AFM Guerrilla Guide for 2017

AFM Guerrilla Guide for 2017

Question for FilmTVLaw.com:

Thanks for your great blog. I am coming down to Los Angeles next week for AFM. I have a television series pilot that I shot and edited late last year. What do I need to do to sell my project at the market this year?

Answer by Brandon Blake, Entertainment Lawyer:

Great and timely question about AFM. Note that I will be on site at AFM Office 310 this year with my production company Saturn Harvest, LLC from November 1 – 5 so feel free to stop by for a moment to talk. Even with this short notice there are some things that you can do to get market attention at AFM. I have represented more than 50 feature film and television series over the last 17 years and regularly consult on film distribution for clients so I have picked up a few tricks over the years. Find out more about me at www.filmtvlaw.com.

The following is a guerrilla guide to making the most of AFM at the last minute. A lot of these points are also great ideas for preparation for other markets. The major markets to hit during the year include Berlin, Hong Kong Filmart, Cannes, Toronto, Busan and of course AFM, so these tips can come in handy all year round.

1. ONLY BUY THE PASS YOU NEED

If you hurry you can still get a little discount off of the cost of a pass. AFM is strategically held over a weekend this year, so you can’t go wrong with Saturday and Sunday. You can usually write off the last two days of the market, unless you like to look at piles of empty boxes and empty booths. Most conferences and screenings are a distraction, so just plan around your meetings. 

2. PLAN, PLAN, PLAN

Get a map to the market floor. The layout of the AFM is a complete mess, so figure out where all the offices are before you go. Don’t get caught studying your market guide Saturday morning when you should be selling your project. Spend every day between now and November 2nd scheduling meetings.

3. GO DIGITAL

The days of 50 pound boxes of press kits are thankfully over. Keep the printed, bound, and laminated items to a minimum. Today people expect to get one powerful image that will drive viewers to an excellent website, online screener and social media presence. My firm can consult on how to maximize marketing and promotion strategies.

4. GO PROFESSIONAL

Less but higher quality marketing materials is the key. Usually film and television producers spend all their time on the footage, and none of the time on the marketing. But the first thing buyers see is the marketing material! Marketing sells movies. That is true for big budget feature films and SAG Ultra Low Budget projects too.

5. SOCIAL MEDIA MATTERS

Yes, it’s official. The fan base for a movie matters. Cast, marketing, and concept all come together to either produce a great social media presence, or not. So make sure the social media campaign is as professional as the website and graphics.

6. FIVE SECOND RULE

Be able to explain why the movie is awesome and deserves a view in five seconds. Literally, that is how long you have to sell a buyer on your movie. Do not expect a movie to speak for itself. The movie cannot sell without eyeballs to watch it, and the only way to get that valuable eyeball time is to make the film or television project irresistible within five seconds.

7. THE MARKET IS JUST THE BEGINNING

No matter how many introductions you make at the market, the market is just the beginning. Film sales is about follow up. Keep the conversation going.

Feel free to contact my office about distribution and market consulting. From marketing, to negotiation of sales and distribution agreements, I have been representing filmmakers at markets for 17 years. 

As with any entertainment matter, please do not make a decision about complex issues without consulting an experienced entertainment lawyer first. Feel free to contact my office at www.filmtvlaw.com about a quote.

- By Brandon Blake, Entertainment Lawyer

Four Methods of Independent Finance

Four Methods of Independent Finance

Question For FilmTVLaw.com:

I would like to get investors for my television pilot. Should I try crowdfunding? Can I set up a non-profit for donations? What about selling stock in my company? Can a television series get a business loan too?

Answer by Brandon Blake, Entertainment Lawyer:

Great questions. There are so many choices in indie finance today, and all of them can be successful. There is no one best way to tap into independent financing, but there are some things to consider that can move you in the right direction when it comes to film and television finance. Below I am going to discuss the benefits of crowdfunding, non-profits, securities offerings, and business loans. Please also check out my other articles that I publish twice a month about all things entertainment, on my entertainment legal blog at www.filmtvlaw.com/entertainment-lawyer-qa/

CROWDFUNDING

Crowdfunding can be a viable option for independent financing, although none of the crowdfunding sites will generate donations “natively,” meaning that you must bring an existing fanbase to your Kickstarter or Indiegogo site. Before you decide on crowdfunding, go and search for other projects like your own. Don’t search by “Projects We Love”, “Trending”, “Nearly Funded”, etc. These just stack the most successful sites on top, and do not provide a sense for the depth of the number of competing projects. Instead, search by “Everything” and then choose “End Date.” Now you can see the realistic returns for crowdfunded sites without major promotional backing. Lots of “$0” projects, and lots of projects under $1000.00.

The above exercise is not to dissuade anyone from crowdfunding, but you need to keep a couple of things in mind: 1) Know your audience. Make sure you have an existing fanbase, don’t expect Kickstarter or Indiegogo to bring the crowd to you. 2) Make sure your product, subject matter, and genre work for crowdfunding. Some things work incredibly well, are almost guaranteed to raise money. Other projects are going to be one in a million on crowdfunding.

NON-PROFIT FINANCING

Non-profit financing has become increasingly popular for television, documentary and feature film development. Often it is the concept or script that hooks investor interest, rather than a promise of big financial returns. So it makes sense that the tax deductibility of financing is interesting to many potential angel “investors.”


The good news is that with a properly organized tax-exempt organization it is possible to collect tax-exempt donations for a project that is otherwise a “for-profit” venture, provided that the content of the project, whether that is a film, television or music project, fits within the mission statement of the tax-exempt organization and that the finances and control of the non-profit and for-profit entities are kept separate.

However, it is not possible to mix tax-deductibility and a future interest in profits in the same transaction. Tax deductibility and profit are like oil and water, they just do not mix. I have reviewed a number of structures by clients hoping to be able to convert a donation into an investment at a later date, thereby getting the best of both worlds. The problem with this concept is that if the “donation” were re-characterized at a later point, then the deductibility of that donation would retroactively be taken away, creating a true mess for the investor’s accountant. Moreover, in the IRS’ zeal to eliminate tax shelters, any arrangement with a contractual right to profits later would most likely be characterized up front as an investment, not a donation.

Yet our firm has successfully set up many 501(c)(3) tax-exempt organizations that participate in the financing of documentaries, television, and feature film projects. And those projects have gone on to be commercially distributed. The key to the proper use of the non-profit in entertainment finance is to understand that donations can be used to finance any project but that profits cannot flow to the donors.

One huge benefit compared to crowdfunding websites is that a 501(c)3 company allows tax deductibility, so your donors can write off their contribution as a charitable contribution. That is a big deal and crowdfunding does not allow it.

SECURITIES OFFERINGS AND PPMs

Securities offerings are an “old-fashioned” way of raising financing that is becoming a big deal again this year. I have had more clients raise more money through film and television limited offerings than any other technique this year. Just like with any other technique, you still have to “bring the crowd” to your project. But a securities offering allows your investors to meaningfully profit from your success. 

Moreover, when our law firm sets up securities offerings, these are not “your fathers” securities offerings. There have been a lot of innovations in the last few years which allow more flexible structures that protect your investors capital and get them excited about investing in film and television. Gross profits, net profits, recoupable development funds, and many other ways to make investors comfortable about a securities offering.

SMALL BUSINESS LOANS (SBA LOANS)

Finally, you asked about loans, and yes, I am seeing more and more clients funding projects through small business loans. In fact, the Small Business Administration (SBA) approved loans for film and television productions more than a decade ago, and just in the past year the terms have become much more relaxed. The SBA finally recognizes that independent film and television production is a viable small business. 

However, remember that SBA loans still require collateral, and also a loan must be repaid. When I work with clients who have chosen loan financing, I focus extensively on distribution and festival planning, to help lessen the risks associated with loss on the film. Proper planning can make loan financing a safe and convenient way to finance an independent television or film project.

As with any entertainment matter, please do not make a decision about complex issues without consulting our experienced entertainment law firm first. Contact my office at www.filmtvlaw.com about a quote.

- By Brandon Blake, Entertainment Lawyer

Protecting Television Pitch Materials

Protecting Television Pitch Materials

Question For FilmTVLaw.com:

I’m an independent producer and want to pitch my series to contacts at a couple of networks that I have acquired over the years, but I am concerned about how best to present and protect my concept. What kind of materials should I have, and how do I protect myself from getting ripped off.

Answer by Brandon Blake, Entertainment Lawyer:

Great question. This goes to the heart of many issues surrounding protecting projects and ideas, and how to submit film and television projects. Having worked with most of the major studios and television networks, I have gained a good perspective on what materials to send and how to protect it. Please also see my Entertainment Lawyer Question and Answer Forum at www.filmtvlaw.com, for more in depth advice that I publish twice a month.

While the question here involves a television series, the answer is going to be equally applicable to feature film as well. When it comes to television development, the key to both presenting and protecting the project properly is to have the project as well developed as possible. That means that it is better to have a script than a treatment. It is better to have a polished script than a rough draft script. It is even better to have prepared pitch materials like posters and websites, than to have just a script, etc.

Finally, the best position to be in with Networks is to also have a-list performers attached to the project, because that will tend to get the attention of development executives. If studios know that performers, and their agents and managers like the project, then it means the executives are taking less of a chance on choosing the material over the tens-of-thousands of other scripts submitted every year.

But what about the situation where there is a great concept but it has not been written in script format, much less packaged? I have had clients in this position before and it generally revolves around true-life stories and events. There are times when a concept is so good that it can speak for itself. In such a situation, the producer needs to make sure that all the underlying rights to the project are secured before pitching it. When you do not have well developed intellectual property, so that copyright protection might be limited, you then must secure the rights to the material by contract law.

The copyright law is set up to protect “tangible forms of expression,” and right or wrong, the courts have interpreted that as meaning that mere ideas are not copyrightable. Where an idea ends and a treatment begins is a source of controversy, but no producer wants to be in court arguing why the idea pitched was more than an idea.

This copyright issue is also why most networks will not accept the submission of ideas in the first place. From their perspective, another “teen comedy” or “Alaska reality series” idea is not going to be so unique as to differentiate it from thousands of other produced films or projects in development, but could get the studio in a lot of legal trouble if someone later claims their concept was stolen.

For security, submission of a project through our entertainment law firm is the number one way to protect your intellectual property. Networks and studios understand that our law firm saves all correspondence and materials, and understands that a record of the submission and chain-of-title will be secured by or firm, making stealing a concept or idea a non-issue.

When it comes to what to submit, I have learned a few things about the types of materials that studios and networks are looking for from producers over the past 17 years in practice. The key is top quality material, whether it is a treatment, screenplay, series pitch, pilot or trailer. The rule of thumb is to never ask the development executives to imagine how good the project will be with their help. Demonstrate the ability to finish the job, which will go a long way to getting the financing and assistance needed.

As with any entertainment matter, please do not make a decision about complex issues without consulting an experienced entertainment lawyer first. Feel free to contact my office at www.filmtvlaw.com about a quote.

- By Brandon Blake, Entertainment Lawyer

Release Agreements for Films and Television Series

Release Agreements for Films and Television Series

Question For FilmTVLaw.com:

For a fiction feature film/ television series: How identifiable do people on the street (not in the cast) have to be to require signed releases?

Answer by Brandon Blake, Entertainment Lawyer:

Over the years I have gotten more questions about releases than almost any other type of contract. In responding to questions about releases, first I like to discuss how to define a release, second, where the legal basis for a release comes from, and third, I will comment on when a release of some kind is usually used.

At the most basic level all contracts are the same. A contract is an agreement between two parties who both want something out of the relationship. There is the concept of “consideration”, meaning both sides are getting something of value out of the arrangement. Generally courts hold there must be consideration on both sides to enforce an agreement. 

So what is the releasing party getting out of the release? Theoretically, the party signing the release is getting the privilege of being in a film or TV show as some kind of background player. But to the surprise of some producers not everyone wants to appear in a movie or television show. So that is where the legal basis for releases begins. 

The legal requirement for releases comes from a number of different laws. Most basically is the right of privacy. The right of privacy may be codified, as it is in California or New York, or it may be a common law principle. California Civil Code, Section 3344 addresses the rights of privacy and publicity in commercial film and television productions in California.

The right of privacy, as it relates to film and television, states that a person has the right to not have their name, voice or likeness used commercially. In addition to the right of privacy, the torts of defamation and false light are both applicable. When someone is recorded there may be certain facts implied by the production. For example, if a person was filmed outside of a demonstration, that might imply he or she was part of the protest. Finally, the right of publicity disallows use of someone’s name or likeness as an endorsement or ad without consent.

So when is a release required? States like California and New York have made it fairly clear that for commercial film and television productions, a person cannot appear recognizably without prior consent. Other states rely on common law standards, so the laws will vary by state and use. But in general, it is by far the standard that everyone appearing recognizably in a feature film should have signed a release or otherwise clearly expressed consent to being recorded. 

The definition of terms like “commercial” and “recognizable” are unfortunately subject to dispute, and even in states with well-defined Codes, the application to any particular production is difficult. But producers hoping to get their project commercially distributed, and therefore requiring E&O insurance, should error on the side of more documentation and try to get signed releases from just about anyone possible.

As an entertainment law firm, our firm offers a number of packages that can help make it affordable to get the contract and legal help needed on any size of film or television production. Feel free to contact me about how we can help make sure your project has the legal documentation required by distributors and E&O insurance companies.

As with any entertainment matter, please do not make a decision about complex issues without consulting an experienced entertainment lawyer first. Feel free to contact my office at www.filmtvlaw.com about a quote.

- By Brandon Blake, Entertainment Lawyer

Packaging A Television Series Concept

Packaging A Television Series Concept

Question For FilmTVLaw.com:

I read that I should “package” my television series concept before I submit it to networks. What does it mean to “package” a project? Do networks only look at packaged projects?

Answer by Brandon Blake, Entertainment Lawyer:

Thanks for a great question about packaging, which is critical for shopping projects for film and television. Please also see my Entertainment Lawyer Question and Answer Forum at www.filmtvlaw.com, for more in depth and money saving advice that I publish twice a month.

Most simply put a packaged project is a feature film project or a television series in development that has one or more well-known performs attached to the project and possibly also a famous director.  A packaged project is in between the script stage and the pre-production stage. As an entertainment lawyer I have been helping filmmakers and producers package projects for many years.

While many screenwriters feel that a really great pitch package and pilot script will sell itself to a production company or studio, the truth is that the vast majority of projects that a studio or major production company will look at are already packaged projects. This is done for multiple reasons on the studio side, some of which actually make a lot of business sense.

Studios and television networks realize that getting a-list performers attached to a project takes time. Actors and actresses are looking for different things in projects. In general a-list performers want to play heroic parts, or at least parts that the audience will empathize with in the story. They usually want to be portrayed as attractive and they want a good story. If there is little money in the role, such as with an independent film, the actor or actress will want to be associated with a film that has potential for good reviews and a strong festival run. Then there are idiosyncratic traits. I once submitted a project to an actor that had recently decided he only wanted to star in a western. Because the actor had a strong Irish accent, that was a tall order!

Studios and television networks also often want to see that somebody “important” likes the script or concept before they get involved. A studio development executive might be nervous about bringing a script to his or her boss, because maybe the studio president will not like the idea. So if an a-list actor or major director is attached nobody can be blamed if the project fails.  

The documentation of the attachment will vary depending on whether you are producing a feature film or television series. When it comes to television development, especially reality television, the attachment of the performer or celebrity host is even more important and is often the most important single factor.

While agents and managers are often blamed for getting in the way of the development of scripts and television series, I have found in my own practice that the opposite is true. Often agents and managers are quite excited about a variety of projects, and it is actually the talent who really makes the decisions.

When approaching agencies and management companies, most will require that the producer be represented by an agent or an entertainment lawyer, and our firm has represented many producers who have successfully packaged film and television projects.

As with any entertainment matter, please do not make a decision about complex issues without consulting an experienced entertainment lawyer first. Feel free to contact my office at www.filmtvlaw.com about a quote.

- By Brandon Blake, Entertainment Lawyer

Bypassing the "No Unsolicited Materials" Roadblock

Bypassing the "No Unsolicited Materials" Roadblock

Question For FilmTVLaw.com:

I’ve got a terrific television series concept, but when I try to submit the project to television networks, either I get no response, or a form letter about “no unsolicited materials.” I know they will like it if they see it, so how do I get past this roadblock?

Answer by Brandon Blake, Entertainment Lawyer:

There are a number of different rationales for why entertainment companies of all kinds require film producers and television producers to submit new projects through an agent or entertainment lawyer, which range from the practical to the obstructionist.  Please also see my Entertainment Lawyer Question and Answer Forum at www.filmtvlaw.com, for more in depth and money saving advice that I publish twice a month.

For practical purposes, entertainment companies have a legitimate concern about liability. Copyright infringement suits are common, and once an entertainment company has received a pitch for a television series or film production it is going to be potentially more liable for a copyright infringement lawsuit. To reduce this risk, entertainment companies want a trusted third-party to document the pitch. If the film producer or television producer has a well-known agency or an entertainment lawyer submit the project, there is going to be a record of exactly what was submitted, by whom, and when. If a lawsuit ever materializes, there will be a third-party with evidence as to what happened. That is also beneficial for the film producer or television producer.

From a convenience stand point, television networks and film studios have another motive. This rationale is based on understanding what it is like to receive ten to twenty thousand submissions per year from film producers or television producers, looking to get an entertainment project made.  It is a daunting task to review so much material, so television networks and film studios want the agent or entertainment lawyer to do some of the work for them. By requiring submission through an agent or entertainment lawyer, the television network or film studio is making the producer do part of the work, having an experienced entertainment representative review the material and quite probably make suggestions and changes before the materials is submitted.

Finally, the requirement to submit through an agent or entertainment lawyer creates another hurdle to surmount before the material gets reviewed. This reduces the number of submissions as some percentage of television producers and film producers will lack the time and financial resources to obtain an entertainment representative to submit the project.

Rightly or wrongly, agent or entertainment lawyer representation has become a necessity when dealing with the large, bureaucratic media companies today.

As with any entertainment matter, please do not make a decision about complex issues without consulting an experienced entertainment lawyer first. Feel free to contact my office at www.filmtvlaw.com about a quote.

- By Brandon Blake, Entertainment Lawyer

Protecting Film and Television Projects From Theft

Protecting Film and Television Projects From Theft

Question:

How do I comprehensively protect the intellectual property in my film and television projects? I have two feature films I am developing and a TV show that is ready to pitch to networks. I don’t want to start until I know my IP is protected.

Answer by Brandon Blake, Entertainment Lawyer:

Thanks for the important question about how to protect the intellectual property in film and television projects.  Please also see my Entertainment Lawyer Question and Answer Forum at www.filmtvlaw.com, for more in depth and money saving advice that I publish twice a month.

None of our client’s intellectual property rights have ever been stolen, whether that involves film, television, music or high tech projects. However, we are never complacent and always working to make sure that our representation of projects not only connects them to studios, networks and production companies, but also protects the long-term value of the story and underlying rights.

Copyright is certainly important, and can serve as a first step, but it is really important to understand that certain important parts of any media project are not protected by copyright law. For example, the underlying concept and idea of a film or television series is not protectable under US Copyright law. While that might not matter too much when a filmmaker is shopping a completed feature film or submitting a project to film festivals, it becomes really important to film and television development. When it comes to reality television, the problem is especially acute, because a reality television series pitch will be mostly characterized as a concept rather than a tangible form of expression such as a screenplay or a pilot.

So, then there are several ways to protect the rights when copyright does not offer a solution. One of those ways is through contract law. Contract law can fill in when copyright does not protect the project. Especially in television production, everyone involved with the producer on the project must sign a contract dealing with the rights. Most projects are not stolen by networks and studios, but instead by former business partners involved in the early phases of development.

Contract law can also protect the producer when submitting the project for other parties to review the project. However, the producer needs to balance the desire to protect the work, with the ability to get other parties to review the materials. Film and television projects are collaborative works, and you need to bring a lot of people into a production to successfully launch the project. So, non-disclosure agreements are a double-edged sword, which can both help protect a project, and can scare off potential business partners.

Another issue to carefully consider are submission releases, which are essentially the opposite of a non-disclosure agreement. Networks and studios may ask producers to sign submission releases, which essentially contractually specify that the producer will not later sue for infringement. Typically, this can be avoided by having our entertainment law firm representing your project. By submitting the project through a recognized entertainment law firm, the network or studio knows that a record has been made of what was submitted and when it was submitted, thereby protecting both sides in the case of any future dispute.

In addition, trademark can be a way to protect content in a film or television series that is not protected by copyright. However, trademark used in this way is far beyond the sort of service available through online filing services. Our firm specializes in using trademark law to extend the protection available for film and television projects.

As with any entertainment matter, please do not make a decision about complex issues without consulting an experienced entertainment lawyer first. Feel free to contact my office at www.filmtvlaw.com about a quote.

- By Brandon Blake, Entertainment Lawyer

Financing with European Co-Productions

Financing with European Co-Productions

Question For FilmTVLaw.com:

We have a production company here in the US, but our director is German and we want to shoot some locations in Germany. Can we qualify as a co-production in Germany in order to get grants and tax breaks? Any help would be super. 

Answer by Brandon Blake, Entertainment Lawyer:

Foreign film and television financing is more important than ever, so this is a great question.  Please also see my Entertainment Lawyer Question and Answer Forum at www.filmtvlaw.com, for more in depth and money saving advice that I publish twice a month.

In order to answer this question we first need to break down the different types of incentives and financing that can be available for a project shot in Europe. In fact, there are two types of financing that can be available in many E.U. countries. The following is a brief analysis. Clients who retain our firm for development and finance services will receive an in-depth analysis of finance opportunities, including available European co-production eligibility. 

First, there are the tax incentives of which most knowledgeable producers are already aware. Just as in the United States, where various states will offer tax incentives to shoot or complete post-production in that state, such as New Mexico’s 25% incentive or Georgia’s 30% rebate, most European countries offer tax incentives for shooting in that country. These are not E.U. wide, but must be dealt with country-by-country.  Germany offers a 20% federal tax incentive for qualifying co-productions. In addition, most German states also offer tax incentives, which will be in addition to the Federal incentives.

Second, Germany offers a number of other grants, loans and investor tax incentives, which have parallels in other European countries including France and England. These additional incentives can be substantial, and include loans and grants for certain budget level projects. The German investor incentive allows investments in a film or television production to be written off against German taxes. This is not the same as the tax rebates discussed above.

However, all of this requires one key element, a German co-production. Co-production agreements are entered between countries, and provide for arrangements where projects can take advantage of local tax incentives and grants. For Example, Canada has co-production agreements with over 50 nations around the world, including Germany.

But here is the thing, the United States does not have a single co-production agreement with any country in the world, not one. So, to qualify, American film and television producers need to be creative. “The Bourne Supremacy”, “Inglourious Basterds” and “The Grand Budapest Hotel” all received German co-production money, so it is just a matter of dealing with the paperwork and working with the right partners.

What percentage of a film budget can come from State, Federal and European funding? The cap on direct grants and incentives throughout Europe is supposed to be 50%, however, there are exceptions, and this cap does not limit the investor incentives listed above, or third-party companies that can receive various incentives based off being involved in aspects of the production and distribution of the same film.

Here are some case studies, showing how much European money is available:

1)    “The Lobster” with Colin Farrell and Rachel Weisz received 56.7% of the budget from tax credits and subsidies, and 43.3% from territorial pre-sales. It should be mentioned that these presales are related to the co-production status as well.

2)    “A Royal Affair” with Alicia Vikander and Mads Mikkelsen received 40% tax credits and subsities, 23% private equity (tax advantaged), and 37% from pre-sales.

3)    “The Railway Man” with Colin Firth and Nicole Kidman received 50% tax subsidies and 47% presales, with 3% from other sources.

The takeaway from all this is that European co-production money can be very generous, and that the entire European system of finance and distribution revolves around co-productions. For example, nearly all French co-productions end up screening at the prestigious Cannes Film Festival, demonstrating that it is an interdependent system throughout the European distribution market.

With the right project, it is possible to get 100% of the financing through arrangements that in one way or another arise out of European film and television incentives. Unlike in the US, where private loans, private capital or studio financing must always play a part, filmmakers in Europe can cobble together funding entirely based on European government funds. Our firm can help advise as part of our development services for producers.

As with any entertainment matter, please do not make a decision about complex issues without consulting an experienced entertainment lawyer first. Feel free to contact my office at www.filmtvlaw.com about a quote.

- By Brandon Blake, Entertainment Lawyer

Production Tax Tips

Production Tax Tips

Question For FilmTVLaw.com:

Thanks for all the amazing advice on this blog, I always end up sharing the articles with at least one friend! Wanted to find out about the Section 181 tax deduction and whether that is still available, and also about any other tax advice you can give me for my film this year. 

Answer by Brandon Blake, Entertainment Lawyer:

Well this is tax time so it is a great opportunity to discuss tax issues that face film and television productions, including tax incentives, section 181, and how to properly tax plan for your production.  Please also see my Entertainment Lawyer Question and Answer Forum at www.filmtvlaw.com, for more in depth and money saving advice that I publish twice a month.

First off I will address Section 181 of the American Jobs Creation Act, the tax deduction for domestically produced film, television and theater productions. For all our clients who created offerings and qualified productions in 2016, the good news is that those projects will be grandfathered in for this year. The Section 181 tax deduction will be available for investors this year and for next year, provided production stretches into this upcoming year. So there is a reward for planning and foresight.

For 2017 projects, the Section 181 tax deduction has expired, and there is no current evidence that it will be revived this year.

However, that does not affect any of the tax incentives or tax rebates of other states. So, for example, the Georgia tax credit of 30% is still available, the New Mexico refundable tax credit of 25% is still a great option (with no minimum budget, which is a big plus), or the other state tax incentive programs.

Moreover, international tax incentives are still available, and are becoming even more important with the death of Section 181. The UK Film Tax Relief program provides a rebate of up to 25%, the refundable federal tax credit of 16% in Canada is still available, plus available provincial tax incentives in Canada which can double the federal incentive, and other more far flung tax incentives and deals can reach 50% of financing. So there are many opportunities to find a substantial portion of the budget outside of the US. Part of our development service focusses on identifying tax incentives and international funding for projects.  

However, tax planning does not begin and end with tax incentives. Properly setting up the tax structure of your company can save you and your investors substantial money and avoid needless accounting complications. 

For example, choosing the right tax structure for your production company can produce active losses for certain members, thereby making such an investment just as attractive as an investment under Section 181, if not more so, but the arrangement requires careful attention to detail when setting up the company. Filing the production company as a partnership or C-corporation, for example, could derail the very tax advantages that your investors might be looking for when Section 181 is no longer available.Loan out companies are another incredible way to save substantial amounts on personal tax returns. For example, did you know that by properly forming a loan-out company, that a writer, producer or director could obtain a 100% tax deduction on all production related expenditures? Even discounting the benefits of liability protection and copyright protection and management, tax savings alone will often justify the setup costs of a loan out company for writers, producers, directors and others.

But no company will set up itself, and there is no magical “check the box” on your 1040 to make a limited liability company or corporation work for you and your investors. It takes careful tax planning and preparation, the kind of work that our firm does every day for film and television makers at every budget level.  

As with any entertainment matter, please do not make a decision about complex issues without consulting an experienced entertainment lawyer first. Feel free to contact my office at www.filmtvlaw.com about a quote.

- By Brandon Blake, Entertainment Lawyer

Starting A Publishing Company

Starting A Publishing Company

Question for FilmTVLaw.com:

I see that you also answer questions pertaining to writers. I am hoping to start a small press, collaborating with a number of other authors to put out our own books as well as those we acquire from others. This is in the early planning stages, and I am just now realizing how much there is to do, but I wondered how much literary law differs from what you do. What is the best source for finding the kind of legal help I will need?

Answer by Brandon Blake, Entertainment Lawyer:

Yes, I have worked with authors and graphic novelists, as well as publishers for literary works and comic books, not to mention the estates of several famous authors. Understanding the law of publishing is critical to setting up a successful publishing company. Below I have set out the basic steps for running and organizing a literary publishing company.  Please also see my Entertainment Lawyer Question and Answer Forum at www.filmtvlaw.com, for more in depth and money saving advice that I publish twice a month.

When you are getting started with a literary publishing company, the first agreement you need will be the contract with the author. The publishing business is quite a bit different than the film and television business in that unlike a film or television production company, the publisher does not normally obtain any ownership of the literary project. The only exception would be sometimes with comic books or children’s books where the publisher was also actively getting artwork produced for the work.

So then in the publishing business the publisher must be very careful to license each of the rights needed for the edition intended to be published. Moreover, the publisher needs to decide how to deal with the sublicensing of international sales, and whether the publisher will get a revenue share from ancillary uses such as film and television projects that might arise due to the success of the edition that is published.

The term of a publishing agreement is also unusual in the entertainment business, because rather than being for a term of years, the term is set by the period in which a book stays in print, and usually includes a provision by which an author can request a second printing of the work.

Much like a film or music distributor, a publisher will typically determine a retail and wholesale price target for the book, and then provide the author with a particular participation. However, that would not be practical for foreign distribution, so foreign distribution is usually dealt with as a percentage of revenue. Finally, given that online download revenue is now sometimes exceeding the revenue from traditional unit sales, there also must be a revenue division for digital sales. 

Second, you need to sign a contract with your editors, unless this is going to be a one-person operation. The editing process could easily lead to copyrightable contributions by the editor, and the copyrights to those notes, ideas and revisions need to be transferred back to the publishing company, so that the company can comply with the deal being defined by the author agreement. If an editor were to try to claim a copyright in work being edited, it would create a huge legal problem for both the publishing company and the author.

Third, if you intend on using a distributor that will be handling in-store sales, shipping and printing, then you need to make sure that you do have a binding contract with that distributor. Particularly important will be the revenue provisions, because you cannot pass on profits to your authors if your publishing company cannot collect from the distributor. Most often foreign publishing deals will be handled as one-off agreements, so that will be negotiated on a project-by-project basis.

Fourth, you might want to consider whether talent management will also be part of what you are offering to authors. While every publishing deal is beneficial to the author, management service would involve representation of the author outside of the publishing of one work, and outside of the term of the publishing agreement. Management would include work such as shopping an author’s book to film or television production companies, or finding the author other writing work.

Fifth, it is usually the responsibility of the publishing company to file copyrights, if they have not been filed yet, in the name of the author, and to obtain an International Standard Book Number (ISBN) for the book.

Sixth, for the benefit of the publisher, a publishing company should be filed with the Secretary of State of the State where the publishing business is doing business. The company has a couple of benefits, including sharing ownership and control of the business between the owners, getting preferential tax treatment and avoiding self-employment and partnership taxes, and protecting the company from liability arising from contract law suits or copyright claims. 

As with any entertainment matter, please do not make a decision about complex issues without consulting an experienced entertainment lawyer first. Feel free to contact my office at www.filmtvlaw.com about a quote.

- By Brandon Blake, Entertainment Lawyer

How To Find Equity Investors

How To Find Equity Investors

Question:

I’m producing a television pilot and have some names lined up for cast and an award-winning director and DP. But some loan financing blew out and now I need private equity investors for the project.  Can you help find equity investors?

Answer by Brandon Blake, Entertainment Lawyer:

Good question about how to find private equity investors for an entertainment project. I would like to use this article as an opportunity to discuss the real nitty-gritty of equity financing, rather than just the legal requirements. So, you will find below a “how-to” guide to equity investor financing that goes much deeper than anything I have found published. While many of these techniques are relatively inexpensive, each one requires “sweat equity” on the part of the producer. If a producer is willing to do the work, private equity investors are available and ready to invest.  Please also see my Entertainment Lawyer Question and Answer Forum at www.filmtvlaw.com, for more in depth and money saving advice that I publish twice a month.

Having represented film and television producers for 17 years, I have been privy to many equity financing techniques, some successful and some not. The following “how-to-guide” to equity financing is specific and reality based.

I have read many guides in the past about raising equity financing from “celebrity” fundraisers like Travis Kalanick, the CEO of Uber, or motivational speakers like Tony Robbins. Invariably these extol the virtues of “sleeping on couches,” “hustling” and “meeting the right people.” There is a little truth to that because a producer really does have to work to raise money. It is not all yacht parties and film festivals.

However, telling a producer to “meet people” is empty advice unless the producer employs an actual system and strategy to bring contacts in and convert them to investors. So, my guide will hopefully cut through some of the platitudes and focus on what really works. Also, a note of caution that each of the below poses its own unique legal challenges, so please do not consider the discussion below to be legal advice or a blanket assertion that all these techniques are legal for all projects and in all states.

I. Requirements for Equity Investor Financing:

Broadly speaking, to raise equity investor financing a producer needs two things:

1)    The Legal Framework: It used to be there was only one legal framework, which was a “limited offering” or “private securities offering.” Our firm sets up many types of film and television securities offerings, each one will let the investor legally use the marketing techniques that follow.

However, there is now a second option, which is to work through an equity crowdinvesting platform like ideaPledge.com. If a producer does not have the upfront budget to set up a limited offering, I have no reservations in referring people to ideaPledge.com, because it is the only equity crowdinvesting company without any hidden fees and that allows the below marketing techniques. 

2)    Marketing Techniques: Without the right marketing techniques, all the “hustle” in the world won’t get a producer anywhere. This is the part of the equation that I want to focus on below.

II. Equity Investor Marketing Techniques 

Below you will find the true “formula” for equity investor financing. It takes effort, and some time, but it works and I have never found a successful fundraiser to have a technique that falls outside of the following:

1)    Family and Friends: While some producers may dismiss this idea, saying, “I don’t have a rich uncle,” you have to realize that there is more interest than many producers realize in participating in the fun and glamour of a film or television production. You don’t know who might help unless you ask and a lot of independent producers have trouble asking for money. Of course, this is also a reality check, because you need to believe in your project before you ask others to invest. But if you have done your homework and know your project will be a success, then start with those closest to you.

2)    Cold Calling and the Boiler Room: Okay, so now we are really getting into the “reality” of raising money. To raise money, you have to talk to a lot of people, often by phone. Sometimes you need to talk with even more people than you can reach on your own, so you need to put down a few bucks to hire others to assist you. The fact is, while there are legal risks associated with this process, the majority of major brokerage firms and investment banks do this exact same thing, just on a larger scale. Before you engage in this process, hire our firm to make sure that all legal requirements are being covered, because while this is a very effective technique, it is also a way to get a wire fraud claim filed against you if everything is not filed correctly.

3)    Mass Email Campaigns: So, again, borrowing from the playbook of the big finance companies, I am sure many of you routinely get bombarded by investment offers from various brokerages and venture capital firms, and here is another situation where the JOBS Act (Jumpstart Our Business Startups Act) has liberalized the ability for producers with small offerings to use mass email campaigns to reach out to subscriber lists and also to purchase mailing lists. This involves two legal factors, one is compliance with securities laws, so that you have a valid exemption from the standard laws prohibiting the advertising of unregistered securities offerings, and second, the CAN-SPAM Act which specifies penalties for certain types of email marketing.

4)    Print Advertising: Less expensive that radio and television, but very effective, advertising in the right print publications and journals can bring in a larger number of investors and contacts without the manual labor of the boiler room. Of course, you still need to have the right campaign set up, and you also need to have your website and social media pages set up so that those interested in investing have somewhere to go to find more information. Again, the JOBS Act has made print advertising, once strictly off-limits for small offerings, possible under the right securities exemptions.

5)    Radio and Television Ads: While television advertising might be a bit costly, radio ads can be an affordable way to reach a huge pool of potential investors. This is absolutely “general solicitation” of investors, which used to be a no-no for reaching investors in an unregistered offering, but it is now legal under particular securities exemptions. The particularities of what you can and cannot say in the ad are too detailed to discuss here, but if you hire our firm to set up a securities offering, we will discuss advertising strategies (after you become a client) as part of our services.

6)    Social Media Marketing: Here we are in 2017 and I cannot tell you the number of producers who tell me, “I don’t know anything about social media.” Well, social media marketing is taking over many other forms of advertising, and it isn’t just about posting your project to your Facebook page. Every producer needs to begin building a fan base for their film or television project. That involves setting up a fan page for the company, as well as a dedicated twitter account at a minimum. Then you need to reach out to new “friends” through groups. This is not about just hitting up your existing friends. This is about proactively building a following. If you do not have the time and patience you can hire a social media marketing company, but social media marketing is labor intensive so it comes at a price.

7)    Hire a Brokerage Company: Finally, a registered securities broker could help you sell your investment. However, of all these techniques this is the longest shot, because it is hard to get a broker interested in selling an unregistered offering. Still, if you know a securities broker, it is worth inquiring about his or her interest.

As with any entertainment matter, please do not make a decision about complex issues without consulting an experienced entertainment lawyer first. Feel free to contact my office at www.filmtvlaw.com about a quote.

- By Brandon Blake, Entertainment Lawyer

Complete Actor Negotiations Guide

Complete Actor Negotiations Guide

Question:

Can you give me some help with SAG Ultra Low Budget casting issues? I decided to go with SAG because there was an actress that my exec producer had a contact with, and now I am one month out without any cast deals signed. Can you review some deal letters and get these agents to realize I’m not shooting Star Wars! With this budget, I am lucky to have props, much less trailers, LOL.

Answer by Brandon Blake, Entertainment Lawyer:

Thanks for bringing up some great points about the casting and negotiation with actors and their agents. First off, working with cast takes time. I am struck by the number of times independent producers get our firm involved in a film or series that is “fully prepped” for production, but has no cast! Cast cannot be an afterthought, even for a SAG Ultra Low Budget project. Casting unknown actors carefully is just as important as casting A-list names. Don’t forget both Matthew McConaughey and Renee Zellweger got their first starring roles in the same “Texas Chainsaw Massacre” film. Please also see my Entertainment Lawyer Question and Answer Forum at www.filmtvlaw.com, for more in depth and money saving advice that I publish twice a month.

When it comes to working with actors in a project, here are some guidelines to making the process go as smoothly as possible. More than one producer has come back later and thanked me for each of these pieces of advice over the years:

1)    Be Careful on the SAG Budget Level Choice – The casting and distribution process really starts right from the very first choice you make with the Screen Actors Guild on the choice of Agreement for the film or series. Remember, there are some very big costs to the SAG Ultra Low Budget Agreement down the line when you go to try to distribute the project. Getting our firm involved at this stage can help save a lot of money and trouble down the line.

2)    Never Use the SAG “Standard” Performer Agreement Template – There is not a major feature film made today that ever used the SAG “Standard” Performer Agreement Template.  Even many actors’ agents are surprised when a producer uses one of the template agreements provided by SAG for the engagement. I have reviewed the SAG template Performer Agreement and it is missing about 75% of the provisions that a producer needs for even a low budget production. It makes sense, if you use somebody else’s form, you are going to be playing by their rules.

3)    The Initial Cast Deal Letter Needs More Detail – I have never reviewed a cast deal letter from a producer, casting director or agency that has enough detail. More detail benefits everyone. The fact is, actors want to work in film and television series, and producers need great cast. Ultimately everyone is on the same side and wants to make a great project. Needlessly getting in fights over deal points can ruin the creative process, and a little foresight early on prevents both conflict and litigation later.

4)    Keep Your Casting Director Involved in Negotiations – I really respect the work casting directors do, and producers need to make sure that casting directors stay involved in the negotiations along with the entertainment lawyer. 

5)    Get Long Form Agreements Signed Before the Start of Production – I am not sure why it seems like a good idea to many producers to not have long form agreements signed before the start of production. Believe me, the last thing anyone wants to do is get an actor to sign a contract the first day on set. In fact, SAG really discourages it. I talked about the creative process before, and this is one of those things that can damage the creative process. Those agreements need to be signed early. Although it is not always possible to sign before the start of production, producers need to try harder. The backup is the initial cast deal in point #3 above, which is why that deal letter needs more detail.

6)    There Are No Flat Deals for $20K! This one deserves its own special section, because of the number of producers who think that they can hire cast for a “flat” $10K, $20K, $30K, etc. No such deal exists under SAG rules! There is a SAG flat deal at a much higher compensation level, but even that is not really flat the way that producers think about the word “flat.” SAG work rules are always going to prevail over any kind of flat deal arrangement. 

7)    Don’t Treat Cast Like Crew – I have worked on some low budget projects where producers tell me, “Hey, the crew is all eating pizza and hanging out in the rec room, so why can’t the cast?” Sorry to say, but you just must get out of that mentality when dealing with cast. There are practical reasons for this too. For example, you can’t have your cast sweating it out before their scene, because it is going to ruin their makeup and clothes, etc. There is a reason for A/C and private dressing rooms. So, don’t just knee-jerk against every request by agents. The cast has probably been on more shoots than the producer and director combined.

8)     Recognize the Friendly Yet Adversarial Position of the Talent Agent and Producer – This is difficult, because talent agents are doing difficult work, for low pay, and want to see productions succeed, but also have a legal duty to represent their client to the maximum. Just as the entertainment lawyer is required to get the best possible deal for the producer, the talent agent is required to get the best possible deal for the actor. So, the producer needs to both avoid needless conflict, but also realize that, just like SAG, the talent agent is actually going to be advocating and working on behalf of the cast.

As with any entertainment matter, please do not make a decision about complex issues without consulting an experienced entertainment lawyer first. Feel free to contact my office at www.filmtvlaw.com about a quote.

- By Brandon Blake, Entertainment Lawyer

Smarter Pre-Production Planning

Smarter Pre-Production Planning

Question:

I actually have my production budget in the bank (thank God!), but now I am facing a mess with SAG, I don’t have any actor agreements done except for about 5 or 6 supporting roles, and my writer is holding out for a bo bonus(?). Basically, I have my budget, crew, and locations prepped, but legal is a nightmare and I don’t want to spend a fortune. Help!

Answer by Brandon Blake, Entertainment Lawyer:

Thanks for a great question. Pre-production planning is the key, and just as you plan your budgets, locations, and cast and crew calls, you need to plan your legal too. Of course, hiring our entertainment law firm with seventeen years of experience in production legal is important, but a lot of what I do when I start work with a client is to plan the legal side of a production. Some of that you can do yourself, so I will share some tips and tricks to help your legal budget stretch to the maximum. Please also see my Entertainment Lawyer Question and Answer Forum at www.filmtvlaw.com, for more in depth and money saving advice that I publish twice a month.

First off, it is important to prioritize the legal work for the film. I am including all kinds of “paperwork” as legal, because things like becoming a Screen Actors Guild and Writers Guild signatory are paperwork issues that have a big impact on the legal side of a production. Of course, all kinds of contracts and negotiations fall into legal, even if a lawyer does not actually prepare them. Finally, copyright, title search, trademark, and insurance fall into the legal category.

Often when a client gets started with our firm on pre-production legal, the producer comes in and dumps a huge pile of paperwork on us and says “help”! That is fine, and we provide full service production legal, but with a little organization a producer can cut through many of these issues with limited guidance from an attorney.

Legal That Doesn’t Require a Lawyer

There are some elements of a production’s legal work that does not necessarily have to be done by a lawyer. There are two big examples that I can provide that can save a ton of legal time, letting our firm focus on the heavy lifting.

I. Below-The-Line

Below-the-line agreements are the first category of contracts where we usually pick and choose certain items that are important, and prefer to leave the rest to the unit production manager. That is why it is so important to have a great UPM, because when it comes to preparing agreements for grips and assistant camera people, a producer probably does not need our level of expertise. 

While “below-the-line” can incorporate most of the on-set crew, there are certain crew members that I feel it is imperative to have our firm handle. Included in those crew are the director of photography, the editors, and the casting director. From years of experience I know that it is super important to get these right, and these positions are actually key creative positions that will make or break a film when you get into post-production. So, do not treat these key crew positions like the lighting and sound agreements!

II. Supporting Cast

Supporting cast agreements can usually also be left to non-lawyers. Depending on the film, you might have 50 or more of these agreements, and if you are smart and disciplined, each agreement should be the same form. Here is where an experienced casting director can make your life a lot easier. 

In other articles I have mentioned that you should not hire a casting director too early in the development process. But here I will add, don’t let your casting director go too soon either! The job of the casting director does not have to end when the last casting call is finished. Negotiate from the start with your casting director to make this critical piece of production legal a team effort.

Why? It is not just about time savings. When a casting director negotiates a three-sentence deal letter with an agent and then walks out the door, you have just created a massive “who said what” negotiation for the entertainment lawyer. When the casting director is still part of the production, he or she can easily clarify what exact deal was agreed to, and there is no question about what the rates and perks should be.

This is also why I ask producers to get my firm engaged as soon as possible for pre-production. If I can spend 30 minutes talking to the casting director, I can save 20 hours of negotiations down the line. It is just that simple.

Paperwork That Does Require a Lawyer

So, as I described above, there are times when legal work does not have to be done by an entertainment lawyer. On the other hand, there is some paperwork that often is not considered legal that a producer really should have done by an attorney.

I. The Guilds

Often producers feel a (false) sense of confidence when dealing with the Screen Actors Guild and to a lesser extent the Writers Guild and the Directors Guild. Especially with SAG, producers tend to find the process easy at first and hard later.

Many producers do not realize they are making major decisions for the film or television series that will impact future profits, distribution avenues, and even investor recoup, with that very first SAG signature. A producer needs legal representation to deal effectively with SAG and to determine the best possible agreement. This is more than a check the box choice. The initial set up of the paperwork will determine overtime rates, work rules, PH&W contributions, residuals, and many issues that affect future profitability of the film or series.

II. Above-the-Line

Every producer knows our law firm will best handle writer agreements and producer deals. Very few producers would want to hire a director without legal guidance. But the most important above-the-line negotiations will be with the lead cast.

Once again, keep your eye on profit and the ability to distribute. Nothing impacts the bottom line like the deals made with star cast. And once again, this is an easy in, hard out situation. Agents at all the big talent agencies, and I have lots of friends at agencies, so no disrespect here, but the agent’s job is to make the initial deal easy, and then extract every dime and perk on behalf of the client after the deal letter is signed. So once again, teamwork between our law firm and the casting director saves eons of negotiation time, and a little early prevention saves a lot of legal cure later.

III E&O, General Liability Insurance, Payroll, Title and Copyright Search

Here are a bunch of miscellaneous departments that I also roll into legal, because they all involve paperwork. Each of these is a separate service provider, and again, you can save a lot of money and headaches by getting a little well-timed advice before signing up for each of these. I can also provide referrals that can save a lot of money, which I do as a part of my legal representation of a project. 

IV Distribution

Yes, distribution is not part of pre-production. But why wait until after the film or television series is shot to decide where to sell it? Studios and major production companies don’t do that. They make distribution part of the pre-production planning.

Imagine if you have a buyer ready and waiting for your project, before you even set up on your first location! That isn’t just convenient, it can make or break your investors’ recoup. Again, I am happy to help clients plan for successful distribution, during the pre-production phase.
As with any entertainment matter, please do not make a decision about complex issues without consulting an experienced entertainment lawyer first. Feel free to contact my office at www.filmtvlaw.com about a quote.

- By Brandon Blake, Entertainment Lawyer

How To Form An LLC And Pay Later

How To Form An LLC And Pay Later

Question:

I am self funding a very very low budget film on my own and want to protect myself and my project. It was suggested to me that I create an LLC for the project in order to cover myself from any liabilities. Is that correct information? And if so, how would I go about obtaining an LLC for my project?  

Answer by Brandon Blake, Entertainment Lawyer:

Thanks for a great question. Film and television producers are faced with a lot of costs right from the start when trying to set up a new production, and there are a couple of new ways to avoid those upfront costs and pay for it out of production funds, rather than during the development stage. Please also see my Entertainment Lawyer Question and Answer Forum at www.filmtvlaw.com, for more in depth and money saving advice that I publish twice a month.

So let’s talk about why a company is required to be set up and then how you can potentially get what you need for free, or defer those costs until you are actually in production.

First, a production company is a business filing that you set up before you start production, which serves as the “entity” that makes the movie. “Entity” is kind of a legalese word for any type of company filing with the Secretary of State such as corporations, LLCs and limited partnerships.

There are a lot of reasons to form a company to make your movie or television series, rather than making it personally. I will list the most common below:

1) Liability: If somebody gets hurt while making your movie, or if somebody gets mad and wants to sue you, having a company is a good idea because then anyone with a grudge against the project must sue the company, and not you personally. Because your production company will only own the project and that’s it, anyone who sues will only be able to get money out of the project, but not from you personally. So, he or she could not get your house, your car, your retirement fund, etc.

2) Chain-of-Title: More Legalese, but “chain-of-title” means proving who owns your film or television project. Most producers assume they own the project “personally”, but because you will usually have a lot of crew members and actors helping, everyone must give their rights to someone or some “entity” (there is that word again), which will be the owner of the movie or TV show for legal purposes. That way, when the distributor wants to buy your project, they can just sign one contract with your company, and not with all the people who helped you make it. In fact, all major movie distributors and television networks REQUIRE you to have a production company.

3) Taxes: Taxes are always on a producer’s mind, and a producer can save a ton of money on taxes by having a production company. If you have a production company then all the costs of production can be “expensed”, meaning that 100% of the costs are taken off the top, before you have any profits that can be taxed. Compare that to making your movie as a sole-proprietorship (meaning making it without a company). If you make a movie personally without a company, you will only be able to take off limited “business deductions” which come out to about 30% of the actual money spent on the project. That 30% is a lot less than the 100% expense with a production company.

Okay, so there is no reason in the world to make a movie or TV show personally, without a company set up. But what is the best way to set up a production company?

Here I will give you two options, both of which are excellent choices, depending on your budget and on whether you intend on raising any more money for the project from friends, investors, or supporters.

The Easy Way

If you are intending on 100% self-financing, meaning that you will produce the film with your own savings, then the best way to set up a company would be to hire our law firm. We have very low rates for setting up production companies, and in fact I have been told we are cheaper than LegalZoom and any of the other online providers. 

A firm like ours makes it easy and quick. We handle all the paperwork and tax filings, so you just come up with a name and that is it. We do the rest, so there is a lot of convenience, plus we are cheaper than the online services.

The Free Way

If you are intending on getting some other backers for your project, then consider crowdinvesting. For example, suppose you are self-financing $125K of the budget, but you are also going to have friends, neighbors, family, etc. come up with the other $125K.

You could hire a firm like ours to prepare a securities offering, which is the most inexpensive way all around, but you need to pay upfront.

Suppose that you are 50% certain that your investors will chip in the other $125K, but would rather not put up $5,000 or $6,000 to find out for sure. A crowdinvesting company like ideaPledge.com lets you do just that. Set up everything you need to sell your investment, and only pay a small percentage of the money raised. No LLC costs, no securities costs, unless you are successful raising 100% of your budget.

Now imagine you have 5 or 10 projects to finance, rather than just one. All of a sudden you are deferring $50K in legal and compliance fees until the projects are 100% financed!

How can that be possible? If you have an ideaPledge.com membership then ideaPledge will handle 100% of the investment paperwork for your film or television project, and won’t take a dime until you raise the whole budget. That includes setting up your production company for free.

Through ideaPledge.com you can access both ideaPledge investors and also hit up  your own contacts, social media friends, and fans to invest as little as $100 in your project, or as much as $100,000. It is a no-lose situation, because ideaPledge covers all the upfront costs, letting you focus on producing your project.

As with any entertainment matter, please do not make a decision about complex issues without consulting an experienced entertainment lawyer first. Feel free to contact my office at www.filmtvlaw.com about a quote.

- By Brandon Blake, Entertainment Lawyer

Crowdinvesting Made Easy

Crowdinvesting Made Easy

Question for FilmTVLaw.com:

Friend of mine with a VR company suggested I look into crowdinvesting to finance my TV pilot. I don’t know where to begin since crowdinvesting is so new. I also don’t see any crowd investing sites that let TV or movie projects on yet. Can you give me any ideas to research or sites to look up? 

Answer by Brandon Blake, Entertainment Lawyer:

Thanks for a great question about crowdinvesting. I have represented more than 50 feature film and television series over the last 16 years and regularly consult on film and television projects for clients, so I have been hearing the buzz around crowdinvesting. Crowdinvesting is going to be big this year, and a couple of companies like ideaPledge.com, look promising.

With some tax incentives and foreign co-production opportunities ending in 2016, any new sources of film and television finance will be welcomed. The potential for crowdinvesting to provide access to the $2 trillion dollar private equity market is the reason many producers are interested.

Crowdfunding Versus Crowdinvesting

First off it is important to make the distinction between “crowdfunding” and “crowdinvesting.” Companies like Kickstarter.com and Indiegogo.com have been around for a while offering crowdfunding, which is donation based. That means that producers are prohibited by law from offering any percentage of the profits to someone during crowdfunding, thereby creating a tax problem for the donor. Any money donated must be kept track of for the donor’s Lifetime Gift Exemption, as well as the donors Annual Gift Tax Exclusion. The IRS puts limits on both how much money can be gifted in one year, and throughout someone’s lifetime.

Crowdinvesting, however, is entirely new and just getting off the ground now because of the change in SEC regulations late last year. A company called ideaPledge.com is one of the front-runners, and several others are joining in too. Crowdinvesting allows users to offer profit participation to investors, creating a real investment that can gain value and pay back the investor if the project makes money.

Previously it was only possible to offer an investment in a film or television series to investors by setting up a securities offering, filing an exemption with the SEC and preparing offering paperwork for every investor before reaching out to potential investors. This is both time consuming and expensive, and crowdinvesting can replace that whole process.

Changes In The Law

What makes this all possible are several recent changes in the law.  First, Regulation CF finally went into effect mid-2016. The SEC had prohibited any crowdfunding portals to start operation until Regulation CF was completed, and the regulations were delayed since 2012, when Congress first passed the JOBS Act.

To show they mean business, the SEC has also amended Regulation A, creating Regulation A+ at the same time, which is another potential avenue for crowdfunding portals. These amendments and new regulations are going into effect now, with the last changes to become effective May 22, 2017.

How To Choose

There are a number of crowdinvesting platforms in operation now, which basically break down into two separate groups, as they are utilizing different regulations passed by the SEC.

One of the most visible new crowdinvesting companies is Microventures, thanks to its partnership with Indiegogo. This is what is called a Reg CF based funding portal. As of my last investigation of the company there are no film or television projects being accepted at this time. The reason for this primarily owe to Reg CF itself.

First, Reg CF requires funding platforms to take liability on behalf of the listed companies. That means that companies under Reg CF are going to be hesitant to take on what are usually considered more “risky” ventures, and film and television projects certainly have a high risk profile. Secondly, in order to try to reduce that risk to the company, Microventures apparently requires expensive “vetting” and “analytics”. Finally, users are still required to prepare their own offerings and securities filings, so the upfront costs are actually higher than conducting a private offering independently.

The second type of crowdinvesting platform is relying on Reg A+ rather than Reg CF. The most notable company in this group is ideaPledge.com. Because different regulations are being relied upon, the site is open to any type of business, and already has a range of film, television, and media projects listed.

Additionally, no “vetting”, “analytics” or even a business plan are required, and the platform also handles the securities compliance through a third-party, so that the upfront costs charged for membership represent the only expenses a producer would face in getting a project listed and in front of investors.

While no doubt there will continue to be more entrants into the crowdinvesting field in 2017, it looks like the industry is breaking into two different versions, both targeting different markets.

After so much anticipation, it is great to see the SEC finally open the door to crowdinvesting in the United States. With the upfront costs so low, there is no reason producers should wait any longer to get involved.

As with any entertainment matter, please do not make a decision about complex issues without consulting an experienced entertainment lawyer first. Feel free to contact my office at www.filmtvlaw.com about a quote.

- By Brandon Blake, Entertainment Lawyer

Hiring A Casting Director

Hiring A Casting Director

Question and Answer for today:

Question for FilmTVLaw.com:

I have a feature film project in the beginning stages. After about a year of trying to pitch the project to studios, I have decided the better route is to get a few well-known actors attached first. Should I hire a casting director? I find I cannot get in the door with the agents. 

Answer by Brandon Blake, Entertainment Lawyer:

Thanks for a great question about casting directors. I have represented more than 50 feature film and television series over the last 16 years and regularly consult on film development for clients so I have worked with a number of great casting directors. Find out more about me at www.filmtvlaw.com.

However, casting directors are not there to do what is usually called “packaging” a film or television project. Casting directors are set up to do exactly what the name implies, which is to run casting calls and cast a full film or television series with great actors and actresses that are ready to work… now!

One of the biggest mistakes that independent filmmakers often make is getting a casting director involved too soon. That is frustrating both for the producer and for the casting director. I have seen the situation where producers feel that the casting director can’t, or won’t do their job, while monthly fees are being frittered away. But in truth the mistake does not lay with the casting director. The real problem is that casting directors cannot cast a movie that is not fully funded.

It is very rare for a casting director to cast a project more than two months before the start date of principal photography. In fact, many producers are amazed at how many roles get cast the week before the start date, and as an entertainment attorney I have spent many long nights the day before principal starts, prepping contracts for actors that are going on location the very next day!

So producers should be aware upfront of the scheduling needs of casting directors and realize that there is simply no reason to contact casting directors too early about a project.

Generally, the way that a producer packages a project is with the help of an entertainment law firm like ours. By working with the producer to shape and develop the project, we can approach top cast for projects that are going forward, but need a few A-list names involved before studios and financiers will sign on the bottom line.

With so many projects vying for a limited number of “star” cast, it can be overwhelming, but with the right help projects can get that jump start needed to move forward and get into pre-production. Then once the start date for principal photography is set, a casting director can do the heavy lifting and fill out the cast needed to shoot the film.

Feel free to contact my office about packaging and development service rates. As with any entertainment matter, please do not make a decision about complex issues without consulting an experienced entertainment lawyer first. Feel free to contact my office at www.filmtvlaw.com about a quote.

- By Brandon Blake, Entertainment Lawyer

Section 181 Grandfathering for Film, TV, Theater

Section 181 Grandfathering for Film, TV, Theater

Question for FilmTVLaw.com:

Okay, so I keep hearing about “Grandfathering” the section 181 tax break and I wanted to find out what that meant and if the year-end is any kind of a deadline. Thanks in advance for the help and keep up the great work.

Answer by Brandon Blake, Entertainment Lawyer:

Excellent question about the American Jobs Creation Act (AJCA) Section 181 Tax Deduction for film, television and theater productions. The Section 181 deduction is expiring at the end of 2016, but producers of films, television series and theater productions can “grandfather” in projects, thereby keeping all the benefits for future years. Feel free to get more details at www.filmtvlaw.com.

It is an unprecedented thing made possible by Congress when they drafted the AJCA Section 181 to apply to projects that “start production” before the end of the year. This wording is what allows producers to lock in the Section 181 deduction for coming years by doing a few simple things before the end of this year.

First, for those that are not familiar with the benefits of the American Jobs Creation Act, Section 181, the tax deduction allows investors in a feature film, television series, and now a theater production, to take a 100% loss on the project in the very first tax year, even if the project goes on to make money later. Needless to say this is something that investors want, and that investors will expect to get not just this year, but for subsequent years, due to the number of producers that are grandfathering in projects.

Grandfathering:

So, what is required exactly for “grandfathering” Section 181? A couple of steps are required:

First, a limited offering must be set up for the particular project to be grandfathered in. Congress specified it is the “project” that must be grandfathered in, and not the company, so each project must be separately set up as a limited offering. Otherwise, private investors cannot invest in the project.

Second, the offering must be filed with the SEC before January 1, 2017.

Third, at least “one day” of principal photography must be shot before January 1, 2017. We can help qualify the production under Section 181, but only if our firm sets up the limited offering this year.

Fourth, a particular tax filing must be made at the start of 2017. Because the IRS never produced a “check the box” type of form for Section 181, the law firm handling the offering must provide the information to the IRS. There is no printed form to take the deduction, and it will not be apparent on the 2017 corporate or partnership tax forms.

Deadlines

It takes a minimum of one-month to file an offering now with the SEC. Because of the new online filing requirements, the company must first qualify to file the offering, and then the offering paperwork can be filed.

Unfortunately, this is not a process that can wait until mid-December to begin. By that point it will be too late to grandfather in a project. Moreover, there is expected to be a rush of applicants this November and December, which will most likely cause delays. So, it is crucial to begin this process this month to complete it by the year end.

Please feel free to contact our office for a quote. As with any entertainment matter, please do not make a decision about complex matters without consulting an experienced entertainment lawyer first. I have been representing feature film projects, television series, and recording artists for more than 16 years.

- By Brandon Blake, Entertainment Lawyer

AFM Guerrilla Guide

AFM Guerrilla Guide

Question for FilmTVLaw.com:

I am planning a trip to AFM this year to sell a horror film I shot late last year. What do I need to do to sell my project at the market this year?

Answer by Brandon Blake, Entertainment Lawyer:

With AFM starting November 2 this year, you are cutting it short in terms of market preparation time. However, even with this short notice there are some things that you can do to get market attention at AFM. I have represented more than 50 feature film and television series over the last 16 years and regularly consult on film distribution for clients so I have picked up a few tricks over the years. Find out more about me at www.filmtvlaw.com.

The following is a guerrilla guide to making the most of AFM at the last minute. A lot of these points are also great ideas for preparation for other markets. The major markets to hit during the year include Berlin, Hong Kong Filmart, Cannes, Toronto, Busan and of course AFM, so these tips can come in handy all year round.

1. ONLY BUY THE PASS YOU NEED

If you hurry you can still get a little discount off of the cost of a pass. AFM is strategically held over a weekend this year, so you can’t go wrong with Saturday and Sunday. You can usually write off the last two days of the market, unless you like to look at piles of empty boxes and empty booths. Most conferences and screenings are a distraction, so just plan around your meetings.

2. PLAN, PLAN, PLAN

Get a map to the market floor. The layout of the AFM is a complete mess, so figure out where all the offices are before you go. Don’t get caught studying your market guide Saturday morning when you should be selling your film. Spend every day between now and November 2nd scheduling meetings.

3. GO DIGITAL

The days of 50 pound boxes of press kits are thankfully over. Keep the printed, bound, and laminated items to a minimum. Today people expect to get one powerful image that will drive viewers to an excellent website, online screener and social media presence. My firm can consult on how to maximize marketing and promotion strategies.

4. GO PROFESSIONAL

Less but higher quality marketing materials is the key. Usually film and television producers spend all their time on the footage, and none of the time on the marketing. But the first thing buyers see is the marketing material! Marketing sells movies. That is true for big budget feature films and SAG Ultra Low Budget projects too.

5. SOCIAL MEDIA MATTERS

Yes, it’s official. The fan base for a movie matters. Cast, marketing, and concept all come together to either produce a great social media presence, or not. So make sure the social media campaign is as professional as the website and graphics.

6. FIVE SECOND RULE

Be able to explain why the movie is awesome and deserves a view in five seconds. Literally, that is how long you have to sell a buyer on your movie. Do not expect a movie to speak for itself. The movie cannot sell without eyeballs to watch it, and the only way to get that valuable eyeball time is to make the film or television project irresistible within five seconds.

7. THE MARKET IS JUST THE BEGINNING

No matter how many introductions you make at the market, the market is just the beginning. Film sales is about follow up. Keep the conversation going.

Feel free to contact my office about distribution and market consulting. From marketing, to negotiation of sales and distribution agreements, I have been representing filmmakers at markets for 16 years.

As with any entertainment matter, please do not make a decision about complex issues without consulting an experienced entertainment lawyer first. Feel free to contact my office at www.filmtvlaw.com about a quote.

- By Brandon Blake, Entertainment Lawyer

Independent Television Development

Independent Television Development

Question for FilmTVLaw.com:

Saw your Q&A blog at www.filmtvlaw.com. I’ve got a concept for a reality television series and went out and bought the life story rights already. Now I am trying to wrap my head around how to get it made. Should I pitch it to production companies or go straight to the Networks? Another friend who is established in the industry said I need a pilot. Any help would be super.

Answer by Brandon Blake, Entertainment Lawyer:

Thanks for contacting me about independent television production. It is a hot topic right now because so much great content is now finding a market on television and video-on-demand platforms like Netflix, Amazon and Hulu. Whether to try to independently produce a television series depends a lot on the format of the series, financial resources, and ambitions for the series. Our firm has been helping a lot of clients get television distribution. I will explain how to make the decision whether to pitch to an established production company or produce a television series independently. In addition to this article, you can also look up our Q&A blog at http://filmtvlaw.com/entertainment-lawyer-qa/.

Format Choices

First, the format of the series is critical. If you want to develop a scripted one-hour drama or a half-hour sitcom, the odds of success will increase if you pursue the traditional route of television development. That means focusing on cast and the material. A solid, professionally written pilot teleplay, one or two A-list cast members, and network quality development materials are essential. A sizzle-reel can help, but only if it is broadcast quality. From there our firm can help to pitch to production companies who will work with you to produce a pilot and set up the series at a network.

Reality television, however, is wide open for independent production. But independent production does not mean Youtube.com or a web series. The problem with web series are two-fold. First, if a producer wants to approach a network about a web series, that web series must have over 100K, and preferably over 1M views before the networks will even start to take notice. If a producer puts the series or pilot onto a public video service like Youtube and it only acquires a few thousand views, then the producer is actually making a case for the project having no market.

Second, the Networks are fighting like crazy right now to stay relevant, and not to end up being considered just another Youtube channel themselves. That relevance means seeing fresh, unique content that is not available anywhere else. So network executives will run the other direction when you bring web content to them, unless of course the series has several million views.

However, independently producing a pilot for reality TV (broadcast quality, of course), can be a ticket to a network deal. Content is critical, and budget is also key. Make sure that the series does not cost millions of dollars per episode to produce, and also do not produce something that requires major tie-ins from other organizations or events. Keep it simple and really compelling. And make sure you know what Networks want before you start shooting. No reason to spend a few hundred-thousand on a pilot, only to realize the concept was last year’s trend for reality TV. We can help clients zero in on what is hot now at networks.

Children’s programming can also be produced independently. Both animated and live-action can work, but be sure that you are producing for the appropriate demographic, since children’s programming needs to fit certain criteria to find a place on the networks. Is there an educational component? What is the age range for the programming? Make sure you have a clear idea for the market before moving into production.

Choose Your Network

Second, consider what type of network distribution you want. The big four television networks are going to be the most challenging, and produce most content in-house, or with a few major studio production companies. Independent television production is not realistic for this category of networks.

Premium cable is another class where independent series are a long shot. Although you could certainly independently produce a film, or even a short mini-series for a premium cable network, full season scripted series are going to need to be developed in the more traditional way.

Cable television is certainly home to much independently produced content, from reality television to mini-series, movie-of-the-week, children’s programming and fully-sponsored content. This is the place where independent television production is taking off. However, every network has a very particular style. Our firm can help pin-point the market before a lot of money goes into production.

Video On Demand

Third, video-on-demand is huge right now and many viewers are abandoning the linear broadcast channel format altogether for exclusively paid and subscription VOD. However, even here there are two tracks. There is the content that is featured and/or produced in-house by Netflix, Amazon, Hulu and others, and then there is the vast thumbnail wasteland of acquired content. Our clients produce content that is promoted and watched, not just placed at the end of a scroll list.

As with any entertainment matter, please do not make a decision about complex matters without consulting an experienced entertainment lawyer first. At BLAKE & WANG P.A. I have been representing feature film projects, television series, and recording artists for more than 16 years. Please feel free to contact my office at www.filmtvlaw.com about a quote.

- By Brandon Blake, Entertainment Lawyer

The Turnaround Agreement

The Turnaround Agreement

Question:

A novel was published in the mid '90s and became a best seller. A studio paid a small fortune and purchased the book. Over several years they hired writers who adapted the book but the studio never went forward to make the picture. They put it into turnaround. No other studio picked it up.

 The original writer of the novel, frustrated, adapted his own novel and submitted it to the studio. They loved it but much time passed, nothing happened and it was once again put into turnaround.

 I would like to make a deal with the novel/screenwriter and acquire the novel rights and his screenplay adaptation. I understand that turnaround costs generally have to be reimbursed. If I commit to pay the author for the book rights and for the screenplay, who is responsible to reimburse the studio?

Answer by Brandon Blake, Entertainment Lawyer:

Thanks for a great question about a very complicated part of the option-acquisition process. While the terms of a Turnaround Agreement can vary substantially from one project to another, since it is the writer’s job to initially negotiate a turnaround agreement as part of the purchase of the property, there are many elements that most turnaround agreements share.

First, it is important to realize that turnaround is not the same thing as an expired option agreement. When an option agreement expires, and of course depending on the terms of that document, usually the writer at that point is free and clear to thereafter do anything the writer wants with the project, including selling it to a new production company. There can be some strings attached to development materials produced by the option holder, but that is a separate article.

However, a turnaround agreement only becomes applicable after the work has been purchased by the studio or production company. In other words, the acquisition price has already been paid and now the studio is the owner of the work.

So why would a studio ever want to enter into a turnaround agreement, given that the whole acquisition price had already been paid?

The reason is generally because a decision is made at some point to abandon development of the project. While that can be a costly decision, since the whole acquisition price would be lost, it is sometimes better to let that fee go, rather than produce a film that the studio decides will not be profitable.

So turnaround then ends up being to the studio’s advantage. It is too late to get the money back from the writer of the script, but the studio can offer the writer a period of time in which the writer can go out and find a new buyer for the property. Basically the studio is using the writer to try to recoup the costs that the studio spent on the script. Writers have an incentive to do this work because the writer wants to see a script get produced, and besides the career benefits to that, there are also usually bonuses and backend participation that will only be paid if the film actually gets produced.

Now back to the question, which is, who gets paid under a turnaround agreement? It is the original studio that has to be paid, because the studio is the one that actually owns the rights to the project. However, the right to re-purchase the rights owned by the studio are actually held by the writer, so both parties must be negotiated with to complete the deal. The new producer or studio must ensure that the turnaround is conducted correctly, or else there will be a problem with the chain-of-title with the project.

The price to be paid for the turnaround is specified by the turnaround agreement, but is generally more than the initial payments made to the writer for the option and acquisition. How much more will be decided by the initial negotiations the writer or his agent or attorney did when the studio purchased the script in the first place.

As with any entertainment matter, please do not make a decision about complex matters without consulting an experienced entertainment lawyer first. I have been representing feature film projects, television series, and recording artists for more than 16 years. Please feel free to contact my office about a quote.

- By Brandon Blake, Entertainment Lawyer