Viacom CEO Philippe Dauman will be playing with fire if he tries to sidestep questions about Nickelodeon’s declining ratings on Monday when he addresses the annual UBS Global Media & Communications Conference: Even some of his company’s more faithful supporters are beginning to wonder what the hell is going on. Today, Nomura Equity Research’s Michael Nathanson joined the pack, decreasing his price target for Viacom shares by $1 to $54 based largely on what he calls the “inexplicable declines” at the channel. He says that Viacom’s total ad growth could be as low as 3% in the last three months of 2011. The reason: Nick’s contribution to Viacom’s ad sales jumps from about 15% most of the year to 25% during the holiday season as companies turn to the kids channel to market toys, movies, and gifts. Nathanson says that’s a problem now given that Nick’s ratings “are down in the high teens, and that the remaining networks are also down (by about -4%).” The poor results plus Viacom’s refusal to provide guidance on ad expectations “remains the core controversy,” Nathanson says. (He still has a “buy” recommendation for Viacom, in part because its plan to repurchase $10B of its shares offsets the new earnings risks.) Early this month, Dauman described the drop in Nick’s ratings beginning in September as a “blip” largely attributable to problems with Nielsen’s measurements — a charge that the ratings company rejects.
EXCLUSIVE: Lifetime has picked up 10 more episodes of its flagship drama Army Wives. The series is currently in production on its 13-episode sixth-season order. I hear Lifetime’s decision to stockpile more episodes was made now so the show could stay in continuous production. It comes after both of the network’s new series launched this past summer, The Protector and Against The Wall, underperformed. By not branding the pickup as a new season, Lifetime can have all original cast members locked in. The actresses don’t have deals beyond Season 6 but their contracts requires them to do all episodes produced, which would include a 23-episode sixth season.
The 23-episode order will likely be split into two batches but, from a contractual standpoint, Lifetime could make the stars of the show return for the 10 episodes at their current salary. While legal, such a move is generally frowned upon. I hear that Lifetime, which is currently deficit financing the ABC Studios/Mark Gordon Co-produced Army Wives, has offered the main cast members a raise of $10,000 per episode. That represents an increase of 10%-20% for the actresses, whose salaries vary but are all in the 5-figure range, but is far less than what they would get if they have to negotiate new contracts for a seventh season.
In some of the most startling testimony yet in the British government’s investigation into press ethics and phone hacking, former News of the World deputy features editor Paul McMullan declared Tuesday that departed editor Andy Coulson and Rebekah Brooks were well aware of and actively encouraged illegal voicemail interception. To a direct question of whether Coulson and Brooks knew phone voicemails were being intercepted, McMullan replied, “Yes.” Coulson and Brooks have repeatedly declared either their ignorance or denied that the activity was taking place. Defending the practice, McMullan said ”I don’t think anyone realized that anyone was committing a crime at the start” and asserted that “Phone hacking is a perfectly acceptable tool given the sacrifices we make, if all we are trying to do is get to the truth.”
EXCLUSIVE: NBC’s The Munsters will be brought to you by The Bryans. X-Men and Superman Returns helmer Bryan Singer is finalizing a deal to direct and executive produce Bryan Fuller’s reboot of the 1960s comedy, which recently received a …
EXCLUSIVE: Veteran Gersh TV lit agents Amy L. Retzinger and Rob Golenberg have left the agency. Both had been there for more than a decade. The move is a fallout from Gersh’s recent hire of CAA TV lit agent Roy Ashton as Partner and Head of the Television Literary …
UPDATE: Paramount Responds To Melrose II Fund Lawsuit Over Profits From ‘Transformers’ And Other Films
UPDATE: Paramount has responded to the Melrose II lawsuit. “Paramount has complied with its obligations to Melrose 2 and has been forthcoming in the audit process. We are disappointed that these sophisticated investors would choose to file a lawsuit filled with hyperbole that ignores the true facts rather than seeing that process through to completion. The Melrose 2 investors have already received almost 90% of their investment back under the financing agreement, and a number of the films in which they participate (such as the successful Transformers 3) remain in the earliest stages of their earning potential.
“While we intend to vigorously defend this lawsuit, the differences between the parties’ positions are relatively modest in amount and we are confident they can be resolved in the ordinary course.” –Virginia Lam, spokesperson for Paramount Pictures.
EARLIER, 3:47 PM:
See the full complaint here.
LOS ANGELES, November 29, 2011 – Kirkland & Ellis LLP is representing Melrose Investors 2 LP (Melrose 2) in a breach of contract case in which Melrose 2 seeks to recover profits related to its nearly $375 million investment in 29 films produced by Paramount Pictures Corporation and DW Studios L.L.C., formerly known as Dreamworks Studios (Defendants).
The 29 films, which include such hits as Mission Impossible 3, Charlotte’s Web, Dreamgirls, Flags of Our Fathers, Blades of Glory, Jackass 2 and all three Transformers films, among others, have grossed close to $7 billion to date.
“The investor group was hoping to avoid being the third co-financing vehicle to have filed suit against Paramount and DW Studios LLC, but despite our ongoing efforts to settle our differences, Paramount has refused to cooperate,” a spokesperson for the investor group stated.
The complaint alleges:
· In 2006, Defendants entered into an agreement with Melrose 2 through which Melrose 2 would own up to a 25% copyright interest in up to 30 films that Defendants produced. To acquire this ownership interest, Melrose 2 agreed to fund a pro rata amount of the production costs.
· Melrose 2 met its obligations and has to date, provided nearly $375 million to Defendants to produce 29 films.
· In the five years since the agreement was signed, Melrose 2 has not received any profits from their nearly $375 million investment.
· Defendants have repeatedly hindered Melrose 2’s audits, engaged in obstructionist tactics, overstated losses and understated the revenues received in connection with the exploitation of the Melrose 2-funded films.
If Summit Entertainment is actually serious about a merger or a sale, the company has the benefit of wheeling and dealing while it is at a high-water mark. Summit announced today that The Twilight Saga: Breaking Dawn — Part 1, flew past $500 million in global box office in just 12 days. The film is at $508 million today. It was released November 18 and single-handedly has brightened the overall box office picture. The film has generated $223 million domestic, making it one of only 12 films to reach $220 million in 10 days. Creatively, I thought the movie would have been much better had director Bill Condon finished Stephenie Meyer’s Breaking Dawn book in one movie. Let’s face it, the Bella (Kristen Stewart) and Edward (Robert Pattinson) wedding and subsequent pregnancy were sooooo drawn out, and nothing much happened. But then again, I am not a teenage girl or a Summit executive looking at another half-billion dollar haul once the second installment comes out next November 16.
EXCLUSIVE: Training Day scribe David Ayer has been hired to write the new version of Scarface for Universal Pictures. The film will put a contemporary spin on the outlaw tale first released in 1932 with Paul Muni playing an Italian who took over Chicago, and then turned into the spectacularly violent 1983 film that starred Al Pacino as Tony Montana, a Cuban who took over the cocaine trade in 1980s Miami. The new film is being produced by Marc Shmuger and his Global Produce banner along with Martin Bregman, who produced the Brian De Palma-directed version. When the studio set up the project in late September, the intention wasn’t to do a remake as much as to marry the common elements of the two films with a contemporary crime context. Basically, the focus is on an outsider, an immigrant who barges his way into the criminal establishment in pursuit of a twisted version of the American dream, becoming a kingpin through a campaign of ruthlessness and violent ambition.
Ayer tells me that he is not at all cowed by stepping into an iconic title. “This is a fantasy for me, I can still remember when I saw the film at 13 and it blew my mind,” he said. “I sought it out; I went after it hard. I see it as the story of the American dream, with a character whose moral compass points in a different direction. That puts it right in my wheelhouse. I studied both the original Ben Hecht-Howard Hawks movie and the DePalma-Pacino version and found some universal themes. I’m still under the hood figuring out the wiring that will translate, but both films had a specificity of place, there was unapologetic violence, and a main character who socially scared the shit out of people, but who had his own moral code. Each was faithful to the underworld of its time. There are enough opportunities in the real world today that provide an opportunity to do this right. If it was just an attempt to remake the 1983 film, that would never work.”
ABC’s November 18 order of one additional episode to freshman drama Pan Am stands. Back then, the network opted for a one-episode back order to the 1960s drama, bringing the first-season run of Pan Am to 14 episodes, but …