WEEKLY CineBUZZ REPORT - 1 February 2012

Exhibitors will pay tax on VPF payments

IRS WILL RULE "VPF" IS INCOME TO EXHIBITORS
It is almost a given that the IRS will rule that the Virtual Print Fee (VPF) that the studios pay exhibitors (through companies called integrators) will be subject to and will be considered as ordinary income to exhibitors receiving the VPF.
Revenue Canada, the Canadian equivalent to the IRS, has already ruled that the VPF will be reported by exhibitors as income.  Additionally, in Canada, there will be no VPF associated with second-run films.  I have not heard, as yet,  if the VPF will be offered to U.S. second-run cinemas; although a $300/print fee was rumored.
The VPF scheme, is just that - a scheme to entice exhibitors into digital  conversion - but as one delves more and more into the details the scheme becomes less and less attractive in view of the stipulations associated with it.  And yes, I hear the lament of exhibitors saying, " well it's better than nothing", but is it?  Each exhibitor should take a hard look at the VPF program.  What is its duration? How much do you receive in fees? How and under what circumstances can the studios void the contract? How much control do you have to cede to the studios regarding the operation of your cinema?  Are there additional operational or equipment costs in adopting the VPF? Under the VPF who owns what?
A VPF of $800 or $300  - after integrator fees, "other" expenses, and taxes - what is the exhibitor left with and how long will it last? Given the studios' current barbarian bean-counting mentality, to me its a one-sided game, because if it wasn't Hollywood would have paid for the industry's conversion long ago

Tech Kings Win Anti-piracy Battle

HOLLYWOOD LOSES PIRACY BATTLE TO INTERNET KINGS

As report is the CTC Flash this past Monday (1/30) Hollywood lost its fight for new and enhanced anti-piracy legislation in both houses of Congress last week.  What had once been considered a shoe-in for the entertainment industry and associated labor interests crumbled as the Internet mavens put the pressure on legislators in both the Senate and House of Representatives forcing them to renege on their prior commitments to Hollywood and its cohorts.

This was a major blow to Hollywood and is an indication of their weakness and diminished clout in battling the tech Kings.


CINEMA TRAINING CENTRAL KICKS OFF 2012

New Workshops & Seminars of 2012

CTC has a new website and Guidebook for viewing at www.cinema-training.com .  This year seminars and workshops will be offered in April and October, and we are anticipating increased attendance given the situation confronting cinema exhibitors and their need to bolster customer service and marketing, and enhance operations and technical capabilities.

Best and Happy Movie Going!
Jim Lavorato