Kim Basinger It Is Difficult to See Essay

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Kim Basinger

It is difficult to see how the jury could reach an intelligent decision in this case because the defense's profit-sharing argument left so much information missing from the production costs. The jury was not given the nature of the costs: variable vs. fixed in incremental production costs for the movie; discretionary vs. non-discretionary costs, which would tend to be unreliable because the Plaintiff is the expert about them; committed vs. avoidable costs.

Based on scant testimony from the Plaintiff's expert:

Plaintiff's Minimum Damages (in $ Millions)

With Basinger

Without Basinger

Difference

Foreign Pre-Sales

Domestic Pre-Sales

Total Revenue

Production Costs

(7.60)

(4.80)

(2.80)

Profit (Loss)

(2.10)

(Albrecht, Stice, Stice, & Swain, 2008, p. 1114).

Should Main Line's maximum and minimum lost profit amounts be revised downward for the following? Why?

a. The domestic distribution revenues of $3 million because the deal had not been finalized.

No, the $3 million domestic distribution revenues, estimate of future cash flows from domestic distribution, should not be used to revise Main Line's maximum and minimum lost profit amounts downward because the deal had not been finalized. According to the narrative, the $3 million domestic distribution revenues were potential; not contractual. Consequently, they are too speculative to include in lost profit amounts (Khan, 2007, p. 9).

b. The $800,000 of foreign pre-sales because they were "probable" not actual.

Yes, the $800,000 of foreign pre-sales should be used to revise Main Line's maximum and minimum lost profit downward because, though still "probable" and therefore speculative, according to Plaintiff's expert -- unrefuted by Defendant's expert -- foreign pre-sales are relatively reliable: "[T]he foreign pre-sale markets are very well organized. They meet in well-defined places....Buyers and sellers come together. The products are there. The transactions take place. Not down in the pit the way the stock market works, but in a relatively short period of time. Information is very good." Therefore, the foreign pre-sale markets (e.g., Cannes Film Festival, American Film Market, MIFED-International Film, TV Film and Documentary Market, etc.) possess greater market efficiency [than do domestic pre-sale markets]"

c. The loss of $2.

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1 million on the "Without Basinger" film.

No, the loss of $2.1 million on the "Without Basinger" film should not be used to revise Main Line's maximum and minimum lost profit downward because the multiple variables contributing to that figure make it so speculative that it is meaninglessness. According to Arthur De Vany of NYU, "Kim's non-appearance is only one of immeasurably many elements of the system. The jury could no more trace the final result, in revenue or other terms, of the movie's run back to a single factor than they could trace a particle of water in a wave at the seashore to its location a mile into the ocean (De Vany, 1997, p. 19).

2. Are the following relevant to the determination of lost profits to Main Line? Why?

a. Basinger's $3 million salary for "Final Analysis."

Yes, Basinger's $3 million salary for "Final Analysis" is relevant to the determination of lost profits to Main Line. According to Khan, "Salary can [be] used as measure of box office drawing power" (Khan, 2007, p. 11), in which case a ratio of Basinger salaries vs. Fenn salaries could be used to help assess the ratio of Basinger-movie-revenues vs. Fenn-movie-revenues (Khan, 2007, p. 11). Even so, Kahn cautions that Basinger's "Final Analysis" salary might reflect Basinger's "star power synergies with [her] leading man" (Khan, 2007, p. 12), in which case that salary would not be "representative."

b. The comparison of revenues for Basinger films with revenues for Fenn films.

Yes, a comparison of revenues for Basinger films with revenues for Fenn films is relevant to the determination of lost profits to Main Line because it allows an appraisal of revenues with and without each actress (Khan, 2007, p. 7). Khan cautions, however, that the comparison should include only the movies in which the actresses played leading roles because movies in which they played supporting roles are much less accurate for attributing revenue to an actor/actress (Khan, 2007, p......

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