"The Sarbanes-Oxley Act"

GO TO JAIL, GO DIRECTLY TO JAIL, DO NOT PASS GO, DO NOT COLLECT $200

I started in the fascinating industry of producing, selling, and managing entertainment content in 1955 when I joined Screen Gems. It took me about 15 minutes to notice that things were not as they should have been. People I worked with were receiving kickbacks from suppliers, and no one seemed to care, even a little.

In the late 60's when I was with Screen Gems International, I wanted to buy a house, but didn't have the money for a down payment. At lunch with a senior corporate person, I was whining about not being able to accrue the $10,000 I needed for a down payment. He asked me "Norman, how much dubbing business are you responsible for in a year" and when I replied well over a million dollars, he was shocked, and said that it was hard to believe that with that much purchasing power I couldn't afford a down payment. He of course was taking HUGE kickbacks for himself from a variety of places.

I have been responsible for the sale of billions of dollars of content in the United States and overseas for Columbia Pictures, CBS, Polygram, and MGM/UA. I have observed that improper things were going on in my company as well as at a variety of other content companies (primarily studios) and nothing was ever done about it. I would hazard a guess that from the period of 1960 through 1990, the losses created by dishonest dealing could have been in the many hundreds of million dollars. Also, very often financial reporting at these companies only vaguely resembled the true state of affairs. Profit participations? Hire a Littigator.

Looking back at all of this, I can only conclude that whatever went on "in Hollywood" was petty stuff compared to the more "imaginative" scenarios created by companies such as Enron.

I went to see the documentary "Enron; The Smartest Guys In The Room", and I just loved it. The opening lines from a NY times review said it all, "If you are looking for a good dose of outrage at a theater near you, you won't find a better bargain than "Enron: The Smartest Guys in the Room"

I had my own "Enron" moment a few years ago. I had been invited to Houston by the Enron Broadband Chairman, Ken Rice who had heard about me and wanted to explore my interest in assisting them with "content" for their fiber delivery system. This included their Blockbuster VOD joint venture.

All of my meetings the next day went well until the last one, when I met with "one of the smartest guys in the room", a Harvard MBA VP. I knew that he was not pleased by my being there when he greeted me by saying "Norman, do you think that you are in any way relevant at your age in the entertainment industry?" (I was 60 something at the time.) He went on to tell me that I was wrong when I said that Studio content holders were not afraid of Blockbuster, and he said that Blockbuster could force the Studios to supply them with whatever content they needed, at acceptable terms. I later learned that these guys were about to stick a $200 Million deal to the Bank of Montreal, based on the projected success of the venture. He obviously didn't want me around to comment on "his deal". That was the end for Enron Broadband and me.

That brings me to Sarbanes-Oxley (SOX), and those wonderful criminal penalties that go along with the act.

Companies, and their senior staff must perform in accordance to SOX, and if they don't "bad things could happen" to them. Ken Rice is under indictment For the Blockbuster transaction among other things.

In retrospect, what could possibly be worse then "Going to Jail"? Unlike Monopoly, there are sadly no "get out of jail free" cards available any more.

I have watched throughout my career as Senior Corporate Executives did things that perhaps they shouldn't do for their own benefit, and not the benefit of their companies (just like Enron).

If SOX stops or reduces this, it will be a good thing.

Norman Horowitz

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