I have frequently been critical of Arthur Levitt’s brainchild, Regulation FD. But I’m starting to think that maybe I’ve been misguided. It might be a joke. So I’m feeling a bit Emily Litella-ish. I guess I should have known that this “fair disclosure” stuff couldn’t have been serious.
What triggers these thoughts is a bit from a W$J article I had missed until tipped off by Bruce Carton of the Securities Litigation Blog:
regulators also are exploring industrywide topics such as whether showing a gathering of analysts a prescreening of a movie constitutes disclosure of material information to a group of select people
Of course! In my last message on Pixar I suggested there was no magic in selling movies. And now I see that the studios do employ advance science: if you want to know how successful a film is going to be, ask securities analysts! A quick glance at whether those analysts’ thumbs are up or down ought to solve the film companies’ current quandary about predicting the success of their films.
Too bad the SEC might block that practice. No problem: hire the analysts to make the movies! If peering at financial statements has somehow given them a Selznick-like feel for great cinema, they ought to be able to turn out a better product.
How far is this going to go? Twenty years ago when I lived in Macon, Georgia, we used to get a lot of previews. I think it was the “play-in-Peoria” phenomenon. Maybe that’s still true. I remember seeing a sneak preview of ET, before I’d seen any publicity on the film. I decided that it was shlock filmmaking, not up to Spielberg’s earlier Duel, but was convinced it would be phenomenally successful. I almost went and bought some stock, and regretted not doing so for years.
Now I wonder, would this have been wrong of me? Even criminal?
Would this at least now violate Reg FD? Is a shopping mall crowd in Macon, Georgia "select" enough? It would seem to be more select than securities analysts, because these Georgians are the people whose opinions the movie company actually solicited.
But, as I say, it’s silly for me to go on in this vein. Reg FD is a joke. Right?
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