Cuban's buyout ploy is good for him, but is it good for you?

By Tom Tapp

There's something about Mark Cuban's new venture that reminds me of those check cashing stores in the seedier parts of town.

You know, the ones that make loans against future paychecks for only 20% interest?

Not that Cuban's offer is usurious; he's playing the role of smart money, betting long term against people's short term fears.

The idea is that a Cuban-backed company called Content Partners will buy out the profit-participation stakes held by actors, writers, directors and producers and give them an immediate return on their money. That means something in a town where even Peter Jackson has to fight for his backend.

What's more, between YouTube, piracy and TiVo, futurecasting the revenue picture for Hollywood content is tough. For profit participants -- especially talent, whose abilities lie not in dealmaking but in artistry -- it's hard to be sure what to bet on. Cuban's deal offers some certainty.

The flipside is that the world continues to become ever more media saturated. And there has never been more money in media. What's more, in a universe of rapidly expanding platforms, one never knows what uninvented revenue streams will one day come online.

Cuban made billions betting on new platforms. He created internet radio pioneer Broadcast.com in 1995 when the Net was in its infancy and sold it four years later to Yahoo for $5 billion.

The other day a veteran producer friend related to me the story of a European studio exec who, in the early seventies, negotiated video rights to certain Universal properties as part of his exit package. This was when VHS and Beta were experimental technologies.

The studio didn't care. It had no interest in video. But the exec knew the studio's business better than it did, especially in Europe.

Years later, as video revenues skyrocketed, the studio came back and paid him a very healthy multiple on what his exit package would have been.

That sort of long-term play seems to be Cuban's game. I wouldn't bet against him.