditional sales, the artist would not be entitled monies that would be entitled to in polyphonic ring tone licensing agreements.

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International Section

Viacom, Saban Eye Viva Share

By Scott Roxborough

COLOGNE, Germany (Hollywood Reporter)--Haim Saban's Saban Capital Group and entertainment giant Viacom are considering acquiring a controlling stake in German music TV group Viva Media, sources said last Wednesday.

Saban and Viacom are believed to be trying to secure a 60% share in Viva by buying up the stakes in the company currently held by Time Warner's Turner Broadcasting System (30.6%) and Vivendi Universal's Universal Music Group (15.3%), along with Viva shares controlled by a series of private investment groups.

A takeover deal for Viva would enable Viacom, which owns MTV, to buy out a strong local competitor and gain a near-monopoly on the German music television market.

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NZ Seen Authorizing CD-Copying

By Christie Eliezer

MELBOURNE--The New Zealand government plans to change the country's copyright laws to authorize private copying.

If introduced, the amendment would allow owners of legitimately obtained CDs to make a single copy for personal use, similar to those freedoms enjoyed by North American consumers or in some European countries such as France. The United Kingdom and Australia do not have such provisions.

The proposed amendment is sponsored by the government's Economic Development Ministry. The law could be passed and implemented by mid-2004.

The New Zealand Cabinet has agreed in principle to the change, but will await the outcome of select committees hearings. The government has emphasized that duplicating a CD for a third party, or from a CD not purchased legitimately, would still be outlawed.

The Record Industry Assn. of New Zealand (RIANZ) is objecting to the government's plans, arguing that it could send the wrong message to consumers, who are currently banned from making any copies. Others predict it could open the door to unregulated "copycat kiosks."

Furthermore, RIANZ is mulling whether to take civil action against a man who is accused of copying up to 70 CDs to his laptop in a public library in the city of Wellington. Police decided against prosecuting the unidentified man when he convinced them that he was copying the discs for personal consumption only.

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UK Collecting Society, MTV Head To Talks

By Emmanuel Legrand

LONDON--MTV Networks Europe (MTVNE) is going back to the negotiating table with British collecting society Video Performance Ltd. (VPL) over video licensing payments.

The parties disagree on the amount MTV pays for showing videos supplied by independent labels. Instead of going through VPL, MTVNE was seeking direct deals with indie labels. It claims it has agreements in place with over 35 indie labels in Europe.

U.K. indie labels license their videos to broadcasters through VPL. Through agreements with collecting societies in other European territories, VPL also collects royalties for broadcast of its members' repertoire in those markets.

Under the previous agreement, which expired in 2002, MTVNE paid VPL £1.9 million ($3.5 million) a year. VPL rejected MTVNE's subsequent proposal of £840,000 ($1.5 million) a year.

Indies say MTV wanted to pay less for broadcasting videos and to expand its rights to include mobile or streaming rights.

MTVNE said it had decided to re-adjust the rate as a matter of fairness because it realized that indie labels were receiving more on a pro rata basis than major labels. Majors have MTV deals in place through the American company and do not use VPL in the United Kingdom.

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Microsoft Seen Appealing EU Ruling

By Leo Cendrowicz

BRUSSELS--Microsoft is expected to appeal last week's decision by the European Union to fine the software giant a record $610 million for alleged antitrust violations.

The EU's competition commissioner Mario Monti announced the fine last Wednesday, which was levied on Microsoft for using its dominant position on the market to muscle out competition.

It is the biggest-ever fine in the history of EU anti-trust regulation. The fine was calculated as 8% of Microsoft's revenue from its Europe, Asia and Middle East division.

Commissioner Monti also ordered Microsoft to release a version of its Windows operating system in Europe without the music and video playing Windows Media Player.

This should, he argued, allow rivals like RealNetworks RealPlayer and Apple Computer Quicktime to compete more fairly.

Microsoft will also have to release to rivals in the server market more of the underlying code for Windows, which runs more than 95% of all personal computers

"Today's decision restores the conditions for fair competition in the markets concerned," Monti said.

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UK Record Industry To Sue Uploaders

By Kate Bulkley

"LONDON (Hollywood Reporter)--The U.K. recording industry says it will likely begin suing music uploaders this year.

Trade body the British Phonographic Industry says there is a clear correlation between illegal music downloading and the 30% drop in singles sales last year.

File-sharers are on notice that if they continue with their [illegal] activities they risk court action," BPI chairman Peter Jamieson said last Thursday. "Serial uploaders are flouting the law and they are damaging British music and the British music industry."

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Dream Makers & Deal Breakers

Antonellis To Head Warner Bros.' Piracy Ops

By Samantha Chang

NEW YORK--Darcy Antonellis has been named to the newly created position of senior vp of anti-piracy operations at Warner Bros. Entertainment.

Antonellis, who is based in Burbank, Calif., retains her current position as EVP of distribution & technology at Warner Bros. Technical Operations.

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Bass Berry Names 3 New Partners

By Phyllis Stark

NASHVILLE--Three Nashville attorneys have been made partners in the Music Row office of law firm Bass Berry & Sims. They are Charles Biederman, Christian Horsnell and Robin Mitchell Joyce.

All three specialize in entertainment and intellectual property law and joined the firm in 2001.

Biederman previously was an adjunct professor in the Mike Curb School of Music Business at Belmont University in Nashville. Horsnell also taught intellectual property law there. Joyce is an adjunct professor of entertainment law at Vanderbilt University Law School.

Bass Berry has 160 attorneys at its four Tennessee locations, including two offices in Nashville and one each in Knoxville and Memphis.

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Savvy Media Bows

By Deborah Evans Price

NASHVILLE--Publicist Mandy Collinger is launching Savvy Media Solutions, based in Franklin,Tenn.

Collinger previously was publicity manager for Provident Music Group's Essential label, where she worked with Caedmon's Call, Bebe Norman, Andrew Peterson, FFH and the Paul Coleman Trio.

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Infinity Broadcasting Names Esworthy CFO

By Carla Hay

NEW YORK--Infinity Broadcasting in Nashville names Bruce A. Esworthy senior VP of finance and CFO. He previously was VP of finance at the Tennessee Education Lottery Corp.

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Univision Names Ruiz Talent VP

By Samantha Chang

NEW YORK--Univision Communications names Mario Ruiz vp of talent relations.

Ruiz, who is based in Miami, previously was president/CEO of EMI Music Mexico. Before that, he worked for CBS Records (now Sony Music) in marketing and A&R.

During his tenures at CBS and EMI, Ruiz signed Mario Chayanne, Selena and Thalia and was an executive producer for Placido Domingo, Paulina Rubio and Ricardo Montaner.

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VH1 Hires Richard Gay

By Carla Hay

NEW YORK--VH1 and CMT in New York name Richard Gay senior VP of strategy and business operations. He previously was a partner at Booz Allen Hamilton.

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Napster Hires J Records' Santosuosso

By Samantha Chang

Napster has named Michelle Santosuosso vp of artist and label relations.

Santosuosso will manage Napster's label and artist relationships and will oversee NapsterLive, the service's in-house recording sessions. Santosuosso previously was vp of crossover music with J Records.

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Sheppard Mullin Names Bostwick Partner

By Samantha Chang

NEW YORK--Sheppard Mullin Richter & Hampton has named Gary Bostwick a partner in its business trial and entertainment and media groups.

Bostwick, who is based in Los Angeles, previously was with Davis Wright Tremaine. He has litigated high-profile libel cases, representing Arianna Huffington in Lawrence v. Huffington and author Janet Malcolm in the landmark Masson v. New Yorker case.

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BeMusic Names Knight Law EVP

By Samantha Chang

BeMusic in New York names Clif Knight executive vp of legal and business affairs.

Knight joined the company in 1975, then called RCA Music Service and later BMG Music Service. BeMusic is home to BMG Music Service and online music retailer CDnow.

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EMI Music Mktg Taps Halbach

By Samantha Chang

NEW YORK--EMI Music Marketing names Melanie Halbach director of national independent retail sales.

Halbach, who is based in Los Angeles, previously was label director of EMM.

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A Sweet Future For 'Advertainment'

By Laurie Soriano

You might remember the old commercials for Reese's peanut butter cups: a guy walks along, enjoying a chocolate bar while another guy joyfully consumes a jar of peanut butter. Then, someone stumbles and-whammo!-a profound combination of chocolate and peanut butter occurs, and candy is never the same.

The guy with the chocolate bar is the entertainment business. The guy with the peanut butter is the corporate advertiser. Both stumble along on their own, but when the worlds collide, something great can happen.

There is nothing new about advertising being crossed with entertainment. Music has been used in TV and radio commercials for decades, and corporations have long provided backing to TV and radio programming and sponsored live concerts.

But the new era of "advertainment" represents a dramatic shift in the ways that these two areas can support one another. The line between entertainment and advertisement is increasingly blurring, and some great art has been created under corporate auspices.

With the advent of TiVo and similar devices, TV audiences are able to ignore commercials. Consumers have other ways to spend their free time, and corporations constantly seek ways to reach consumers that are not unduly intrusive but at the same time get their attention.

Today, CD sales are falling, the major record companies are consolidating, and recording artists are experience a precipitious drop in their traditional income streams.

Similar changes are occurring in the world of TV with the proliferation of channels and competitive devices for distributing content. Even the movie business, while still vibrant, is bracing itself for the onset of piracy against the backdrop of increasing budgets.

As these changes lead to the abandonment of many of the traditional models, win/win combinations of entertainment and advertising are emerging, ranging from corporate advertiser sponsorship of, and product placement in, reality TV programs, to the career renaissance of artists like Michael McDonald, Sting and James Taylor through creative commercials that use their music.

Many artists now realize that there is nothing evil about having their music associated with a particular product. Similarly, many advertisers are striving to set up deals that provide artists with the promotional push they need in their careers.

As record companies become increasingly hesitant to sign new acts, new artists are achieving initial buzz by appearing in ads or other promotions. The availability of advertising tie-ins provides much-needed exposure for artists.

Similar changes are occurring in the world of live events, as tours have remained strong as an independent profit center.

Corporations are increasingly looking to have their brands more substantively associated with live events, and, in return, artists are receiving bigger pay-outs and more promotional tie-ins that boost their profiles. The success of Celine Dion's relationship with Chrysler (including Chrysler's support for Dion's shows in Las Vegas) illustrates this model.

Where there is an advertiser/artist match, the joint marketing possibilities are virtually endless, and can result in the creation of great art.

In many cases, artists and advertisers fail to recognize how much they actually can help one another. In some cases, the deals between them can be structured so that relatively little cash changes hands, but promotional benefits are instead exchanged. When it works, advertainment offers tremendous win-win possibilities.

Laurie Soriano is a partner and co-chair of the entertainment law group with Manatt Phelps & Phillips in Los Angeles.

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Case Analyses

Recent Cases And Filings

Case: Delicious Vinyl v. Tee Vee Tunes; TVT Records and TVT Music
Issue: Copyright infringement arising from defendant's use of plaintiff's original musical composition.
Cite: Southern District of New York CV-2304
Filing Attorney: Jonathan Pollack

Case: ABKCO Music v. EUniverse; Media General; BoxerJam Media.
Issue: Music publisher contends three of its Rolling Stones songs were illegally used in the Internet game program "Name That Artist."
Cite: SDNY 04CV0511

Case: Eight Mile Style and Martin Affiliated v. Apple Computer; TBWA/Chiat/Day; MTV Networks; and Viacom International
Issue: Rapper Eminem says his song "Lose Yourself" was used without his permission in a commercial for Apple's iTunes that aired on MTV.
Cite: U.S. District Court for the Southern District of Michigan. CV04-01361

Case: RIAA v. Richard Sinnott
Issue: Court holds flea market operator liable for contributory and vicarious copyright infringement after he ignored RIAA warnings that his vendors were selling boot-leg CDs.
Cite: US ED California No. S02-2153 MCE PAN

Case: Time Warner v. Mary Ann Sherman
Issue: Second Circuit upholds $6,000 damage award against individual who bought cable descrambling equipment. Time Warner was allowed to use defendant's credit-card records to establish equipment purchases.
Cite: 2nd US Circuit Court of Appeals No. 02-7417

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Country Music Radio Legend Sues For Age Discrimination

By Phyllis Stark

NASHVILLE--Gwyneth Seese, the former country music director at WCAT in Harrisburg, Pa., is suing WCAT parent Citadel Communications for age discrimination.

A member of the Country Music DJ Hall of Fame, Seese, aka Dandelion, was fired in 2002, when she was 64 year old. She had worked at the station and its predecessor, WRKZ, since 1981.

Seese is seeking back pay, benefits, compensatory and punitive damages and reinstatement. "I want my job back,'' Seese has said. "That's the primary thing.''

Lancaster, Pa.-based attorney John F. Pyfer Jr. filed the civil suit Jan. 23 in the U.S. District Court for the Eastern District of Pennsylvania.

Citadel and its stations WCAT, WQXA and WRKZ are all named as defendants in the suit. All are based in Elizabethtown, Pa.

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Writers Guild Loses Rewrite Battle

By Jesse Hiestand

LOS ANGELES (Hollywood Reporter)--In a setback for the Writers Guild of America West, an arbitrator is siding with film studios in rejecting a grievance brought by the guild over free script rewrites.

The ruling by Anita Knowlton capped a five-year arbitration that included 35 days of hearings on 18 motion picture projects submitted by the guild as proof that studios routinely take advantage of writers during the script-revision process.

Knowlton found no evidence that the studios were liable to pay damages for violating Article 13.A of their minimum basic agreement.

"The language of the [minimum basic agreement], bargaining history, past practice and agency law support the company's contractual interpretation and require rejection of the guild's theories," Knowlton concluded in a 91-page ruling.

The arbitration centered on film projects culled from four studio defendants: Paramount Pictures, Warner Bros., 20th Century Fox Film and Universal Pictures.

The two sides agreed on several points: that scriptwriting is a collaborative process; that no extra pay is due when a writer voluntarily submits material to a producer or director; and that writers are contractually entitled to be paid when the script is officially delivered to the studio.

It's what happens before script delivery that concerns the guild, because some writers fear their careers will be jeopardized if they refuse to do rewrites or complain about the process.

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