Drones, online streaming services present new challenges for entertainment lawyers

LOS ANGELES — The entertainment business is changing faster than ever and that means new things to look out for. Drones being used for filming. Online streaming services like Netflix and Hulu. Those were some of the highlights from the 2015 USC Gould School of Law’s Institute on Entertainment Law and Business held on Saturday.

The first panel I attended was titled: “From Webisodes to House of Cards: Negotiating for Talent in the Made-for-Internet World.” It was about multi-billion dollar internet companies like Amazon, YouTube and Hulu purchasing original content for their platforms.

Mike Farah is the president of Funny or Die Productions. In 2011, he produced a comedy film called “Answer This” on the University of Michigan central campus in Ann Arbor. In 2014, he won a Primetime Emmy for his work as executive producer of Between Two Ferns with Zach Galifianakis: President Obama. 

“At panels like this, we give talent complete creative control,” he explained. The audience laughed. “For us its kind of a perfect world. We have the mindset of protecting talent. It’s a good time to be making stuff where you can decide where it goes. We’re actually fortunate because most of the people don’t remember the shows and deals. It’s a very collaborative. So many talented people are used to hearing no over and over again. What we’ve been able to do is say yes more than anyone else. From that, just grow organically. If you have a hit, it can change your career. Dawson’s Creek–people definitely remember that show.

Farah was asked about James David Van Der Beek. “James is a great guy. We nave five videos with him. We premiered one each day and called it Van Der Week. It led to him being cast in his first comedy, Don’t Trust the B—- in Apartment 23. Now you just want people to see stuff. It’s not just about tuning into Fox at 8 o’clock. We always bet on the talent not the platform. Keep that long view. Eventually these things work out.”

Philip Matthys is the head of business affairs of original series at Hulu. His job is negotiating all development and production deals for Hulu’s original programming. Prior to that, he spent 13 years at various roles at NBCUniversal.

“We’re starting to see a little bit of a shift,” Matthys said. “If your starting with Hulu, you’re getting a bigger license fee up front. It’s all kind of a balancing act between what’s paid up front and what’s left for later. More rights up front and figuring out monetization later. We’re not stuck to any particular windows or launch periods. For us, that’s easy, we’re not fitting in a slot. We’re not checking the ratings at 5 a.m. We’re worried about talent and the subscribers we have. I think it opens up more creative freedom and enjoyment. Our goal is to get more people to subscribe to our service. You have to have content that exclusive that you can’t find anywhere else. We’re aggressively ramping up at Hulu trying to buy the best shows we can to boost our subscriber numbers.”

Jonathan Moonves is a senior partner at Del, Shaw, Moones, Tanaka Finkelstein & Lezcano. He negotiated what is considered to be the biggest deal ever for an actor: Getting Ray Romano a reported $2.2 million per episode fee for “Everybody Loves Raymond.” Later on, Moonves served on the Obama Entertainment Advisory Council.

Now they are battling you on multiple fronts,” Moonves explained. “The studios in the digital era are working at how they can keep prices down for their talent for their writers. At the same time, they are saying they want the same exclusivity. That is the challenge now. A lot of competing interests. With as little info given to talent while they are negotiating.  My thing is we still don’t know the value of that show to the studio and to the network. It goes beyond the advertising revenues that are coming in. whether it helps launch other shows or not.

“What we don’t yet know is for some of the key shows, how are important are those shows to those networks? If they do as a talent rep, you’ve got them where you want.  Make sure you spend the time instead of funneling through Hollywood. The next shift I think we’re going to see is much of their original content will be owned by them instead of licensed to them. If they own it and control it, it will be different.”

"From Webisodes to House of Cards" panel discussion. From left to right: Mike Farah, Philip Matthys, Jonathan Moones, Sandra Stern, Amy Weiss and moderator C.J. Vranca. (Photo by Jason Rzucidlo/AmericaJR.com)

Sandra Stern is the president of Lionsgate Television Group. She manages the company’s television operations, which includes more than 30 shows on 20 different networks. Stern was instrumental in paving the way for successes such as Orange is the New Black, the new Charlie Sheen comedy Anger Management and the acclaimed comedy Nurse Jackie.

“Lionsgate takes a portfolio approach to production,” she said. “You are always trading up upfront money to downstream money. What is the best home for a particular peace of property? We have a strong piece of development based on a film that we’ve done. Netflix felt like a very good home. When we look at Deadbeat for instance, Hulu was best. Deadbeat had a young hip feel. It didn’t belong on network television. The budget was about 20 percent of the most recent show we launched on Hulu, Casual.

“Where is it most likely to get on the air? Where is it most likely to find an audience? How do we monetize? It kind of doesn’t matter what your budget is. When I look at Nashville on ABC, I’ve been able to sell it internationally in syndication to a cable buyer and on video sale. I’m able to take advantage of different revenue streams. Mad Men doesn’t do anything close to How I Met Your Mother. When Mad About You dropped from a 24-point share, we panicked. Twelve million viewers on a night is a big hit. So the metrics are completely different. You’re not seeing a whole lot of sitcoms today. The economics just don’t parallel. The world is a whole different place.”

Amy Weiss is in charge of business affairs at Brillstein Entertainment Partners. Her clients include Eva Longoria, Orlando Bloom, Maria Shriver, Rob Lowe, Brad Pitt, and Courteney Cox. Earlier in her career, she worked at ABC Studios and Sony Television.

“One of the things we are talking about is the economics,” Weiss explained. “Sometimes decisions are made purely for entertainment reasons. With places like Netflix, we will get them to pay a premium in a talent deal. That’s when Netflix owns the show, they produce it they own it. Therefore there isn’t room for a home run hit like Friends. It continues to be worth millions and millions of dollars on an annual basis. Netflix is trying to expand its business overseas. They paid a lot of money to have marquee talent on Netflix. To quote Bob Dylan, ‘The Times They Are a-Changin.’ Ratings are just one factor in determining whether or not a show is successful. In the old days, you would have two years to prove a show. Now a days, they will cancel a show after two or three episodes.”

Seth Shapiro gave a great talk on "What is TV?" (Photo by Jason Rzucidlo/AmericaJR.com)
Seth Shapiro gave a great talk on “What is TV?” (Photo by Jason Rzucidlo/AmericaJR.com)

Next, I listened to the panel discussion called “What is TV? From Three Networks to an Ever-Expanding Universe.” It made the argument that free, ad-supported television is on the way out in favor of paid, commerical-free programming.

Seth Shaprio is an adjunct professor at the USC School of Cinematic Arts. He was responsible for launching TiVo by DIRECTV, the world’s first major DVR platform during his time as head of production at DIRECTV Advanced Services. Shapiro is a two-time Emmy Award winner and a leading advisor and speaker on innovation, media and technology.

“In many industries like the big three automakers, there was some arrogance that creeped in,” he said. “Just because TV is free doesn’t mean it has to be. We moved from limited choice to a whole lot of choice. A valuable small audience is really really good. The revenue is now driven by subscription. Narrow means broad. By in large, there are often programs not designed to reach everybody. The ratings of top shows are going down. The number of choices people have are going up up and up. Digital is disruptive because it unshackles supply.

“We’ve solidly left that cable age and moved into the broadband age. These will drive the structure of media for the next five years at least. A lot of it has to do with demographic shift. A new technology and business model became powerful Netflix more than 42 million subscribers. Hulu is also in the top five. DVD questions about a durable format. DVR same thing. The Super Bowl is our biggest television event. It was offered online and it crossed a billion views. Generational consumption trends never reverse. It just doesn’t happen.”

Finally, I wrapped up my day by attending the “Avoiding Liability: 101 Ways to Not Get Sued” panel discussion. It dealt with commonly overlooked risks and insurance that covers reality TV and independent films.

“Today, we are talking in fictional television,” said moderator Deborah Henderson, a general counsel at Zodiak USA. “A bear hunting show in the woods of the northern United States. They are going to cross the border into Canada. They will use helicopters to get into remote locations. How do you prepare for something like this?”

"Avoiding Liability" panel. From left to right: Moderator Deborah A. Henderson, Marlo Lyons, Brian M. Kingman and Jeff Egan. (Photo by Jason Rzucidlo/AmericaJR.com)

Jeff Egan is the vice president of feature production safety at Warner Bros. Studio Facilities. He is in charge of the environmental, health and safety aspects for all of WB’s domestic and international feature productions. Prior to that, he worked for Turner Broadcasting and oversaw productions or New Line Cinema, TNT and TBS.

“My first concern is definitely the helicopters,” Egan explained. “There have been 13 deaths with helicopters. One of the big ones was in Argentina with a reality show. They lost 10 people at one time. Are we doing shooting on a helicopter or just shuttling? We’ll end up hiring two pilots.

“Drones are so trendy. In September of last year they became approved for the entertainment industry. The FAA told the drone operators that you need the same kind of manual. Everybody is copying the same manuals. The drone companies are not as cheap as producers thought they were going to be. It’s about $11,000 per day while a helicopter is $20,000 per day. A little bit trendy. So far, we’ve only used five drones since September of last year. The city of Los Angeles has enacted privacy laws with drones.”

Brian M. Kingman is the managing director of Gallagher Entertainment at Arthur J. Gallagher & Co. His career in entertainment insurance has spanned 35 years. Kingman has worked with most of the major studios, independent production and distribution companies, music labels, sports teams and venues.

“It’s critical to have all of your paperwork in order,” Kingman said. “The insurance industry is confused about drones. We’ve taken the decision that they are aircraft. Weather insurance should be considered. what’s at risk and you can’t work? Does it dissolve do you have a plan B? A broker doesn’t take premiums. Their job is to identify risks and recommend coverage. Scripted you have a storyboard, script, budget and underwriters. On unscripted, reality-based TV programming their concern is they don’t have a clue as to what could happen. I would try to figure out all of the safeguards. Liability insurance is the biggest concern. The first season is probably the toughest to insure. nobody knows whats going to happen.”

Marlo Lyons is the vice president  of the Business & Legal Affairs Production Risk Team at Viacom Media Networks. She identifies legal and media risks and advises on more than 1,000 projects annually across Viacom’s linear, digital, mobile and social platforms.  Prior to that, she managed the Diligence department in Legal Affairs at NBCUniversal for six years.

KODAK Digital Still Camera

“I’m going to pretend this is a docu-soap,” Lyons explained. “The first thing I would ask is how are we casting this? I want to look at those notices to make sure they are not discriminating. The next thing I would look at is lets background check them. Make sure that there are no sex offenders. Shockingly, there are sex offenders that get on set. For minors, most of those records are sealed. You could check their Facebook pages. Last week alone I had one sex offender who tried to get one my kid show sets.

“There are specific entertainment laws for children. California, New York, Michigan, point the camera, permit the kid. How do you pay these people? If you pay hourly, they are basically employees or pay per episode. It’s definitely a bad fact by court. We try to pay them an appearance fee or a rights fee. When you go into Canada, there’s a couple of things that come into play. Make sure that your crew has been  FCPA [Foreign Corrupt Practices Act] trained so they understand who not to bribe. How to get them in. Look into visas. It’s tougher to get into Canada. Immigration is a big issue.”

Check back in a few days for my feature story on keynote speaker Norman Lear. The television legend made a lot of interesting remarks at the USC Institute on Entertainment Law and Business.

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