Major movie studios’ shareholders seek response to 1,000,000 deaths

In September, shareholder advocacy organizations announced that they
were filing shareholder resolutions with the major movie studios
regarding the portrayal of tobacco in youth-rated films (covered by the New York Times). Shareholder concerns stem from publication of the 2012 US Surgeon General report, Preventing Tobacco Use among Youth and Young Adults, which
concluded that “there is a causal relationship between depictions of
smoking in the movies and the initiation of smoking among young people.”
 
Shareholders were concerned that this data, and the publicity it has
received, reflected a reputational risk to the company, and could hurt
the company’s long-term profitability. Citing data from the Surgeon
General’s report, in 2014 the Center for Disease Control and Prevention
(CDC) wrote that: “Giving an R rating to future movies with smoking
would be expected to reduce the number of teen smokers by nearly one in
five (18%) and prevent one million [1,000,000] deaths from smoking among children alive today.”
 
The first shareholder resolutions were filed at Walt Disney and Viacom (parent company of Paramount Pictures) in September, and a revised shareholder resolution has just been filed at Comcast (parent of NBC Universal) and Time Warner (parent of Warner Bros.). The resolutions at 20th Century Fox and
Lion’s Gate Entertainment will be filed in spring 2015. The different
resolution filing dates reflect the different times of year that each
company holds its annual shareholder meeting.
 
Disney and Viacom appealed to the Securities and Exchange Commission
(SEC) that the shareholder resolutions they received should be omitted
from the companies’ proxy statements and not be voted on, claiming that
the resolutions addressed “ordinary business operations” by attempting
to control the content of their films. The companies also argued that
the resolutions did not address a “significant social policy issue,”
which would have overridden concerns about ordinary business operations.
The proponents of the resolutions filed a counter-brief with the SEC
stating that the proposal was in no way asking to alter content, only
asking the studio to report on the reputational risks they faced, as
they were named in the Surgeon General’s report and linked to the
1,000,000 deaths.
 
Ultimately, the SEC decided that the companies could exclude the shareholder resolutions without a vote (see the SEC decision, and the proponent/defendant briefs here). Despite the fact that smoking is the leading cause of preventable death in the country, and the US Surgeon General has reported that that 18% of youth smoking is caused by exposure to smoking in youth rated movies, the SEC did not believe that the issue was of public significance or warranted any response from the companies. The shareholder advocates filed a revised version of their resolution
at Comcast and Time Warner to clarify the issue, and are considering an
appeal of the Disney and Viacom SEC decisions.
 
Between 2005 and 2012, dialogues between Hollywood studios and
shareholders resulted in each of the major studios creating and adopting
smoking in youth-rated movies policies regarding the oversight of
tobacco portrayal in film. However,  independent data shows that the
number of tobacco impressions that each studio delivers to youth each
year is inconsistent, demonstrating that the policies are ineffective.
 
It will take continuing pressure from the shareholders, together with
public health advocates and authorities to pressure the six media
companies that own the major studios to acknowledge their culpability
for this preventable public health crisis and use their votes to as
members of the Motion Picture Association of America (MPAA) board to
change the industry’s voluntary rating criteria to give all movies with
smoking an R rating.