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Tuesday, May 1, 2012

Four-alarm fire at Tyler Perry's Atlanta studio CBS plays new media to profitable projections for 2012. Joe Drake reunites with Mandate partner for Good Universe. Japanese buy San Franciso Video Game Company. News Corp.'s woes in Britain reignite calls for scrutiny in U.S.

Rupert and James Murdoch in happier times
Photo: Rupert and James Murdoch in happier times. Credit: Adrian Dennis / AFP/Getty Images.
 From the LA Times Company Town Blog. Click here for the latest updates.

FOX/NewsCorp open to shots in US due to British "verdict." A Parliament report critical of News Corp., its Chairman Rupert Murdoch and his son Deputy Chief Operating Officer James Murdoch for their response to the ethics scandal at its British newspapers will give new fuel to the company's critics in the United States.

One activist group already is demanding that the Federal Communications Commission strip News Corp.'s Fox unit of the licenses it holds to operate 27 television stations in the United States.
“The House of Commons report makes clear that both Rupert and James Murdoch were complicit in New Corp.’s illegal activities," said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington. "If the Murdochs don’t meet the British standards of character test, it is hard to see how they can meet the American standard.”

Eric Boehlert of Media Matters, a nonprofit media watchdog group, compared Rupert Murdoch to Richard Nixon.

"Both practiced partisan hardball but quickly cast themselves as victims when law enforcement started to ask difficult questions," Boehlert wrote. "For Murdoch and Nixon, the rules did not apply, as breaking the law became commonplace in the pursuit of the ultimate goal -- serving enemies with payback. And like Nixon, Murdoch's reputation has suffered a fatal blow in the form of a botched cover-up."

The FCC declined to comment on the Parliament report or whether it would spark its own investigation into News Corp.'s fitness to hold broadcast licenses in the United States.
One communications attorney said a challenge to Fox's broadcast licenses would face a long, uphill climb, unless Murdoch were arrested or found guilty of violating the Foreign Corrupt Practices Act, which prohibits paying a government official for commercial gain.

"Based on what has happened today and what is known today, I don’t see any material risks to the licenses," said John Hane of Pillsbury Winthrop Shaw Pittman.

Former FCC Commissioner Michael Copps said the renewal process for broadcasters is not as tough as it should be and that he hopes the Parliament report will at least lead the FCC to take a harder look and not just rubber-stamp News Corp.'s renewal applications.

"This should be a wake-up call," Copps said. "These are the kinds of problems when too much media is held in too few hands."

The U.S. Department of Justice has been conducting its own probe into whether there is any evidence of wrongdoing by News Corp. newspapers here. If the Justice Department were to uncover illegal activities in the United States or determine that the Foreign Corrupt Practices Act was violated by News Corp., that could force the FCC to take an aggressive stance on the renewals.

A Justice Department spokeswoman declined to comment.

Jack Welch stands by Rupert Murdoch
 Photo: Jack Welch in 2001. Credit: Neal Hamberg / Associated Press.

Former GE Chief says Murdock is a good man and fit to run media giant NewsCorp. Former General Electric Chief Executive Jack Welch took issue with a report from the U.K. Parliament that questioned News Corp. Chairman Rupert Murdoch's fitness to lead the global media giant in the wake of an ethics scandal at its British newspapers.

“It is outlandish to suggest that Rupert Murdoch is anything less than perfectly fit to lead his organization as it moves forward," Welch said in a statement. "Over our many years of dealings, I’ve seen nothing but integrity from him. He has never been anything but straightforward and above board in all his interactions with me, and his courageous and innovative moves in business have always been a source of inspiration to me.”

Welch, of course, competed head-to-head with Murdoch when General Electric controlled NBC. Back then, their relationship was not always cordial and at times was bitter. In fact, in 1994, NBC filed a complaint at the Federal Communications Commission accusing Murdoch and News Corp. of violating rules that limit foreign ownership of television stations.

The FCC complaint was withdrawn around the same time that News Corp. agreed to carry an NBC channel on one of its Asian satellites.

Photo: Tyler Perry introduces President Obama during a fundraiser at the filmmaker's Atlanta studio in March. Credit: David Goldman / Associated Press
A fire that broke out at Tyler Perry's Atlanta film studio was under control late Tuesday night, the Atlanta Fire Department said.

Over 100 firefighters, 13 engines and 12 trucks responded to the four-alarm fire at the filmmaker's studio complex, and no injuries were reported, said Capt. Jolyon Bundrige.

"As far as I know, [Perry] is OK -- there was a report that he was on the scene, but I didn't see him," Bundrige told The Times.

It is unknown what caused the fire, and firefighters on the scene were continuing to investigate the source Tuesday evening, Bundrige said.

Perry's Hollywood connection has been principally with Lionsgate Entertainment, with whom the filmmaker has had a long-standing relationship. The filmmaker's next movie, "Madea's Witness Protection" -- in which he will reprise his role as a sassy, plus-size grandmother -- will be released by Lionsgate on June 29. Perry is currently in post-production on "The Marriage Counselor," which is set to hit theaters next January. TBS also ordered 35 additional episodes of Perry's sitcom "For Better or Worse" in February.

Lionsgate had no comment Tuesday night on how the fire may affect production.

According to Perry's website, in 2008 his studio moved into a 200,000-square-foot location in southwest Atlanta. The studio includes a back lot, a 400-seat theater, a private screening room, five sound stages, a post-production facility, a chapel and a gym, the website said. In March, Perry hosted a fundraiser for President Barack Obama at the 30-acre complex.

Modern War Funzio

Gree International Inc., a Japanese mobile game company, announced Tuesday that it had purchased San Francisco mobile game developer Funzio Inc. for $210 million.
 From the LA Times Company Town Blog. Click here for the latest updates.

The deal represents the second major acquisition of a U.S. company for Gree, which a year ago bought OpenFeint, a mobile social game platform company, for $104 million.

Gree and rival Japanese mobile game company DeNA Co. have been speculating in the U.S., where the market for mobile social games has exploded in the last three years thanks to Apple Inc.'s iOS devices and a proliferation of tablets and smartphones powered by Google Inc.'s Android operating system.

Both Gree and DeNA are betting that the U.S. market will mirror the surge in Japan's mobile games industry over the last decade and evolve into a multibillion-dollar business. DeNA placed its bet in 2010, when it paid up to $400 million for Ngmoco Inc., a Bay Area mobile game company. DeNA and Gree are profitable, largely owing to the lucrative mobile market in Japan.

With Funzio, Gree has kicked up its rivalry with DeNA a notch. The purchase gives Gree a development studio that created Modern War, Crime City and Kingdom Age -- titles that were among iTunes' top 25 grossing apps as of Tuesday.

The games are free to download, but Funzio makes money by selling bundles of in-game currencies for as much as $79.99 that let players advance more rapidly. Funzio estimates that more than 20 million players have downloaded its games.

"Las Vegas" to be among first films to come out of new film company.
Former Lionsgate movie chief Joe Drake, who was squeezed out of his job as part of the independent studio's acquisition of Summit Entertainment, is joining his former Mandate Pictures business partner to launch a new company that is essentially Mandate 2.0.

Drake and Nathan Kahane, who was most recently president of Mandate, are starting a new film finance, sales and production company called Good Universe.

Mandate is best known for quirky low-budget films like "Juno" and "Harold and Kumar go to White Castle," as well as horror films like "The Grudge" from its Ghost House label, a joint venture with director Sam Raimi. Good Universe will continue both efforts and also seek to make bigger-budget projects that appeal to a broader audience and have the potential to spawn sequels.

Founded in 2003, Mandate was acquired by Lionsgate in 2007. Drake then took a job as chairman of that studio's motion picture department while Kahane ran Mandate independently.
Several of Drake and Kahane's staffers from Lionsgate and Mandate will be joining them at Good Universe.

Their move to essentially re-establish Mandate has been expected for several months, since former Summit co-chairmen Rob Friedman and Patrick Wachsberger were given Drake's job.

Santa Monica-based Good Universe will take over Mandate's entire development slate, in which it will share ownership with Lionsgate, and will help manage Mandate movies soon hitting theaters, including August's "Hope Springs," starring Meryl Streep, Tommy Lee Jones and Steve Carell.

The first Good Universe movies expected to start production are both carry-overs from Mandate: "Oldboy," directed by Spike Lee and starring Josh Brolin, and "Last Vegas," starring Michael Douglas. Drake will sell foreign distribution rights for those pictures and others at the Cannes Film Festival later this month.

Lionsgate will maintain its ownership of Mandate's library of approximately 30 films, including last year's dark comedies "50/50" and "Young Adult," though Good Universe will provide management services for them.

Lionsgate is not expected to replace Kahane or keep Mandate open as an operating entity. The studio already has a significantly expanded film operation following the integration of Summit.

Drake's departure from Lionsgate ironically comes little more than a month after the blockbuster success of "The Hunger Games," which the executive oversaw from development through release. However, Friedman and Wachsberger were promised the top film jobs at Lionsgate as part of the Summit acquisition.

 Photo:  CBS Corp. board member Arnold Kopelson, Chairman Sumner Redstone and CBS Chief Executive Leslie Moonves  in March.  Credit:  Alex J. Berliner / ABImages

CBS Corp. might be a titan of old media, but it can lay clam to knowing how to maximize new media profits and gain.

CBS's first-quarter earnings were boosted by gains in new media: the digital distribution of its television programming and the sale of e-books.

"The growth in digital is a positive development for us," CBS Chief Executive Leslie Moonves told Wall Street analysts in a conference call Tuesday to discuss earnings. "We are extremely pleased with our first quarter. We broke records in five key financial metrics for the quarter, and I’m confident we will break records for the year as well."

The New York-based broadcasting company beat analysts' estimates by reporting 80% higher net earnings. The company earned $363 million, or 54 cents per diluted share, up from $202 million, or 29 cents per diluted share, compared to the year-earlier period. The substantially higher margin came from growth in operating income as well as lower weighted average shares as a result of the company's stock repurchase program.

For the quarter ended March 31, CBS collected revenue of $3.92 billion, an increase of 12% from the first quarter of 2011.

CBS attributed the increase to content licensing, particularly its online distribution deals with Netflix and, and higher fees paid by cable and satellite TV operators for the retransmission of CBS' broadcast signal. Content licensing and distribution revenue soared 39%.

"There are a lot of players out there circling the building," Moonves said. "They need our content.  It's an exciting period of time."

Advertising revenue, company wide, was up 5%. At its flagship CBS broadcast network, ad sales were up 8%. The network, according to Moonves, is expected to end the TV broadcast season with ratings gains in key demographic groups: total viewers, viewers age 18 to 49 and viewers age 25 to 54.
CBS boasts the most stable schedule in network television. 
“With 18 shows already renewed, the competition to get onto our schedule is extremely strong -- meaning that we will be much more selective than our competitors will have to be," Moonves said.  As the company heads into the upfront advertising sales season, Moonves said, "We feel very good about our future -- both creatively and financially."

Investors have been expecting CBS to post a strong year -- lifted by hundreds of millions of dollars in political spending expected to flood the company's TV and radio stations. CBS shares closed Tuesday at $33.42, up 4 cents.  The shares are trading 33% higher than last year at this time.

In addition to the CBS television network, which broadcasts such popular shows as "NCIS," "Survivor," "Hawaii Five-0" and "Two and a Half Men," CBS owns television and radio stations, a billboard unit, premium cable channel Showtime, and the Simon & Schuster publishing house.
The company said it spent $269 million to buy back 9 million of its shares in the first quarter.  The company also sold a radio station group in the mid-sized market of West Palm Beach, Fla., as part of its strategy to own stations in the nation's largest markets.

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