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

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.

 

Show Me NO Money: Is Paying Zero for an Option Legal?

By:

Tifanie Jodeh
Andrew Keyes
Heather Lanter

As entertainment business professionals, many of you have probably entered into agreements without exchanging money. Many producers option life rights or book rights without paying for the initial option. Is this legal? YES!

The following hypothetical situation will help you to understand why a contract where no money changes hands can be a valid and binding agreement: 

Producer meets with well-known Model who wants to create a film about her life story. Producer doesn’t have the money to pay for Model’s life rights, but in lieu of money, the Producer agrees to shop her life story to a film studio. Model and Producer enter into an option agreement. Producer spends the next five months shopping Model’s life story to every studio in town. In the meantime, Model speaks with Studio Executive, who also wants to make the movie at his studio without Producer’s involvement. Model prefers to work with Studio Executive instead. To get out of the option agreement with Producer, Model argues that the agreement isn’t valid because she didn’t get paid for the option. In legal terms, Model is arguing the option agreement has no “consideration”. Is Model correct? The short answer is NO.

Of all the elements required to make a contract legally binding, consideration can be the most difficult to understand. In simple terms, consideration is a bargained-for exchange of valuable promises between the parties of a contract. It can take the form of physical items, such as a puppy or a diamond ring. It can also be money or simply a promise to act. One of the most famous cases illustrating consideration is Hamer v. Sidway, 124 N.Y. 538, 27 N.E. 256 (1891), where an uncle agreed to give his nephew $5,000 on his 21st birthday if the nephew promised not to drink, smoke, swear, or gamble. When the uncle died and the estate refused to give the nephew the $5,000, the court held that the exchange of promises between the uncle and his nephew was valid consideration. Therefore, the uncle’s estate had to pay the nephew $5,000. This case shows that even a promise not to do something can be consideration. The most important aspect of consideration is that there is bargaining between the parties.

Returning to our hypothetical, the question is whether there was valid consideration for the option agreement between Model and Producer. What is Producer giving? He is giving his time, efforts, expertise, and connections, which will be used to get the film into production. What is Model giving? She is giving Producer the exclusive right to shop her life story to film studios, which both parties hope will lead to a lucrative blockbuster picture. Since Producer and Model are each giving and getting something, there is valid consideration between them to make their option agreement binding.

Though we highly recommend that you put down money as consideration for an option agreement, even as little as $100, know that a promise to act will also make a good argument for consideration.

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.

Tips on Negotiating Deals with Business Affairs Executives in TV and Film

By: Tifanie Jodeh
 We have all had interactions with in-house business affairs executives, or what we call “BA”.  Most business affairs executives are lawyers, but some are not.  You are at the mercy of their work overload, pressure to get deals done, dealing with many of us outside counsel and producers who range in experience from novice to overly exuberant in their negotiation tactics and deal flow.  In order to avoid being completely “zoned out” by BA or putting yourself at risk in getting an immediate “NO!” to a requested deal point, you have to understand how and when to work one issue over another.

A BA executive, more often than not, doesn’t care about practicing law.  Instead, a BA executive is usually more interested in making a deal and letting legal affairs deal with the heavy lifting of legal contract drafting nuts and bolts.  BA executives have the ability to make business decisions, according to company policy, with the mission of getting the best deal they can for their employer.  However, know that sometimes the best deal isn’t as important as getting a deal done to the BA executive.  So, tip # 1- navigate and move according to the BA executive’s time preference in working a deal, or, in other words, how he/she likes doing things and moving to the “beat of their own drum”, not yours (so to say).  I do not to mean this to imply for you to lay down and not negotiate vigorously on behalf of yourself or your client.  I’m simply suggesting to know that you are playing as a visiting team in the BA’s home stadium. 

Tip # 2- I have found it very successful to call and introduce myself to the BA executive on the outset of the deal (if I don’t know them already).  This sets a friendly, professional and constructive relationship to begin the deal making process.  I have received several compliments from BA executives when applying this method.  Most of the time, the BA executive is simply given a directive from their employer to get a deal done within certain parameters.  Our jobs, as talent/producer/EP representatives, is to push the parameters while not breaking the deal or creating an unhealthy rapport with the BA executive.  

Tip #3- Getting to a “YES” is based on maintaining an open door communication with the BA executive, being responsive and available on the BA’s timeline and managing the BA’s expectations in a way to better gain support to benefit your client. 

Here are some examples of what terms will be negotiated with the BA executive:

- Fixed Compensation, including upfront fees and options fees.
- Deferred Compensation, including a statement about whether anyone else is eligible to receive the same. 
- Backend Compensation, including how that is defined and how it is paid.  Be sure to find out if there is a CAMA.  
- Term of Services.  This may be number of days an artist/producer will be on set to how many seasons a producer/executive producer will be locked for a television series. 
- Credit, including placement, how many episodes, paid advertising and treatment.
- Creative/Business controls.
- Attachments.  Are there any other persons to be attached to the project or is your client serving more than one position (i.e. client will serve as writer and producer)?
- Renewals of options (TV/New Media).
- Spinoff/Derivative Rights.
- Reversion.  What happens to the project if it’s never produced? 

Other Consideration to the Deal:  With regard to compensation, when negotiating with BA, you should have the following pieces of information at hand, which may give you more leverage when negotiating for your client: 
- Prior quotes.
- Credits.
- Success of past projects. 
- Control.  Creative vs. Business. 
- Timeframe. Consider the timing of your deal vs. television pilots selling time period almost over.
- Leverage of the artist’s representation and/or the relationship between the talent and the producers.
- Be creative in negotiating several different ways to get compensation.  The types of compensation that are available include up-front monies, such as salaries; use fees, including a series sales bonus, pick up bonuses, use fees, options, royalties, or residuals; and back-end payments, such as contingent compensation.  

Tip #4- Back end participation (sometimes referred to a contingent compensation) can mean nothing or as much as hitting the lotto.  Some of the most heated negotiations I have been involved in surround defining “Net Proceeds”; be sure to be diligent in clarifying how that definition will apply to my client.  

Once you are done with the BA executive, you will most likely then be pawned off to the next department, which is Legal Affairs.  There, you will be working with another person, most likely an attorney at the company, where you will get into the long form contractual negotiations.  Long form contracts are an entirely different subject and will be covered in a future article. 

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.