Category Archives: Notable

“You Were Right And I Was Wrong”

Some time ago, a client called me to apologize for not taking my advice on a deal that ultimately went bad for her.

“Alright” she said. “Let’s get this over with. Tell me you told me so.”

“No,” I said. “We discussed the risks, you considered my advice very carefully and then you made your own decision.”

A rep’s judgment should never in itself become a substitute for your own judgment. As between the rep and you, you alone will likely have to live with the consequences.

Most big decisions in this business (and in life) are a crap shoot; there’s rarely a bright line to follow. However, there are a few things you can do to increase the odds in your favor.

1.     Surround yourself with smart people of good will (that’s by far the hardest part). Look up the word “supportive.” It doesn’t mean working with reps who are yes men and it doesn’t mean silencing their dissent. However, it does mean ensuring that your reps are acting in your – not in their or someone else’s – best interests. See e.g., Iago in “Othello” or more apropos, Sammy in “What Makes Sammy Run?”

2.     Actively seek out your reps’ counsel. Don’t assume their silence means that they approve. They might just be inattentive, lazy or misunderstand their role in the decision making process.  If so, go back to step #1. Consider the risks, benefits and alternatives that they provide (as well as your own take).

3.     Then and only then make up your own mind.

And if you screw up against your reps’ best advice, that’s OK. Everyone screws up at some point.  But your reps better still be there for you to help clean up the mess.  That, and their good counsel is what you pay them for.

Of course, if anyone doubts that, just tell them I told you so.

Smart Money vs. Dumb Money

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One of my web start-up clients recently extolled the virtues of smart money over dumb money.

My client asserted that smart money is the best way to grow a start-up. In addition to capital, smart money may provide infrastructure, personnel and the input of boards of directors and advisers. These boards provide additional expertise and guidance. Moreover the optics or perception of their association with the start-up increases the venture’s curb appeal and chances for success.

Dumb money, he cautioned, isn’t pejorative; it merely describes a cash investment with little or no oversight of the actual use of the funds other than initial approval of certain elements, cash flow and the overall budget.

To be fair, it’s like comparing apples and oranges. Smart and dumb money deals are structured in different ways to address different risks and expected returns of very different investors. Nevertheless, I was struck by the disparate thinking of movie producers and start-up entrepreneurs; film financiers and venture capitalists in their capital preferences.

My start up client preferred working with smart money from VC investors because he could leverage greater resources into the growth of his company than he could with the same amount of dumb money.

I explained that smart money is anathema to movie people unless it comes with distribution and even then, they’re never thrilled with an investor armed with approval rights over talent, budget and distribution. Dumb money shuts up and stays out of the way.

That said, we both agreed that if an investor offers up smart money, dumb money or any other kind of money, take it (provided it’s legal).

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

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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.