Archive for category EntertainmentIndustry

What’s the Verdict: What does Governor Brown’s new Fair Pay Act mean for Hollywood?

I read an article this morning that posed this very question, and it will be interesting to see how this will play out in Hollywood. An industry already under scrutiny and pressure over pay-disparity of its female actresses as compared to males, due in part to the post-Sony leak of Jennifer Lawrence’s lower profit participation (as compared to co-star Bradley Cooper; 7% vs. 9%, respectively), followed by Patricia Arquette’s Academy Award acceptance speech bringing attention to 35 million people, which then prompted an inundation of media speculation by morning as to why.  Some say this law was a reaction to that pressure.

The law is interesting for 2 reasons: 1) it applies to “similar” jobs, not “same.” 2) it shifts the burden on employers, to justify why there is a disparity, if there is one.  In an industry in which pays are already presumably guided by box office numbers and demand (and projections based on same), it will be interesting to see how things shift, and whether this will in turn change how calculations are done.  In the film world, these calculations determine pre-sales, commitments that determine, in part, how much financing a project will get.  A commitment from a foreign territory (for example) to buy your project at X pre-negotiated amount, before it’s even made, is taken to the bank and used as collateral for a loan.  A risky move already on the part of distributors, sales agents are faced with the difficult and creative job of providing projections based on what talent, director, etc. is attached, and what those names typically bring in at the box office. Oh, how these numbers will change as pays are “equalized.” I have to ask if this will lower pay for everyone.  Doubtful at the A-list level, but what about the low budget and modified low budget world many of my clients (and a significantly growing fraction of the film world) live in?

And while I sympathize, from my perspective, my client is just a cog in the wheel–meaning I can’t take all that into consideration when negotiating the best deal for my client.  And what impact is that having?

The problem here is that there is no guidance yet.  And guidance comes from judges deciding cases and interpreting what the law means in different factual scenarios. My hope is that this law will lead to actual change, as opposed to a slew of litigation….which sadly enough, is the only way we will get some clarity on how the law will be applied.  You can bet on seeing some high profile cases pop up soon.

The other very interesting question that hasn’t been answered yet is what this means for the concept of the “loan-out.” Legally, the actor/producer/director/writer’s loan-out company is contracted by the studio, producer, etc. and it’s actually the loan-out that “hires” the talent, director, writer, etc (going to refer to them all as “talent” from here on out). So technically, the talent etc. is an employee of the loan-out, not the studio or producer.  Hollywood runs on the concept of independent contractors.  And the loan-out –a company set up for the sole purpose of minimizing legal exposure for talent etc.–could end up being a double-edged sword.  Can an actor/producer/writer/director with a loan-out bring a claim against a studio or production company when they are technically employees of their own loan out? The independent contractor vs. employee has already been heavily litigated (there is a slew of case law to turn to, and the IRS even has its own 20 point checklist http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee), but we can bet on seeing this issue come up in future cases.

Anyway, just some thought for the curious mind.  I’d love to hear what you all think. Thank you @latimes for getting my wheels turning this morning. http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-hollywood-fair-pay-20151008-story.html

(As a note, I haven’t addressed the important role of crew and “other” talent here, no doubt also subject to this disparity and deserving of notice.)

Talk to me people!

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What’s The Verdict: Comcast and Houston Sports battle over bankruptcy and alleged scheming, who is behind it?

What’s The Verdict: Comcast and Houston Sports battle over bankruptcy and alleged scheming, who is behind it?

Houston Regional Sports Network has been in an involuntary bankruptcy phase but most recently, a litigation trustee filed a complaint accusing Comcast of doing everything in its power to impair the Network in an attempt to acquire the rights to broadcast Houston Astros (baseball) and Houston Rockets (basketball) games at a significant discount.

Robert Ogle makes clear that the cable giant has a track record of poor customer service and that since Houston Regional Sports Network was set up in 2003, they have experienced Comcast’s ‘dishonesty’ firsthand.  It was in 2010 that Comcast became a partner with a 22.5 percent interest in the network and the teams, Astros and Rockets, owned the rest of the percentage.  At this point, Comcast said it would use its power to achieve promised rates, gave an advanced loan for $100 million, amongst other things.  In addition, the sports teams granted the Network exclusive rights to games through the year 2032 for hundreds of millions.  This all happened in 2010 and then in 2013 is where problems arise.

The complaint (filed by the Network) asserts that Comcast has been doing everything in its power to acquire its primary and most valuable assets, the right to telecast programming related to Houston Astros and Houston Rockets, as well as the right to receive revenue from affiliation agreements with MVPDs that carry CSN Houston.  What’s interesting is that Houston Regional Sports Network was never able to reach affiliations with a major MVPD; thus, the lawsuit claims this was intentional on Comcast’s part.  Other regional sports networks owned by Comcast were able to make deals but the major difference is that with these other networks, Comcast owned most, if not all, of the equity.

In effect, Houston Regional Sports Network began to experience liquidity constraints because they couldn’t make any big distribution deals.  This caused the Astros and Rockets to offer to sell their own equity to Comcast, but they didn’t take the offer.  So what happened next? The financial situation of Houston’s Regional Sports Network continued to grow worse, which eventually led to a buy-out offer from Comcast at a much lower price.  Mr. Ogle says that all of it was part of Comcast’s plan and that Houston’s RSN was basically a scheme.  How was it a scheme?

Comcast would put the Debtor (HRSN) into bankruptcy and automatically its value would drop substantially. With that, Comcast would make a statement of its intention to offer a great amount of money to acquire the Debtor plus assets, which would scare away other potential buyers.  Once it was clear that Comcast was the only likely buyer,  Comcast could buy the Debtor plus assets at an even smaller price than it had stated.  This is because there would be no other buyers  so HRSN would have no other option but to take the offer regardless of how small it was.

Point being, Rockets and Astros were in terrible position and the truth is that Comcast played a role in this.  The teams ended up selling to AT&T and DirectTV for $5000 which is a lesser value than they would’ve made if they simply liquidated all their assets in 2013.  Comcast of course denies all claims and allegations as entirely without merit.

What do you think will happen? Stay tuned for more on What’s The Verdict!

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What’s The Verdict: FTC settles crowdfunding fraud with Erik Chevalier!

What’s The Verdict: FTC settles crowdfunding fraud with Erik Chevalier!

The big, bad Federal Trade Commission has settled its first case against a creator on the Kickstarter Project.  Erik Chevalier and The Forking path, Co. jumpstarted a campaign to raise money for a fantasy board game called “The Doom that Came to Atlantic City.” Supposedly, Erik Chevalier raised about 4x his goal for the game, but used some of these funds for personal expenses including personal equipment, personal residence, etc. and we all know that’s not allowed!

Chevalier promised consumers that they would receive a copy of the game along with figurines if the campaign reached its funding goal of $35,000.  He ended up raising over $120,000 from 1,246 backers.  But then, in July 2013, he told his backers that the project had been cancelled.  There had been previous issues regarding patents and overseas manufacturing,  and consumers thought all was good until he told them it was not.  Chevalier made a statement addressing the situation, “Every possible mistake was made, some due to my inexperience in board game publishing, others due to ego conflicts, legal issues and technical complications. I never set out to con anyone or to perpetrate a fraud but I did walk into a situation that was beyond my abilities and for that I’m deeply sorry.”

Backers were upset, Chevalier promised refunds which he of course couldn’t uphold, and the FTC began investigating. The FTC is pursuing him for violating a law on the dissemination of a false advertisement.  Chevalier has neither confirmed nor denied allegations, but has given consent to a permanent injunction barring him from making misrepresentations about any crowdfunding campaign.

And that’s all she wrote.  Stay tuned for more on What’s the Verdict!

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What’s The Verdict: Were Mike Huckabee’s anti-Hollywood phone calls more like a survey or telemarketing? Will he be held liable?

What’s The Verdict: Were Mike Huckabee’s anti-Hollywood phone calls more like a survey or telemarketing? Will he be held liable?

Just earlier today, the 8th Circuit Court of Appeals has revived a lawsuit that accuses U.S. presidential candidate Mike Huckabee along with others of violating telemarketing laws.  The lower court rejected the case, but after today’s decision, Huckabee and others will again face a class action lawsuit over millions of prerecorded  phone message delivered on behalf of the film Last Ounce of Courage back in 2012.

So, what actually happened that led to the lawsuit?

Huckabee was tapped by the film’s producers including Veritas Entertainment in an attempt to get people to a see a movie about a son of fallen U.S. soldier.  The film was Last Ounce of Courage.  To be more precise, there were about 34 million calls to residential phone lines and cells phone.  Based on the script, Huckabee was promoting the film by pitching it as ‘anti-Hollywood.’ For example, Huckabee would call residents and ask the following:

“Do you agree that traditional American values are under attack in mainstream media and by our government?” As well as, “Would you, like me, Mike Huckabee, like to see Hollywood respect and promote traditional American values?”

Two St. Louis residents, Ron Golan and Dorit Golan, filed a $5 million class action suit on behalf of themselves as well as other claiming that the calls were a violation of the Telephone Communication Protection Act and Missouri’s Do Not Call Law. Turns out that the Golans weren’t actually in their home to hear the message but were left with voicemails on their answering machine.

In May 2014, a federal judge rejected the lawsuit because the plaintiffs were unable to demonstrate an injury sufficient enough to give them standing for a law intended to crack down on robocalls.  However, the 8th Circuit judge Diana Murphy has decided to read the law more broadly than the district judge who rejected.  Judge Murphy says that the lower court judge erred in dismissing the claims.

The defendants are arguing that the calls do not fall under the category of telemarketing or advertising, but were more for information gathering with survey questions.  It is now the role of the appeals court to examine and determine the context of the calls to see if the purpose was to promote goods.  Judge Murphy states in her opinion that the messages appeared to be survey-like by asking if recipients had traditional American values, but clearly acknowledges that the producers were most concerned with getting viewers of the film rather than gathering information.

Overall, Judge Murphy recognizes that the Golans are not subject to a unique defense nor did the suffer a unique injury, but what matters for all class members (including Golans) is that the phone calls placed by Huckabee were initiated for the purposes of promoting Last Ounce of Courage.  Additionally, she does not rule on whether or not Huckabee could be “vicariously liable” and is leaving that to the lower district court.

Judge Murphy has reversed the lower court judge’s opinion, meaning the case has been revived and remanded.  The final decision will be left to a lower district court judge.

The case is Golan et al v. Veritas Entertainment LLC et al, 8th U.S. Circuit Court of Appeals, No. 14-2484.

What do you think the lower court judge will do this time around? Stay tuned for more updates on What’s The Verdict!

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What’s The Verdict: Janet Jackson’s announces new album + new label with artist incentives but is it feasible?

What’s The Verdict: Janet Jackson’s announces new album + new label with huge artist incentives but is it feasible?

Here it comes…the moment you have all been waiting for…Janet Jackson’s next studio album since 2008 will be released this fall (potentially end of summer) via BMG as the distributor. The album will mark Jackson’s first venture with her newly formed label Rhythm Nation, which will be offered to both new and established artists, although there is no one signed to it yet (that we know of).

The partnership between BMG and Rhythm Nation is an “artist services deal,” which is different that a traditional record deal in one major way.  It basically allows her and other artists that are signed to the label to retain full ownership and revenue over recordings. The artist services deal is designed to put artists in the driver’s seat, which is arguably a new concept within the music industry.

This gets a bit more interesting after clarifying that BMG is not a record label, but a publishing company.  With that, BMG functions to find licensees and on the flip side of that means that artists are financing their own records and getting them out into the world via distribution deals.

To be clear, the artist services deal is a wonderful concept of putting artists in the driver’s seat and giving them more ownership; however, the artist services deal likely means that Janet is paying for the artists.  This is great, so long as it can be maintained.

In effect, the amount of money used to finance artists may (or may not) be contingent upon the success of her album to be released in fall.  Perhaps, there is enough to financially support Jackson and other artists long-term, but it’s undeniable that the first venture is always important in terms of future predictions.

Do you think the new album  will be a smashing hit? Or perhaps will she be a bit rusty? Can’t wait to get more promo details on the upcoming album. Stay tuned for more updates on What’s The Verdict!

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What’s The Verdict: Update on Blurred Lines case and 7th Amendment

BLURRED LINES PRESS RELEASE

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What’s The Verdict: Will the success of Entourage mean an end to female driven storylines?

What’s The Verdict: Will the success of Entourage mean an end to female driven storylines?

Entourage may prove to be one of the biggest films of the summer, and even the year. Fandango reported that more than 50% of its online sales today have been for tickets to the anticipated film debut of the popular HBO series. The film, which aired special previews across the country this past Tuesday was already able to hit a $2 million in ticket sales record.

With these starting numbers Entourage is sure to break a couple of records. But what effect will this have on female driven films in the industry? Over the past coupe of years female driven casts have become more and more prominent. Even films that would have traditionally thought of as male driven have begun to feature strong female leads.

Mad Max, a film that was originally male driven featured several female protagonists in the remake released last month. For a while it seemed as though the trend of large ensemble cast type films was to integrate both female and male characters.

Entourage presents audiences with a change to this trend. The film is entirely male driven. While it does feature female characters and cameos the storyline, like the HBO show, will revolve around its male actors.

With the film projected to break a series of records for both summer films, and the industry in general, will its all male cast send a message to content creators? Will the industry revert back to featuring all male casts?

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