How To Make the Most out of the Inevitable Streaming War -Disney, COVID-19 and Digital Distribution

By: Tifanie Jodeh, Esq.

Kelmer Messina

Fewer industries have been more affected by the current COVID-19 pandemic than the entertainment industry. With nearly every production shut down and movie theaters closed, now can be the time to adapt and become inventive. 

For that reason, we are discussing the digital distribution and streaming services and the future of content viewing in the wave of this pandemic.

While before the box office served a king and an online/streaming/on-demand exclusive release model as the last option for a lot of productions, it seems that for the immediate future, a “straight-to-stream” model will be a viable point of entry for producers and filmmakers. According to studies cited on Los Angeles Times’ recent “Coronavirus Entertainment” article, “the average person is streaming eight hours of content each day, double the number of hours from before the pandemic rapidly spread in the U.S.” and “three in four people are using more streaming services since the coronavirus came to the U.S.” [1]. Now, more than ever, is the best time to get into the streaming business. 

Media giants like Disney are desperately trying to make the best out of this situation by releasing content on their streaming platforms way ahead of schedule both to evoke the attention of the quarantined public and cut the losses of unsuccessful releases. 

Despite being extremely publicized, Frozen 2 and Onward, both of these animated blockbusters had to be pulled from theaters into Disney+ because of the pandemic. Nonetheless this move has brought great numbers and success to the platform. Because of COVID-19, Onward only recouped half of its $200M budget at the box office but through Disney+, Disney will likely be able to cut their losses. Currently, Disney+ has duplicated their number of subscribers in the last two months thanks to the success of these releases [2]. Currently, the upcoming Artemis Fowl will now debut as a streaming exclusive instead of as a theatrical release and heavy rumors steer in the way of the same thing happening with the live-action adaptation of Mulan. 

This trend of releasing content early combined with the shut down of all productions and the upcoming release of HBO Max and NBC’s Peacock streaming services along with their strong catalogs will create an unprecedented bidding war for new content wherein all the players will compete to get each other out of business by having the most content and the most exclusives. Producers with content in development or in pre-production are well positioned to take advantage of this content demand and potentially put a huge amount of money in producer’s hands in the near future, while these streamers are preparing for the incoming production drought. 

Let us deal with these media giants’ aggressive negotiation tactics. We at Entertainment Law Partners’ have extensive industry and deal making experience. Take advantage of this drought and get the deal you deserve. 

If you have questions concerning this topic, or other areas of entertainment law, please email us at Asst@entlawpartners.com.

COPYRIGHT & DISCLAIMER

Tifanie Jodeh is Partner at Entertainment Law Partners dedicated to corporate, business and entertainment affairs.  You may contact her at Asst@entlawpartners.com.

Tifanie Jodeh grants column recipients permission to copy and distribute this column and distribute it free of charge, provided that copies are distributed for educational and non-profit use, no changes or revisions are made, all copies clearly attribute the article to its author and include its copyright notice.

DISCLAIMER: Readers should consult with a lawyer before solely relying on any information contained herein.

[1] https://www.latimes.com/entertainment-arts/business/story/2020-04-14/coronavirus-more-people-sampling-streaming

[2] https://www.theverge.com/2020/4/8/21214236/disney-plus-50-million-subscribers-international-europe-india-netflix

CARES Act-Forgivable Loan for Small Business Owners

BY: Tifanie Jodeh, Esq.
Kelmer Messina

The results of the COVID-19 virus has riddled our economy, most notably the entertainment business. It is a challenging time to be a business owner, we here at Entertainment Law Partners are determined to assist in solutions to help you make the best out of this difficult time. In particular, information on the application and general process for the CARES Act’s Paycheck Protection Program.
The Federal Government is in the process of implementing the Paycheck Protection Program, which will dispense nearly $350 billion dollars in forgivable loans through many  lenders and financial institutions, assisting small businesses’ capability to pay their employees while simultaneously guaranteeing the job security of all their employees for an 8 week period.
As early as Friday, April 3 (this date is fluctuating at the time of this writing), you can apply via your financial institution. Each financial institution will have their own documentation and application requirements. We have been in touch with several banks regarding their filing requirements. These loans will generally be dispensed on a first-come, first-serve basis, therefore, it is to your benefit to apply as soon as possible.
To apply for this loan, your lender or financial institution will require you to prove (among other items) the following:

• Your small business has less than 500 employees. Current economic uncertainty makes the loan necessary to support your ongoing operations.
• The funds will be used to retain workers and maintain payroll or to make mortgage, lease, and utility payments. You will need to provide to the lender documentation that verifies these costs. 75% of the loan must be used for payroll costs (Not complying with this requirement could affect the loan’s forgiveness).
• You have not and will not receive another loan under this program.
• You will also need to provide your lender with any additional documentation they request (such as tax and payroll documents), which they will use to calculate an eligible loan amount, which could be the lesser of (i) 2.5 times  the business’s average total monthly payroll costs during the prior on-year period prior to the loan being made multiplied by 2.5, plus the outstanding amount of an SBA disaster loan that was made between January 31, 2020, and the date that such loan is financed with a loan under the Act; or (ii) $10 million.

Because this program makes no distinction between corporate entities like sole proprietorship, partnerships or LLCs, nearly any company can apply as long as they fulfill the conditions, even if they are independent contractors or seasonal workers. This makes it so that if you are an actor, writer, director, producer or any other kind of Entertainment Industry professional, with a company and payroll eligible to apply for the loan.
As previously mentioned, financial institutions are likely to require a vast amount of necessary documents to determine both your applicability and the size of the loan. Assembling the documentation required by this program will be time-consuming and in some cases difficult to put together. While you may be eligible, a faulty application could be catastrophic for your company if your loan gets delayed or denied because of documentation issues. We are currently in a time full of uncertainties, yet you do not have to allow your business’s future to be uncertain.
Instead of allowing any minor mistakes to come in the way of your finances, we at Entertainment Law Partners are able to use our expertise to assist with your application ensuring the best possible presentation for consideration.

Have questions? Contact to discuss this loan as well as other state and local programs.  

Email us at Asst@entlawpartners.com or call 310-684-3666 to schedule a free initial consultation.

Will My Contract Survive this Pandemic?

COVID-19 and Force Majeure Clauses: Will My Contract Survive the Pandemic?

By: Tifanie Jodeh, Esq. 

Kelmer Messina

  When any of us in the entertainment industry first heard about the ongoing Corona Virus pandemic we could have never imagined that its spread would have such enormous repercussions around the world, and, even less, imagined its impact could be felt in such a short time. 
  Now that productions have ceased, artists, producers, and crew either deciding or being forced to stop working, what can you do to protect your rights? Well, the secret to do that might just lie on an often overlooked element of contract drafting: the force majeure clause. 
  In principle, termination and force majeure clauses have similar purposes: they both excuse the performance of one or more parties’ responsibilities to a contract. Yet, despite this similarity they are distinguished from each other because of one crucial difference: invoking a termination clause is generally a result of the actions of one parties while, under force majeure clauses, a party is excused because performance has become impossible or unreasonably difficulty due to events beyond the control of the parties. This implies that an intervening cause, such as the CoronaVirus Pandemic, could potentially excuse parties from performing under a contract. 
  Nonetheless, while the invocation of force majeure is a possibility you should have in mind, it might not be applicable in every situation arising under this pandemic. 
  Call us to review your agreements as it will be easier for us to help you make a determination of the circumstances in lieu of having to spend thousands of dollars in court to assert your position over any allegations of breach. 
  While certain events make explicit mention of superseding events such as “acts of God”, war, or strikes in the force majeure clauses in entertainment contracts, a great majority of them fail to mention anything like the word “pandemics” or “public health crises”. We need to answer this question: will COVID-19 be a valid excuse for people to invoke force majeure? 
  We need to look at some clauses that might terminate the contract immediately, while some others might just suspend it for a given time. Others might even require a party to unilaterally determine if force majeure is applicable or not. Whatever the case, make sure that, just like any other provision, the force majeure clause is applicable to your needs. 
  Keep in mind, even if COVID-19 has impaired the execution of certain contracts, the force majeure clause will only excuse people from performing their obligations if the impossibility arises as either a direct result of the disease. This means that just because the force majeure clause has been carefully delineated and is invoked during this difficult time, it would not automatically be valid because it is invoked now. Put simply, a writer or editor stuck at home because of COVID-19 is more than likely to be able and expected to keep working unless he is directly affected by circumstances such as contracting the disease or accessing the tools or resources he needs has become unreasonably difficult or impossible.  
  In conclusion, be prepared. Let us examine your clause and try to distinguish any ulterior motives the other party might have and assert your rights appropriately. After all, this is a difficult time, but if you confide in Entertainment Law Partners’ industry experience, we promise you that we will make it so you can be as informed as possible. 
  If you have questions concerning this topic, or other areas of entertainment, business or corporate law, please email us at Asst@entlawpartners.com. 

COPYRIGHT & DISCLAIMER Tifanie Jodeh is Partner at Entertainment Law Partners dedicated to corporate, business and entertainment affairs.  You may contact her at Asst@entlawpartners.com.

Tifanie Jodeh grants column recipients permission to copy and distribute this column and distribute it free of charge, provided that copies are distributed for educational and non-profit use, no changes or revisions are made, all copies clearly attribute the article to its author and include its copyright notice.

DISCLAIMER: Readers should consult with a lawyer before solely relying on any information contained herein.