Stealthy Wealthy: Did Katzenberg's support for Obama fast-track movie deal with China?By Bill Allison Apr 18 2012 10:38 a.m.
It's not every businessman who has the vice president of China personally sign off on his latest venture, but then Jeffrey Katzenberg, the CEO of Dreamworks Animation and a prolific Democratic donor, isn't every businessman.
The Hollywood titan is also a prolific Democratic donor, who has introduced President Barack Obama at fundraisers in tony locations, bundled at least $500,000 for Obama's 2008 campaign and promised to bundle as much in 2012, and, after contributing $30,8000--the maximum he's allowed to give--to the Obama Victory Fund, he wrote a $2 million check to the super PAC that's supporting the president's reelection.
Obama, who's invited him to a state dinner at the White House, called him "an extraordinary friend" at an April 2011 fundraiser, and at an event the following September, he said, "Jeffrey has been remarkable over the last couple of years, helping us consistently move an agenda forward that creates a more just and fair and more competitive America." Katzenberg hasn't just supported the president: He and his wife Marilyn have also given $578,000 to congressional candidates, more than $1 million to party committees and more than $114,000 to the campaign of California Gov. Jerry Brown. He's also dabbled in local politics: along with his former Dreamworks partners Steven Spielberg and David Geffen, Katzenberg is soliciting donations on behalf of a former Dreamworks executive running for mayor of Los Angeles.
Dreamworks Animation, which was spun off from Dreamworks in 2004, has never registered to lobby the federal government, but the largesse of its CEO has guaranteed access. Katzenberg not only visited the White House for a state dinner and high level diplomatic receptions, he had private meetings with key advisors like David Axelrod and Valerie Jarrett. Andy Spahn, another former Dreamworks executive who struck out on his own as a political consultant and advises Katzenberg, may have been an even more frequent vistior to the White House. Visitor logs show that an Andy Spahn or an Andrew J. Spahn--Spahn's full name, according to campaign finance records--occurs 38 times, including two meetings when Katzenberg was also present. Spahn is a bundler for Obama in his own right, having raised at least $50,000 in the 2008 election cycle and pledged to raise at least $500,000 in 2012; in 2009, Obama appointed him to the President's Committee on the Arts and Humanities.
Like Dreamworks Animation, Spahn isn't registered to lobby the federal government. The website of his firm, which advises wealthy individuals, nonprofits, trade associations and corporations on how to play the political game, lists "government relations" as one of its areas of specialization, and says the firm "has a deep level of government affairs experience, and maintains extensive relations in Washington, D.C., California and throughout the region."
Though those relations may not require Spahn to sign up as a lobbyist, they do allow him to organize fundraisers at the homes of movie moguls. In early February 2012, he told the Hollywood Reporter that he was working out details with the Obama campaign to hold a $35,800-a-ticket fundraiser at the home of Jeffrey Katzenberg.
Two weeks later, Katzenberg was a guest at a Feb. 14 luncheon hosted by Vice President Joe Biden and Secretary of State Hillary Clinton for Xi Jinjing, the current vice president and all-but-certain next president of the People's Republic of China. Katzenberg wasn't just there to offer a valentine; he told the Financial Times that he needed Xi's personal approval of a deal he had arranged with three state-owned media firms to create a Chinese-based studio that hopes to launch its first feature film in 2016.
The Chinese box office amounted to $2.1 billion in 2011, and is on a pace to become the largest market for motion pictures in the world. Some American films have done well there--including Kung Fu Panda II, which Dreamworks sent to China complete with a contingent of its own executives in May 2011. That same month, Katzenberg made his $2 million donation to Priorities USA Action Fund, then the unofficial super PAC of the Obama campaign. Also that month, the Motion Picture Association of America--the lobbying arm of the movie industry--put forward a plan to resolve a trade dispute with China that the U.S. government said unfairly blocked access to the Chinese market.
In 2009, the World Trade Organization ruled twice--China appealed the initial ruling and lost--that the country's use of two state-owned companies to distribute all foreign films violated trade agreements. After the second ruling, the Chinese government announced that it would comply with the ruling by March 19, 2011, but when that day came and went, the state-owned companies were still the only distributors allowed in the market.
Katzenberg, who made the maximum $35,800 contribution to the Obama Victory Fund at an April 2011 fundraiser he organized, was involved in the U.S. effort to get China to abide by its obligations. He was part of a group that included former Connecticut senator Christopher Dodd--now chairman of the MPAA--and other studio heads that, along with Ron Kirk, the U.S. Trade Representative, and Treasury Secretary Timothy Geithner, pressured China. On July 27, 2011, MPAA officials and studio heads had a lengthy meeting with Biden in which they pressed their case. Biden was headed to China the next month, where he met with Xi to discuss, among other things, trade issues.
The impasse was resolved last February, when Biden and Xi hammered out an agreement on the last day of the Chinese vice president's trip to the United States. The Chinese agreed to allow 14 more films in per year, as long as they are big-ticket Imax or 3D productions. A final sticking point was the percentage of the box office that U.S. studios would receive for their films. After consulting with Katzenberg and Robert Iger, CEO of the Walt Disney Company, Biden set the figure at 25 percent, and Xi agreed. Biden announced the new trade deal.
Katzenberg went one better for his company. On the same day that the WTO issue was resolved, Katzenberg announced his new joint venture, Oriental Dreamworks. Because the joint venture will produce its films in China, it won't be subject to the same quotas U.S. studios face.
In an interview, Katzenberg told the Financial Times that negotiations started about a year earlier. How they proceeded, and how he met the Chinese vice president and got him to approve the deal--or whether that was a bit of Hollywood hyperbole--is unclear. Dreamworks Animation's corporate communications officer referred to the press release for the announcement, and added that she didn't "have anything on-the-record" with regard to Oriental Dreamworks.
The resolution of the China WTO deal was an important win for Hollywood--and came after the entertainment industry was thwarted in its attempt to get Congress to pass tougher copyright and intellectual property enforcement measures, including a House bill, the Stop Online Piracy Act, or SOPA, and its Senate counterpart, the Protect Intellectual Property Act, or PIPA. Over the years, Katzenberg has contributed $58,650 to two of the SOPA cosponsors, California Congressmen Howard L. Berman and Adam Schiff, both Democrats, and more than $110,425 to 19 Senate Democrats who co-sponsored the bill.
Perhaps most tellingly, when it appeared that the bills were in serious trouble, and the White House would signal opposition to the measures, Dodd, the former senator and architect of the Dodd-Frank Financial Reform Bill, one of the key legislative achievements of Obama's tenure in Washington, reached out to Katzenberg to find out what the thinking was in the White House.
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