1076453469 64.165.230.34

SAG members are becoming increasingly aware that something is Fishy in CEO Pisano’s relationship with Netflix. Especially in light of the shocking revelation that he recently netted well over TWO MILLION DOLLARS in the deal.

When you read the terrific Investigative Report by Backstage’s Roger Armbrust keep in mind that it was revealed at the recent Membership Meeting that Mr. Pissano advised SAG NOT TO PURSUE INCREASED DVD REVENUES in negotiations with the AMPTP!
—-

February 9, 2004 9:40 p.m.

Back Stage East Feb. 9, 2004

Netflix Brings Pisano $2.4M

SAG CEO, a Director in Firm, Sells Stock Held in Trust

By Roger Armbrust

Robert PisanoSAG’s chief executive who last week two guild members accused of a conflict of interest for his directorship in Netflixrecently netted $2.4 million in a sale of Netflix stock for his living trust fund.

The sale occurred a week before the Screen Actors Guild began negotiations on a new feature-film and TV contract with the Alliance of Motion Picture and Television Producers (AMPTP). Pisano is heading SAG’s negotiations, while Netflixwhich calls itself the world’s leading online DVD rental firmhas financial relationships, including revenue-sharing agreements, with studios that are members of the AMPTP.

In 2002, when Back Stage made public Pisano’s connection with Netflix, he said there was no conflict of interest in his position with both the DVD firm and the guild because his stock options were held in trust and not exercised. He also said he had no plans to purchase the over 33,000 shares in Netflix, which were at that time worth just over $1 million. He noted his director’s position benefited actors who earned residuals from the DVD company.

But on Jan. 26 of this year, Pisano reported the trust’s stock purchase and sale to the federal Securities and Exchange Commission. The options were held in the name of A. Robert Pisano, trustee of Pisano Living Trust. Called a Form 4, the report listed two stock purchases and sales on Jan. 23 — one for 16,667 shares and another for 16,666 shares. Pisano purchased all the 33,333 shares for $3 each and sold them for $75.91 a share, a net profit of $2.43 million.

Back Stage asked SAG on Monday if Pisano wished to comment on his decision to purchase and sell the stock. Seth Oster, SAG’s deputy national executive director for communications, replied, “When the SAG board and its search committee recruited Bob to serve as CEO three years ago, every relevant investment and activity he had was fully revealed and vetted.

And just last month the board elected to renew his contract for an additional three years. There is simply no issue here.”

Netflix has relationships with all the major and independent studios, but doesn’t reveal the specifics of their dealings, Lynn Brinton, Netflix’s director of corporate communications said Monday. “Some are revenue sharing and some are not,” she noted of those relationships. As far as purchasing DVDs from studios,Brinton said, “Publicly we’ve said we bought about $100 million worth of content last year.” She said that figure represented acquisitions from majors and independents.

On Jan. 21, Netflix reported that its revenue for fiscal 2003 was a record $272.2 million, up 78 percent compared to $152.8 million for fiscal 2002. The firm ended 2003 with 1.49 million total subscribers.

Wilson, Bower Complain Lawyers for two SAG/Hollywood membersScott Wilson and Tom Bowerwrote Melissa Gilbert on Jan. 30 complaining that Pisano had a “conflict of interest in representing SAG members in the collective bargaining negotiations commencing next week.” SAG and the American Federation of Television and Radio Artists (AFTRA) opened talks with the AMPTP on Tues.,Feb. 3. Wilson and Bower opposed Gilbert and Pisano last year on the guild’s attempts to consolidate with AFTRA. Their opposition continued in the Jan. 30 letter, where their attorneys claimed Pisano’s conflict arose from his directorship in Netflix and his sitting on the advisory board of Cinema Entertainment Group (CEG), which the lawyers called “an entertainment media company engaging in the production, resale and distribution of digital entertainment products.”

The lawyers cited the federal Labor-Management Reporting and Disclosure Act which states that a union officer or other union representative should “refrain from dealing…in behalf of an adverse party in any matter connected with his duties and from holding or acquiring any pecuniary or personal interest which conflicts with the interests of such organization.” The lawyers were referring to Netflix and CEG as the “adverse” or management parties.

The lawyers argued that, in his positions with SAG, Netflix, and CEG, Pisano possesses a fiduciary duty to act in the best interests of each organization, which they see as a conflict of interest.

Digital media represents one of the most important areas of the current contract negotiations, the attorneys observed. They said that firms like Netflix and CEG “have a financial interest in keeping the costs of [actors’] residual payments lower because this benefits their ability to obtain digital media for redistribution at lower cost. Put simply, the less a studio must pay in residuals on digital media, the less the studio can charge in license or other fees to companies redistributing the product.”

Wilson and Bower were demanding that SAG’s board of directors prohibit Pisano from representing SAG in the talks or taking part in the negotiations, the lawyers said.

Melissa Gilbert, SAG’s national president and a Pisano supporter, followed with a statement to Variety last week arguing that there was “absolutely no conflict whatsoever.” She referred to the attorneys’ letter as politically motivated”a smoke screen” by members of the SAG board who oppose Pisano, “one of whom was actually on the national board and voted to approve Bob’s selection as CEO.”

——

Hmmmm, it may be subject to debate whether or not Mr. Pisano is benefiting because of “Conflict Of Interest,” however when he is able, from his outside interest, to turn a Hundred Thousand bucks into 2.4 Million in such a short period of time, he definitely has benefited from “Conflux Of Interest!”

A.L. Miller SW Editor & Chief WOOF !

*Formatting and photo are the SAG Watchdog’s.