Category Archives: Notable

“Drinking From The Trough Of Distrust”

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That’s what I said as I cautioned the rep on the other side of recent negotiations unrelated to the WGA strike talks. I was sharing my very real concern that our negotiations were polarizing our respective clients and actually making it harder, if not impossible for us to close a deal.

Strike negotiators for both sides are well advised to conduct themselves accordingly. Dave McNary wrote in Variety that talks tanked late on Friday “after two weeks of bitter and unproductive negotiations” with no real sign of when or whether they will continue any time soon. Sounds pretty grim but maybe a holiday hiatus from hostilities (and several good nights’ of sleep, I suspect) will make for more productive negotiations. For a thorough breakdown of the issues, check here and here.

Prior to Friday’s “cratering,” Robert King, a member of the WGA Negotiating Committee, blogged prosaic on the state of negotiations and the current mindset of the parties this way:

Part of the problem of negotiations—and especially this negotiation—is that both sides tend to interpret the contractual proposals and counter-proposals in one way: as an attempt to fuck them. This is complicated by the fact that sometimes management’s proposals are designed to do exactly that; and sometimes they aren’t designed to do that, but might be used later by less enlightened souls to do that.

So dialogue, in a smaller room, with fewer people, and less of the theatrics of negotiations, allows everyone to discover what wasn’t designed to fuck; or was designed to protect against being fucked by someone else and has only the appearance of a personal fuck; what was inelegantly put; what has unintended consequences, etc. It’s also a place where language can be designed that satisfies everyone’s fears of being fucked.

In other words, sometimes there is the illusion of being farther apart than we actually are; and smaller side bar dialogue helps us discover if that’s indeed the case.

And then again there is just plain old being far apart.

Hopefully, this breather will allow cooler heads to prevail at the negotiating table. The studios and networks will start feeling the pinch from dwindling project reserves and the first stirrings of pilot season. By mid January, mounting financial pressures from holiday purchases and the lack of work will compel writers to return to the bargaining table. Maybe then, the parties will find creative ways to resolve the issues amicably and resourcefully.

And then again there is just plain old being too far apart.

Advertisers Now Investing In Indy Films

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The Los Angeles Times
and Tim Swanson’s blog reported earlier this month about Inferno Distribution’s recent financing of “The Women” starring Annette Benning, Meg Ryan, Eva Mendes, Jada Pinkett Smith and Candice Bergen. I’ve worked with Bill and Jim at Inferno before, and they can be very resourceful when it comes to financing their pictures.

Inferno financed about $3 million of a reported $15 million budget with an advertiser buy-in from Unilever/Dove. In exchange, Dove will share in profits at cash break-even on the negative cost of the picture (presumably, with some fees payable to Inferno and distributors off the top).

Similarly, Gatorade reportedly invested about $3 million in “Gracie,” a picture about girls soccer, making it possible for the producer to acquire an additional $7 million in financing from a hedge fund. In a deal that apparently proves that producing credits are the coin of the realm – even outside the entertainment business – Gatorade execs received three producing credits in exchange for Gatorade’s investment but neither they nor Gatorade are entitled to receive any back end.

Swanson’s blog reported that neither company demanded product placement for their investment though apparently both advertisers will receive it anyway. The girls in “Gracie” reportedly drink Gatorade on screen. Diane English, director of “The Women” is quoted in both pieces as looking for ways to incorporate the Dove brand “seamlessly.” (Funny, doesn’t the placement of product in the picture make these deals run of the mill product placement deals?) In both “Gracie” and “The Women,” advertisers are leveraging content that reflects well on their product or ties in a like-minded demographic audience to their product with the picture. Given advertising budgets in the hundreds of millions (billions?) of dollars, an investment in an smaller budgeted, independent picture is a drop in the bucket for many advertisers.

Product placement and sponsorship are nothing new to the entertainment business and have been around even longer than motion pictures. What is new, is advertiser focus on smaller, independent pictures. Still, this seems to be more flash than substance since there is no business bang from advertiser investment in pictures without significant domestic (read: theatrical) distribution. In other words, independent producers without distribution (aka consumer reach) need not apply.

The Importance Of A US Theatrical Release

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I was catching up on my reading and caught this from one of Anne Thomson’s blog entries she wrote from Cannes last week. Thompson wrote that “[v]ideo drives everything. I know I’m supposed to already know this, but it really drives it home when you hear the would-be buyers discussing the way they put these deals together. They do crunch the numbers and when video doesn’t crunch for a black and white or foreign title, it doesn’t make people comfortable, no matter how much they love a movie.”

While I agree that video accounts for a substantial portion of the gross on pictures and I am sure that Anne and the people she speaks with know their stuff, video is (and has been) imploding in very much the way the music business is getting whacked with CD sales though for different reasons. Video is down because there is a great deal of content out there with no distribution – lots of supply vs. demand. CD sales reportedly have gone in the toilet due to online access to tunes though I understand there are other reasons for this as well.

The best way to maximize foreign sales – and increase the likelihood of covering a picture’s budget – is with a US theatrical release. If a client is trying to sell the foreign rights for a movie about paint drying or a smart, material-driven movie and the paint drying movie has a guaranteed US theatrical release, the buyers will usually if not always take the former over the latter.

Why this is so probably has more to do with the credibility Hollywood has over the movie going public the world over than the quality of the material. Higher movie revenues in foreign territories are generated by the consumer’s preference for titles released theatrically in the US. Back in the day, a producer could four-wall his movie and call it a US theatrical release to satisfy the conditions of a foreign sale. But foreign buyers won’t accept anything less than a genuine commitment from a distributor – even with a platform deal – to theatrically release the picture in the US.

The Negotiation Culture: When Is It OK To Lie?

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A literary agent recently lied to me during a negotiation. Anyone who negotiates for a living; indeed, anyone with any meaningful time in the business might find that unremarkable. But the truth is, the entertainment business, like many businesses, is built on trust. It’s ironic then that no one would be surprised by my complaint even though everyone knows that trust is the currency of the realm.

Without trust between the parties and between their representatives “the deal won’t make.” So in every negotiation between reps in the business or kids on the playground, there is an implied agreement to negotiate in good faith regardless of the leverage you have in the deal. The law makes this assumption in many jurisdictions as well. Sure, hard ball negotiations and bluffing are fair game but even reps have a common code of conduct without which the whole idea of deal making would not be possible.

The deal closed last year and my client, let’s call him “Producer,” wanted to renegotiate some of the terms before the option lapsed. However, time was running out and, barring renegotiations, Producer needed to come up with some serious coin to pay Writer or risk losing control of the screenplay.

The agent, a young turk in his 20’s (let’s call him “Agent”), went out of his way to protect his client the “Writer.” This impressed me (my client, not so much) because even though Agent was creating greater difficulties for us, no one could blame Agent for doing right by Writer. Too many agents when faced with the choice of being loyal to the deal or to the client, pick the deal. It never occurred to me that he might not want the deal at all because AGENT WAS NEGOTIATING WITH ME; even giving me more time past the option payment deadline to renegotiate the deal.

Negotiations continued over several days and Agent agreed to the new terms subject to Writer’s approval. Agent PROMISED to get back to me no later than 5 pm. It was the last day of the extended deadline and even though I technically had until 11:59:59 that night, it was a Friday and for all practical purposes, the deadline was really “the end of business” that day. Agent was in New York so a 5 pm deadline there would still give my Producer in LA time to strategize if things went sideways; which of course, they did.

No call at 5 pm New York time (no big shock).

I followed up at 5:30 but Agent’s assistant told me Agent was in a meeting and could not come to the phone. I emphasized the importance of hearing back from Agent ASAP.

I followed up at 6:30 and got Agent’s voice mail. Apparently, Agent had left for the day without the courtesy of calling me back (how do these guys make a living on banker’s hours?) . I called Agent’s cell phone and left what can only be diplomatically described as a “terse” message on his voice mail.

I updated Producer and discussed the possibility that Agent was ACTUALLY DUCKING me. Agent was young and inexperienced so maybe he wasn’t ducking; maybe he was just flaking on me. An interesting but still unacceptable alternative. Ducking me was dumb because it exposed Agent, his agency and Writer to a possible law suit for acting in bad faith, among other things. Flaking on me on the other hand, was merely unprofessional and rude.

I called Agent’s cell phone several more times; the last time time my call went straight to voice mail without ringing at all. When a call goes to voice mail without ringing you know that the person you’re calling turned their phone off. This meant that Agent was picking up my messages or at least knew I was calling him – a lot.

After several more confidential discussions, Producer decided to pay Writer and drove over to the agency with check in hand (not an easy task during a Friday rush hour in LA).

Later that evening, Agent copied me on an email to Producer in which he acknowledged that he had, indeed, been ducking me. I responded by text message that the only thing that anyone has in this business is their integrity and Agent lost his so easily, so carelessly and so soon in his career. His response is irrelevant but predictable.

If the Agent wanted Producer to comply with the original terms of the agreement or even move on without Producer, the better course would have been for Agent to simply demand the original option payment by the end of the day or threaten to walk from the deal.

It’s hardball but at least I could trust him to do what he said he was going to do.