Hollywood lawyers dominate the industry as it faces new challenges

It doesn’t take a team of lawyers to see how much the entertainment industry has changed in just a few years, but they’re probably some of the best at helping figure out how to navigate it.

Studios closed, consolidated or bought out their competitors. Streaming services have exploded in popularity and expanded their global footprint. And as of 2020, a pandemic has forced virtually everyone to adapt almost overnight to these changes, from producers reacting to filming protocols to consumers demanding more content delivered directly to their homes.

The result: From private arbitration to public battles of will, from landmark cases to boilerplate settlements, lawyers are increasingly shaping the future of the industry.

For John Berlinski, a partner at Kasowitz Benson Torres, one of the companies representing Scarlett Johansson in her 2021 dispute with Disney over her distribution of “Black Widow,” the ongoing challenge has been synchronizing traditional compensation methods with the rise of platforms that use different and often unclear calculations to determine a creator’s value.

“The real value brought by talent was once measured by things like box office receipts in movies or television,
Nielsen’s notes or the longevity of a series”, says Berlinski Variety. “So what a lot of people are dealing with now on the transactional side is how do we appropriately compensate talent for the value they bring to a project when the metrics that we’ve historically used to evaluate that talent’s work change. so spectacularly.”

Lindsay Conner, a partner at O’Melveny & Myers, who also represented Johansson, believes the biggest impact of the pandemic has been accelerating the shift to content consumption on streaming services. “Even though they’re not traditionally grouped with what Hollywood considers ‘the majors’, the level of content spending by Netflix, Amazon and Apple is massive, and streamers are interested in creating and licensing content as diverse thematically as it is culturally,” Conner says.

“It’s blurred the boundaries of film and TV, and where they’re exhibited and consumed is less bound by rules and windows than at any point in the last century,” he adds. . “And the huge changes in our business really emphasize that lawyers stay ahead of the game when it comes to negotiations and follow the market to prepare for what’s next.” »

Michael Gendler of the law firm Gendler & Kelly negotiated on behalf of Shonda Rhimes, Alex Kurtzman and David E. Kelley. He says the consolidation of media companies, even as they develop their own streaming services to acquire and create content, has dramatically changed the revenue generated even by industry standard bearers like his clients. “Old-school backend offerings [worked] where something was on the network and then sold overseas, then everything else after that, you could renegotiate your network licensing fees and reap huge bucks,” Gendler says. “But that market is gone, or has been so diminished that it’s considered gone.”

Ziffren Brittenham managing partner Cliff Gilbert-Lurie, a longtime representative of formidable TV impresario Dick Wolf, observes that this consolidation creates a bifurcation of haves and have-nots between Hollywood stars and everyone else. “As you consolidate, you’d think you’d be left with the strongest companies that have the financial resources to land the most aggressive, lucrative deals with the top talent creating the shows that attract and retain. customers. But when you drop below the A players, it probably won’t be as lucrative for everyone,” says Gilbert-Lurie. “Like in the movie business, 3-5% of the top talent in the industry probably eats up 80% of the economy, and I expect that to happen in the TV streaming business.”

He adds: “If a fixed-term contract does not work, it will not be renewed. And if they work, they will be renewed – but that will leave less money for others.

Gordon Bobb, who in January was elevated to associate at Del Shaw Moonves Tanaka Finkelstein Lezcano Bobb & Dang, says adjustments made by networks, studios and streamers are keeping pay rates similar at the start of a contract, but at the cost of lower revenue streams that creators have traditionally relied on. “I think there’s a nominal attempt to increase the initial compensation, but not enough to compensate for the lost revenue or potentially lost revenue for moving away from the traditional theatrical release model,” says Bobb. “This is compounded by the fact that these streaming services take all rights in perpetuity, worldwide, so there is no potential for future exploitation of these properties which would generate additional revenue for the talent. .”

Hollywood accounting has always been notoriously opaque when evaluating the success of a project. Although countless costs are spent on development, production, promotion, distribution, etc., it nevertheless sometimes seems difficult to understand how a film or series could make hundreds of millions of dollars publicly without for so much to generate profit. Unsurprisingly, the transparency of studios and especially streaming services remains an essentially theoretical concept, or one that for creators is framed by quotation marks. “I think these are still very well-kept secrets,” Berlinski says. “But I think on a selective basis, when it’s in their interests or they think it’s in their interests, I think they’re releasing more of that information.”

Bobb adds, “I know that in certain situations where they want to communicate success to a client, they will kind of open the kimono, or when they want to justify not going ahead with something, they will share that information. . But I don’t think streaming services in general are now fully transparent with their creative partners.

Then there is the international factor. While shows like “Squid Game” and “Money Heist” have provided a very public boon of viewership, and therefore revenue, for Netflix, Gendler says they’re just the tip of a much larger iceberg. big in terms of an industry-wide push for non-domestic content. “Two things are happening. The first is that some people think we’re reaching a saturation point for streaming here, which may or may not be true,” Gendler says. “But certainly in terms of growing these businesses, everyone is looking for subscribers outside of the United States. So there’s going to be, I think, more foreign content, not just coming to our country, which wasn’t so common before, which is wildly successful… but also more foreign language content funded by the same companies that we go for our domestic customers.

Regardless of these changes in how content is created, paid for and presented, Bobb says the one thing that remains the same is the consumer appeal of proven talent. “I still think it’s a star-driven business, whether it’s on camera or behind the camera,” he says. “There’s an abundance of content out there, but you have to get out of the clutter and so I think the trend is for streamers to go to creators who have a name and a following, who are going to be able to drive subscribers. .”

While the cases these attorneys negotiate sometimes reach contentious ground in the court of public opinion, Berlinski says he tells his clients to stay as civil as possible. “Most of my clients want to be treated fairly. Most of them aren’t looking for a bargain,” he says. “Most of them say, ‘Hey listen, I contracted to get X dollars in success and now someone’s trying to manipulate things behind the scenes so I get less than I got for. contracted.

Berlinski believes most people don’t want to be in litigation. “I tend to advise them to do everything possible to avoid litigation, even if that’s what I do,” he says. “But I also think that if people feel like they’ve been treated fairly, and if people are upfront with each other…there’s no reason why litigation shouldn’t be a way out. ‘come to an end, begin or continue a fruitful relationship with the opposing party’.

Despite the power and authority that entertainment lawyers wield on behalf of their clients, Gilbert-Lurie echoes a sentiment shared by his colleagues that their ultimate goal is to provide resolution and stability no matter what changes. coming. “You are the person who is meant to be wise and thoughtful in a world of constant change and upheaval,” he says. “You have to be that rock in that river of rushed offers, rushed information, rushed change. Clients decide what they want to write or what movies or TV shows they want to be in. And I just have to make the best of it for them as a calm voice of reason, and honest reflection and advice.

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