Tagged: the new york times

Lennon Reloaded

The “One Laptop per Child” Foundation released a television commercial on Christmas Day of John Lennon – almost 30 years after his assassination – pitching viewers to buy laptops for poor children.

The Foundation produced the spot using digital technology; creating an ersatz version of Lennon saying “I tried to do it through my music, but now you can do it in a very different way. You can give a child a laptop and more than imagine, you can change the world.”

Variations on the technology have been around for years. Michael Crichton predicted the advent of the technology in “Looker” in 1981. In 1995, I cited Crichton’s work when I wrote about the use of digital technology to reanimate deceased celebrities in new works – and the possible legal complications – here.

Although the ethical and business dilemmas of using digital automatons instead of real actors are still in flux, the legal issues remain the same. The commercial exploitation of dead celebrities requires the consent of the celebrity’s estate. In this case, Yoko Ono, Lennon’s widow approved the spot.

When I wrote my article in 1995, the infinite possibility of the internet was largely unknown to the public. Our understanding of its potential now combined with advances in digital reanimation technology will only bring these issues to the forefront.

You can find out more about One Laptop Per Child’s donation program here.

The Bail Out

No matter our behavior, the economy fluctuates from boom to bust on a fairly predicable basis. However, the severity of a bust is based in part on group (read: global market) psychology and bad, unregulated choices (don’t get me started on so-called “free market” thinking!).

Right now, the group think is pretty pessimistic and we’re in dire need of the equivalent of a global prescription for Prozac. A downturn is not a question at this point; only the extent of the damage and the timing of the recovery remain up for grabs.

The bail out measure before Congress will by no means prove to be a panacea. I keep hoping they will find a better way since the legislation – despite all the money – will not alter the landscape of losses or willingness to lend. However, it will remove a barrier to lending and mitigate some of the negative thinking. So, the sooner Congress works it out, the better for all of us.

I was recently assured by an elder statesman in the business that the industry will continue to flourish as it has in prior recessions and during the Great Depression since people continue to spend on entertainment as an escape from bad news. Peter Bart smugly approved in his column in Monday’s Variety:

Compared to the turmoil on Wall Street, Hollywood seems like an object lesson in prudent management. That’s why billions keep flowing into the movie business even when other industries are starved for capital.

OK, I know that’s really not the reason. Sucker money traditionally flows to Hollywood because investors want to meet girls, attend parties with movie stars and say they’re business partners with Steven Spielberg. Nonetheless, it’s still surprising to count the big bucks involved in the DreamWorks deal or in Ryan Kavanaugh’s Relativity Media or in Media Rights Capital’s portfolio at a time when the rest of the economy is locked in a liquidity crisis.

Suddenly, Hollywood’s managers seem downright austere compared with the crazies at Lehman Brothers. And movie-star salaries are pathetic relative to Wall Street payouts.

I’m not sure I agree since the entertainment business – like most businesses – requires access to credit to run. MGM is already struggling to service its existing debt and like the banks and other financial businesses, may be unrecognizable from its present form down the road.

Even before the current market crisis, Dave McNary wrote in last week’s Variety :

Start with plenty of labor unrest, add in the global credit crunch along with the consequences of too many movies in the market, and combine that with foreign distributors getting cold feet for anything but blockbuster Hollywood product.

“Any one of these factors would depress the business, so having all of them at once was something of a perfect storm,” notes Charles Heaphy, senior VP at City National Bank’s entertainment division. “This is like being in a rowboat while there’s a hurricane going on.”

With respect to startups, Jason Calacanis wrote:

It’s my believe [sic] that the economic downturn will be much worse than it is today, and that 50-80% of the venture-backed startups currently operating will shut down or go on life-support (i.e. 3-4 folks working on them) within the next 18 months.

Make a list of every Web 2.0 startup to raise an A or B round and cross 80% of them off the list, because they will not make it to their next round of funding or profitability.

Tough times like these will require media and entertainment companies as well as startups to rethink their strategies for investment and growth for the foreseeable future.

It all sounds really, really bad.

It’s not enough that it’s hard to finance movies or a good idea; contend with getting distribution or vacillating VC’s; now you’ll have to work that much harder to even find potential investment let alone actual investors.

But the news may not be all bad. Money abhors a vacuum. There’s a lot of money out there sitting on the sidelines and plenty of people looking for places to put it; some of it from the most unlikely of places.

I’ve spoken to personal money managers whose sole duty is to make at least 20% on client money in good times and bad. Some of this money previously invested in oil, gas and securities but with these markets in turmoil, these investors are now looking for new investment opportunities. If bank financing dries up, private equity (e.g., hedge funds) – already a big player in motion picture financing – will likely replace it. Moreover, I recently had several discussions at the Toronto Film Festival and elsewhere with several emerging market financiers who all viewed the current US economic situation as a unique investment opportunity.

Let’s hope their optimism is contagious.

Chorus Line Dancers Make A New Deal

s02ccon2l.gif

Although “A Chorus Line” opened on Broadway over thirty years ago, the dancers who signed away their life story rights as the basis for the musical back in 1974 recently renegotiated the terms of their deal. The dancers originally signed away these rights for $1 each during “workshop” sessions for the musical.

In 1975, Michael Bennnett, the producer, choreographer and co-writer of the book for the show, renegotiated these terms after “A Chorus Line” moved to Broadway; dividing about one-tenth of his own royalties and about one-third of his rights income derived from the show and its subsidiary rights with the dancers. “This kind of arrangement has now become standard, though with less generous terms, for people involved in workshops that lead to Broadway productions,” wrote Campbell Robertson for The New York Times.

Apparently, many of the dancers remained unsatisfied with these terms. For a more complete chronology, read here.

The Bennett Estate’s recent revival of the show on Broadway triggered the renegotiations. The previous agreement only applied to the original Broadway production not to first class productions like Broadway revivals and related road shows. The revival presented the dancers with a unique opportunity to renegotiate. After 16 months, the dancers successfully negotiated an additional (undisclosed) share of revenues in the current production as well as in all past and future first-class productions of the show.

The “Chorus Line” renegotiation provides broader implications to deal making for two reasons:

1. Leverage only comes from immediately recognizing the other party’s needs and fears in a particular deal and then effectively using that leverage in negotiations. Accurately assessing your leverage can be tricky since your own needs and fears are always in play (this is so even if you have representation – e.g., the writers strike negotiations).

Here, the Estate wanted to mount a new production of “A Chorus Line” which required additional permission from the dancers. The original show and subsidiary rights grossed over $280 million. Clearly, the Estate was a motivated negotiator with that much money at stake. Each of the 37 dancers however, was unorganized and had differing agendas. I suspect the 16-month lag in closing this deal was due in part to those detracting elements on the dancers’ side of the equation.

2. We now live in an era of franchised content – “everything old is new again” as the show tune goes. Even early-stage deals (aka deal memos) should be negotiated accordingly with an eye towards future revenues from media not even conceived at the time the deal is struck. If the deal is worth papering, it is worth papering thoroughly. Opportunities to renegotiate may later prove to be few and far between. In this case, it took the dancers over 30 years to get a taste of these revenues. Most people aren’t prepared to wait that long.

WGA Deal (Pretty Much) Closes. Now Let The Healing Begin.

happy-face_happyface_smiley400.jpg

Everywhere you look, change is in the air.

All indications point to the writers strike being called off by Monday; certainly by sometime next week, at the latest. This is great news but it will likely take many months for the industry to get back on its feet and much longer to discern how the industry changed forever as a result of the strike. With NBC head Jeff Zucker talking about changing the business model that dominated the development and production of television shows for the past 50 years, you can be rest assured that some things will never be the same.

The strike in many ways affected a discreet group of people working in the business: the major studios and networks and those writers employed by them. This group by no means represents the entire entertainment industry.

Despite the strike, many non-signatory independents continued to do business and there was a boon in reality television production. Scribes writing screenplays for non-signatory companies continued to write. Nevertheless, there remained a cloud of dread over the entire industry.

Now that the strike appears to be over, I expect that the most dramatic short-term effect will be a spike in industry-wide morale rather than a spike in production. In my negotiations with reps this week, most are optimistic about the near future. To be sure, there is much to be happy about. However, it is unlikely that there will be a significant difference between working conditions over the next few weeks and those of the last few.

The WGA’s rank and file must approve the new contract (though it appears that the strike will be called off while the details are worked out). Many TV shows will remain shut down until next season; some shutting down permanently, making it unlikely that many writers and crew will have jobs to return to next week. The local economy will continue to languish; with industry job losses and mortgage foreclosures likely continuing into the spring if not longer.

However, the new deal should make many writers happy in the longer term. Go here for a summary of the tentative deal. The most notable deal points are the WGA’s exclusive jurisdiction over the Internet and cell phones, a residual kicker in new media reuse fees and separated rights. I will provide a more detailed analysis of the tentative deal in another post.

It will be interesting to see what effect, if any, the WGA’s exclusive Internet jurisdiction will have on those writing new media content. Although many writers of podcasts and similar content will be clamoring to join the Guild, Internet writing services apparently don’t apply towards membership in the WGA. Podcasts and other web content are not generally produced by signatories to the WGA agreement. Consequently such services will not be subject to the WGA’s jurisdiction despite the terms of this deal.

Despite the lack of details, most of my clients writing new media content for the Internet who are not yet Guild members will still expect the new agreement to analogously apply to their writing services even if their employer is not a signatory. Signatories for their part will no longer be able to hire non-WGA scribes to create new media content. Regardless of signatory or membership status, it is safe to say that these developments will likely mean big changes for new media creatives and those that hire them across the board.

Required Reading

best_magazines_stack.jpg

As part of my daily online read, I culled the following from the past week or so. Usually I post these links and any editorial to facebook. I am going to start posting the most significant ones – those that I think are required reading for reps (and our respective clients) – on a regular basis to dealfatigue. Please let me know what you think.

Scrabulous Facing Copyright Infringement Charges

Change in the Business Model at EA Games

In Tentative Deal, Directors Send Message To Screenwriters

Arts Council in England Taketh (and Giveth), Leaving Anger in Its Wake

Netflix lifts limits on seeing online movies Read this if you read anything today. This is where video (and TV…) are headed. Wondering if it’s possible to do a deal with Netflix and Apple directly as you can with music.

Which comes on the heels of . . .
Apple Bets on Online Movie Rentals

Oprah Winfrey getting her own TV network

TV studios cut more overall deals
Companies cite WGA strike as main cause

Steroids beyond sports
Celebrities now among those linked to drug shipments

American Library Association announces literary award winners

Non-Scripted Outlets Want A Bigger Piece Of The Hostess Pie

hostess_fruit_pies2.jpg

The Food Network made Emeril Lagasse and Rachael Ray into television stars and household names. They’ve also become multi-millionaires from the sales of countless books and other merchandise; revenues the network admits are typically excluded from their talent deals.

The NY Times reports that about a year ago, the “Food Network began aggressively trying to change that with new deals that were ‘way more onerous’ from the stars’ point of view, said a person who has been affected by the changing strategy, by insisting on a stake in book deals and licensing ventures, and control over outside activities.”

This is an important sea change in talent negotiations on non-scripted programming. While my experience has been that network participation in merchandising has been part of the ask from cable outlets, it has not, for the most part, been a deal breaker and then only when it arose from an outlet’s desire to embark on its own merchandising efforts (i.e., revenues from branding the network as opposed to the talent).

The Food Network’s approach will likely influence future negotiations at other outlets breaking new talent in their programming though probably less so on deals featuring talent with more hosting experience (i.e., brand recognition in their own right) or have pre-existing merchandising deals. Such talent will have more negotiating leverage but if pressed, may be able to negotiate limited outlet participation “above a baseline” from any bump in merchandising revenues after hosting the outlet’s programming.

No Strike Waivers For TV Yet But Web Start Ups Tempt Writers

hammy.jpg

Variety’s Dave McNary reported that the WGA rejected requests for strike waivers by the Golden Globes and Oscar telecasts today. While the Guild granted waivers during the strike in 1988, I doubt they will now- even to Letterman and Leno -until and unless meaningful negotiations resume for two reasons. Awards shows present a high profile opportunity to make an adverse and very public impact on the quality of these telecasts. Secondly, any waiver now, absent meaningful negotiations and in the face of mounting holiday debts for WGA members, may erode the widespread support of Guild members to the cause.

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

The LA Times ran a story that striking writers are in talks with venture capitalists to finance and launch Internet start-up companies. “Silicon Valley investors historically have been averse to backing entertainment start-ups, believing that such efforts were less likely to generate huge paydays than technology companies.” There’s been a change in that perspective, albeit a limited one, after the success of Youtube. I’ve been involved in several of these deals. One started just before the strike and was in production as late as last week. They’re interesting opportunities on the cutting edge of where the entertainment business appears to be headed. However, without the right business model, these ventures will – if they go anywhere – lead to cross-over deals for TV programming rather than a big pay day for an Internet venture. It reminds me of Web 1.0′s icebox.com or my stint with Film Roman’s Level 13 back in the day. Despite the risks, more and more of my clients are migrating to the Internet, if not for the potential payoff then for a chance to broaden their experience and marketability down the road.