Working Without An Agent

Working Without An Agent

QUESTION FOR FILMTVLAW.COM

Recently I heard Jennifer Lawrence and Leonardo DiCaprio are deciding not to work with agencies and choosing representation through managers or entertainment attorneys instead. Is that legal? I thought actors could only be repped by talent agencies?

ANSWER BY BRANDON BLAKE, ENTERTAINMENT ATTORNEY:

It’s no secret that something is going on in the entertainment business in the past couple of years that is unprecedented. A-list actors and actresses like Jennifer Lawrence and Leonardo DiCaprio are choosing to forgo the agency system altogether. There are a couple of good reasons why, and some of those reasons might not apply unless you are a well-known superstar. Please feel free to check out all of my entertainment industry articles at https://filmtvlaw.com/entertainment-lawyer-qa/.  

First off, any young performer, writer or director should not write-off an offer from a major agency, as it can certainly be a career defining opportunity. Many of my clients are represented by major agencies and would not have it any other way.

But that said, some of the changes in the industry make it possible to launch a career in the entertainment business without agency representation. Of course for some, that’s not a choice. Often, major agencies are looking for a track record of solid performance (and paychecks) before committing to new talent. But then again, Jennifer Lawrence and Leonardo DiCaprio are not exactly new to the business.

One of the principle reasons for producers and directors to work with an agency is because the agency can submit projects to Netflix, Amazon and the studios. That is an incredible window of opportunity that is difficult to get otherwise. However, recognized entertainment law firm’s like ours can also submit packaged projects to platforms like Netflix, Amazon and Hulu, in addition to the studios and major networks. So an agency, while attractive, is not strictly necessary any more.

Another consideration are fees. While most performers, writers, directors and producers would agree that 10% is a small price to pay for major agency representation, that in some ways underestimates the costs.

First off, typically performers will be represented by both an agent (10%) plus a manager (15%), which comes in at an off-the-top 25% of all earnings. Second, you are still going to have to hire an entertainment attorney to negotiate your deals, because although the deal points will be hammered out by your agent or manager, the bulk of the contract will still be negotiated lawyer to lawyer.

Finally, packaging has become so competitive that each agency locks clients into a large system of sales and production business. I don’t think very many clients are going to complain about being locked into the William Morris Endeavor system, since they do represent so many major productions, but for someone like Jennifer Lawrence and Leonardo DiCaprio who can literally pick and choose their projects, the big agencies could actually become a limiting factor in the number of roles they can consider.

Of course there are always going to be areas where an agency of any size is going to be indispensable. In many states talent managers are prohibited from directly “soliciting employment” for clients. That does not mean a talent manager cannot help find work for a client, but it does mean that either the client will be asked to also have a licensed talent agent, or otherwise the offers for employment must be handled as introductions to projects and producers or through an entertainment attorney. For this reason, talent managers generally are more involved in long-term career building, rather than day-to-day submission for roles or writing jobs.

Likewise, agents will have access to the breakdowns of many film and television productions, which gives agents access directly to a network of casting directors who are looking to immediately fill acting roles on upcoming productions. These are duties that managers and entertainment attorneys are not going to replace.

So the good news is that there is more opportunity to break into the entertainment business than ever before, and it is no longer a system where agency representation makes or breaks a career. With some dedication and hard work, everyone can make it, whether that means an offer from a major agency, or a hardworking manager or entertainment attorney like our firm that can represent your project and get you to the next level.

Before signing a representation contract with a talent agent or talent manager, you should have the contract reviewed by an entertainment law firm like ours. The best way to make sure that you are going to be fairly represented, and are signing a good deal, is to have the agreement reviewed, and since we work with many talent agencies and management companies, we can also provide our own feedback about the reputation of the agency.

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 18 years. Please feel free to contact my office about a quote.

- By Brandon Blake, Entertainment Lawyer

Smartphone App Replaces the PPM, Business Plan, and Securities Offering

Smartphone App Replaces the PPM, Business Plan, and Securities Offering

LOS ANGELES, CALIFORNIA, November 28, 2018. Walking into the twenty-fourth floor Century City law firm owned by Brandon Blake, founder of ideaPledge.com, instantly transports you to movies like “The Firm” or “Swimming With Sharks”, where A-listers and Oscar winners come to sort out entertainment industry business.

Mr. Blake established himself in Hollywood 18 years ago, when he started the law firm of BLAKE & WANG P.A. with a fellow law school alumnus. Nothing is more important to a feature film or television series than financing, so Mr. Blake also began a securities law practice, becoming an expert on the ins-and-outs of securities laws regulation and what it takes to raise venture capital for media projects.

Looking out on the Los Angeles Country Club from his conference room window, I can’t help but be impressed by Mr. Blake’s enthusiasm for a subject that doesn’t always elicit excitement… the world of securities law compliance. But then again, there is nothing ordinary about Mr. Blake, or his tech startup ideaPledge.com.

Question: So what’s so exciting about securities compliance?

Mr. Blake: Thanks for coming by today. Having worked for a long time with film and television producers, I learned early on that investor financing is really important, even to big studio projects. Every producer has to get out there and establish at least a portion of the budget in equity. That means pitching projects to private investors. A lot of people don’t realize that even the big studio films require a component of equity financing. Steven Mnuchin, now the United State Treasury Secretary, cold-called Warren Buffet and Bill Gates to raise money for “The Lego Batman Movie.” So, this is not an “independent film” thing. And of course every industry is the same, from high tech startups to brick-and-mortar businesses, capital raising is key.

Question: How does ideaPledge.com help entrepreneurs raise money?

Mr. Blake: Raising money is hard work, and there is no shortcut to getting out there and meeting potential investors, whether that be in person or through social media, email, phone campaigns, or the like. But a huge barrier to entry are securities compliance costs. That’s the cost of getting an attorney like me to put together your PPM, business plan, securities offering, and then file with the Securities and Exchange Commission. A lot of producers can’t even get their project seen because of the burden of the compliance costs associated with raising money.

Question: You talk a lot about fairness, but not everyone can be a film producer or an entrepreneur.

Mr. Blake [laughing]: Why not? That’s exactly my point. Everyone can launch their dream project when you eliminate the barrier to entry. That’s exactly what ideaPledge.com does for users. With no upfront costs, anyone with a good idea can approach investors and get the same opportunity to fund their dream project as a major Hollywood producer. It’s that simple.

Question: So how does it work?

Mr. Blake: Anyone can sign up as a Creator on ideaPledge.com. It takes about 10 minutes. Once the user is registered a really easy to use app allows you to create a professional looking business plan page for your project. You can upload photos, videos, bios, whatever you want. Drop downs allow you to choose your industry, investor percentages and how much of your company to share with investors. Then with a single click your project goes live.

Question: What about costs?

Mr. Blake: That was the most important thing to me. No upfront costs of any kind. Not to use it, not to post your business plan, and no limit on the number of investors either. When the offering closes there is a flat 10% compliance fee which covers everything from escrow costs, transaction fees, legal, securities filings, bank transfers, everything.

Question: Does ideaPledge.com have a pool of investors ready to invest in new projects?

Mr. Blake: This is a really important point. The fact is, no crowdfunding site brings the investors or donors to you. There are a lot of sites that promise “Angel Investors” or to introduce your project to a pool of early stage investors. But in the end it’s the sweat equity of the entrepreneur that brings in the investors. It’s just like donation crowdfunding. The entrepreneur is going to have to put in work to bring investors to a project. ideaPledge.com is a tool that let’s entrepreneurs stop planning to raise money and start reaching out to investors.

“ideaPledge.com is a tool that let’s entrepreneurs stop planning to raise money and start reaching out to investors”

Question: So how should Creators use ideaPledge.com?

Mr. Blake: ideaPledge.com is an incredible tool to get past the hurdle of securities compliance. ideaPledge.com can replace the PPM, business plan, and securities offering, and let entrepreneurs start reaching out to investors about projects. It puts everyone in the same position of a high powered Hollywood producer, with all the resources you need to make your dreams come true. But lets face it, if Steven Mnuchin has to sit at his desk cold-calling people in his Rolodex, everyone else probably has to do it too. But now there’s no excuse why you can’t get out there and make your project happen.

- Interview Courtesy of Film & TV Quarterly

ideaPledge.com is a private equity crowdinvesting and social media app allowing entrepreneurs to launch investor funding campaigns for film, television, media and high-tech projects, replacing PPMs, business plans, and securities offerings with a free, easy to use app for smartphones and desktop.

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BLAKE & WANG P.A. is a professional corporation and is not associated with or affiliated with ideaPledge, LLC. ideaPledge, LLC does not provide legal or professional services and BLAKE & WANG P.A. does not endorse or represent ideaPledge, LLC. The foregoing is not an endorsement of the ideaPledge, LLC services or a guarantee, warranty or prediction as to the success or suitability of the site for any particular project. As with any legal matter, please do not make a decision about complex matters without consulting an experienced entertainment attorney first.

Copyrights, Derivative Rights and Electronic Signatures

Copyrights, Derivative Rights and Electronic Signatures

Question For FilmTVLaw.com:

I did a page-one rewrite on a script for a producer who never paid me for my work. Later he sent me a text message giving me rights to the project. Now like 2 years later I’m actually casting the movie and the producer says he never gave me the project and that a text is not a written contract. Can I use a series of texts as proof he gave me the rights?

Answer by Brandon Blake, Entertainment Lawyer:

Great question. There are a lot of rights questions here but I want to focus on two issues, one is the idea of the “derivative work”, and the other is about the US Copyright Act requirement for a “signed writing.” In addition to this article I have nearly a hundred other articles covering all facets of film and television development and production at ww.filmtvlaw.com/entertainment-lawyer-qa/

First of all, we need to look at how many different versions of the creative work exist. In film and television we usually talk about 1) the “underlying work,” such as a book, short story, comic book, etc., 2) the script, and 3) the film or television production itself. Each of these three works has a copyright, and none of these works need to be owned by the same party.

The underlying work is considered to be the original work. It was not based on a previous property and is copyrighted solely in the name of the author or of the company that commissioned the work. A script or teleplay could also be an original work if it was written without reference to an underlying story or other creative work.

Each of the subsequent works based on the original work are “derivative works”, meaning that they are based on other copyrightable works and that they therefore must be licensed from the original author.

In this case, there are multiple derivative works. If there was a story or property the first script was based on, then that would be the original work, the first script is a derivative work, and your rewrite is a derivative work, based on both of the two previous works. In order to precede you would need to license the rights from both the original story and also the other screenplay. If the first script was an original screenplay, then you would only have to deal with the ownership of that work.

Now the next question deals with how a creative work can be licensed. The Copyright Act specifies that a “signed writing” is required to transfer those rights. But it does not provide any more detail or a template for what is required. There have been cases where even a check was used as evidence of a transfer, although the writing must be signed by the party transferring the rights.

But electronic communications create a whole new issue regarding what “signing” means. The federal ESIGN Act clarified a few things, making it federal law that digital signatures are considered to be as binding as ink on paper signatures. The ESIGN Act provides a number of steps that help to confirm that a signature is binding, but it specifically does not require any one technical step to complete an electronic signature.

So then that creates a gray area with regard to emails and text messages. Emails are often “signed” by the party sending the email, although email communication can certainly be easily altered.

Text messages, Facebook and Twitter posts are even more difficult, because they could be considered signed writings in some ways, although certainly are not expected to be formal contracts by the parties sending them.

So the best advice is to be cautious with sending electronic communications. Do not assume that what is said by email or text is “not binding”, because under federal law it can be held to be a signed writing. On the other hand, a writer or producer should not rely on an email or text to be a final disposition of the underlying rights either, given that there are not all the formal steps needed to confirm a signature under the ESIGN Act.

When it comes to the underlying rights to your film or television project, writers and producers should not take chances. Every project has the potential to become valuable property in the future. Have a formal contract drafted, or if a contract is presented, have it reviewed. Many producers only focus on the transfer of rights and the overall division of royalties and profits, but there are a lot of other legal issues that should be resolved as part of a rights agreement as well.

As with any legal matter, please do not make a decision about complex matters without consulting an experienced entertainment attorney first. I have been representing feature film projects and television series for more than 18 years. Please feel free to contact my office about a quote. Feel free to contact my office at www.filmtvlaw.com about a quote.

- By Brandon Blake, Entertainment Lawyer

Chain Of Title Versus Protecting Titles

Chain Of Title Versus Protecting Titles

Question For FilmTVLaw.com:

How do I protect and register the title of my film? I’ve heard the term chain of title, but not clear on what it really means. I’ve got a really unique title for my feature project and already filed with WGA. What am I missing?

Answer by Brandon Blake, Entertainment Lawyer:

Thank you for your question. I represent a lot of producers and writers and there is generally a lot of confusion out there regarding the chain of title for a film project. The terminology is similar between several different areas of the law, so I will go through and respond to these issues from a number of different points of view. In addition to this article I have nearly a hundred other articles covering all facets of film and television development and production at www.filmtvlaw.com/entertainment-lawyer-qa/

First, it is important to know that copyright is an important part of the chain of title, but somewhat confusingly, copyright does not protect the titles themselves of television series or feature films. Copyright only protects creative content and the titles are not considered to be part of the work of authorship.

This then often leads to the question of why is it that one of the standard deliverables for feature films is called a “title search”? In this case “title” is actually referring to the chain of ownership to the work, much like a car or house has a “title”, meaning a record of ownership. To further confuse things, a title search often does involve searching the titles of copyrightable works but that is done to find other works that might have been infringed.

You will find many copyrighted works, including film and television shows, that all share the same titles although the use of similar or confusing titles, or the reference to titles of other works, is not completely unrestricted.

Producers can go about protecting the actual titles of entertainment works in two principal ways, first is trademark and second for feature film is MPAA registration.

Trademark can be used by both film and television producers to protect the title of a production, although trademark does not specifically protect the title of a creative work either. A trademark is supposed to be what is called a “source identifier.” Trademarks and servicemarks are for the purpose of identifying the maker of some product or service, and thereby keeping consumers from being confused about who created the goods. Coke, Pepsi and Apple are all easy examples of the typical functioning of trademarks. Each of these “marks” identifies a particular maker of drinks or computers.

So when it comes to using trademark to protect the film or television production’s title, some creativity is often required in coming up with a mark that is valid and can protect the title of the work.

Common law or state trademark law is also available in many jurisdictions and it is possible that even if the mark was not filed with the federal trademark office, that there could still be protection for a film or television title at the state law level.

Many producers do not know that for feature films another method of protecting titles exists, which is MPAA registration. MPAA registration can protect a title and is the purpose of reserving titles for theatrical feature films. There are some costs involved but many feature film clients retain us to obtain MPAA protection for planned feature film projects. It is good to start early with this process since names are simply assigned on a first-come first-serve basis.

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 Reality TV Pitch Decks

Protecting Reality TV Pitch Decks

Question For FilmTVLaw.com:

Me and my producing partner came up with a killer reality TV concept and finished the pitch deck already. I want to submit it to networks but am worried about it getting stolen. What can I do to protect it while still getting it seen?

Answer by Brandon Blake, Entertainment Lawyer:

Thanks for the important question about how to protect reality TV pitch decks. 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, or music 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.

Of course, 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 movie to film festivals, it becomes really important to reality TV development. When it comes to reality television, the problem is especially acute, because a reality television series pitch deck will be mostly characterized as an idea rather than a tangible form of expression such as a screenplay or a pilot episode.

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 reality 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 and networks.

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.

Finally, the ultimate defense against reality TV series concepts being stolen during the submission process is by having them submitted through our entertainment law firm. When the submissions are done through a recognized entertainment law firm, not only are networks and production companies willing to review the projects, but also the process of creating a third-party record of what was sent and when prevents any party from making the decision to use the ideas or concepts without authorization.

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 Film for Dreamworks

Packaging a Film for Dreamworks

Question for FilmTVLaw.com:

I’ve got a project perfect for Dreamworks. How can I get in the door at Dreamworks? I’m not a first-time filmmaker, got three films distributed already. I’m ready to work at the next level. Thanks for your posts! Keep up the good work.

Answer by Brandon Blake, Entertainment Lawyer:

Thanks to everyone for all of the great questions these past two weeks. I can’t get to all of them but will focus on those that probably resonate with the most readers. Please feel free to check out my Q&A Blog for a wealth of other entertainment related advice and articles at www.filmtvlaw.com/entertainment-lawyer-qa/. 

I have had the good fortune of working with Dreamworks Animation on a number of recent projects, and actually represent the estate responsible for such classics as “Dumbo” and “101 Dalmatians”. In answer to your question, let’s first talk about the way agencies and studios work with each other to get feature film and television projects produced in the “studio” system. After that we can talk about opportunities to break in for independent producers and writers.

Major agencies supply a constant stream of scripts and stories to studios, production companies and networks, and often package those projects first before presenting the scripts. Packaging means getting an A-list performer, director, or other celebrity with name recognition and an existing fan base interested in a script or story. Agencies typically shop the project internally first, in order to find current clients who would be interested in attaching to the project.

Once the agency feels that it has enough interest from talent attached to the script, the agency will then present the project to studios, focusing on producers at the studios who are known to be looking for particular stories for production. If there is interest at the studio in the script, a similar kind of internal shopping process begins, where a producer or acquisitions executive will approach others at the studio and try to build up interest in the project at the studio. Eventually the President and CEO of the studio will get involved, deciding to green light projects that have been internally developed.

So, the question is how to become a part of this process, when so much of the development and shopping work is being done internally at major agencies and studios, and television networks. There are a couple of solutions for independent producers who want to bring scripts into the Hollywood system.

The best way is to work on packaging the project during development, and make attaching cast, director, or other celebrities the first step in getting the project made. In one project I represented that later was picked up by a major studio, my client and I worked to create substantial publicity around the story during the development phase, which attracted Keanu Reeves and David Ayer to the project. 

At that point a major agency got involved, which began shopping the project with us to studios. Whether I work with major agencies or studios, the idea is to do the legwork for the development executives, bringing them something with not only a great story but talent already attached. 

Regarding advice for how to get projects seen by studios and networks, I would offer the following specific ideas:

1) Produce great promotional materials. The look book/ pitch book, website, poster and one-sheet should be the highest possible quality. After 18 years in the entertainment business, I can spot projects that will get agency and studio attention from the poster alone. It really is that important. I get a lot of questions about trailers, demo reels, sizzle reels, and pilots, and my answer is always the same; if the material is broadcast quality and exactly reproduces your intention for the series or movie, then yes, the more material the better. But anything where you are asking the agent or studio executive to “imagine” what you can do with a bigger budget, do not include it. For various reasons, television and studio executives do not have very good imaginations. Show them what you can do right now or do not include it.

2) Package the project. Most producers, after spending a few years in the entertainment business, will have at least one or two celebrity contacts to approach about the project. But due to schedules and the personal taste of the talent involved, only one in fifty of those will work out. An entertainment law firm like ours can help. I have been successfully bringing together cast, directors and celebrities with films in development for nearly two decades. Relationships, the right approach, and industry knowledge are crucial when pitching a project to high level talent.

3) Publicity. Never underestimate the power of some well-placed news articles about the project. There are a myriad of ways to build a story around a prospective film or television project. If your story rights are not strong enough to grab a news headline, then chances are the story will not impress the agents or studios either. Work on ways to make the project newsworthy. 

Feel free to contact our office about rates for our packaging and representation services, and please do not decide about complex entertainment legal 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 18 years. Please feel free to contact my office at www.filmtvlaw.com about a quote.

- By Brandon Blake, Entertainment Lawyer

Who Qualifies? 20% Deduction for Pass-Though Business Income – The 199A Deduction

Who Qualifies? 20% Deduction for Pass-Though Business Income – The 199A Deduction

Question for FilmTVLaw.com:

I’m a freelance television producer and my wife is a casting director. Do we qualify for the 20% deduction for pass-through business income in the new Trump tax cuts? Been thinking about forming a company but not clear on how to do it right. Thanks in advance. 

Answer by Brandon Blake, Entertainment Lawyer:

It has never been a better time to form a loan-out company and getting the 20% deduction for pass-through business income under the new 199A deduction of the Trump tax cuts is just the start of it. Aside from the Tax Cuts and Jobs Act (TCJA) benefits, loan out companies are a great way to reduce tax exposure and to avoid the pitfalls of the alternative minimum tax and self-employment taxes.

A word of warning, all of the TCJA deductions are complex and the new 199A deduction is no exception. Before you file a loan-out, you will need to have an entertainment law firm like ours organize the company. You can also see other entertainment legal advice that I publish twice a month in my Entertainment Lawyer Q&A Forum at www.filmtvlaw.com.

Although there is not going to be a way to provide one answer to every different situation, I would say that in almost every case I have reviewed it has been substantially to the benefit of the client to choose loan-out status rather than employment status when being hired for entertainment freelance jobs, and that was before the new 20% deduction for pass-through business income under the 199A deduction.

TJCA 20% Deduction for Pass-Through Business Income

At the beginning of the year the big story was that there had been an attempt by Congress to prevent entertainment industry businesses from gaining full advantage of the 20% deduction for pass-through business income under 199A. However, in many ways that has been overstated and it comes down to the income level of the business owner and also the marriage status, since there is a marriage penalty built into this deduction. Tax planning is key, and I could not recommend someone file a loan-out without tax planning service from an entertainment law firm like ours being part of the formation, because there are many different ways to organize businesses, and many different choices of State jurisdiction as well. With proper tax planning done at the time of the formation of the loan-out company, all entertainment industry businesses should see substantial benefits from the TJCA section 199A deduction.

Elimination of Itemized Deductions

It is true that what the Tax Cuts and Jobs Act has given with one hand, it has taken away with the other. Employees with business costs are hard hit, and that effects many in the entertainment industry. When you are an employee you do not have the option of taking business expenses out of your calculation of income. The amount reported on the employee W-2 is your income and the only way to reduce your tax bill is through itemized deductions. Now under the Trump tax “cuts,” many of these itemized deductions are actually eliminated, such as unreimbursed employee business expenses, and a lot of others. Moreover, higher income employees will reach the alternative minimum tax, in which case most of the business deductions are then eliminated anyway, meaning that money spent on things like vehicles, business supplies, inventories, and office space is being paid for with after tax money. Essentially you are being taxed on your revenue, not on your profit.

Loan-Outs and Business Expenses

Aside from the new Tax Cuts and Jobs Act 20% deduction for pass-through business income, the original reason to file a loan-out company is still valid and comes down to business expenses. The loan-out company allows the individual to run in the same way that a company runs, which means the costs of doing business are taken out and the company only pays tax on the profits. This makes sense because no one expects a major corporation to be paying income tax on money it is paying out for office space or for the raw materials it uses in the course of business. So why should an individual be forced to pay tax on the materials that he/or she must purchase in the course of business? 

So, for the entertainment industry, the 20% deduction for pass-through business income in the new 199A deduction is a great incentive to start a loan out company, but the meat of the tax savings will come from switching from an employmee tax status to a business owner. That always provided tax advantages, and the new Tax Cuts and Jobs Act goes one step farther by eliminating employee itemized deductions, while at the same time tagging on a 20% pass-through business income deduction for entertainment business owners.

Remember that tax planning is key, and tax planning and business formation for an entertainment company is too sophisticated to trust to anyone other than a licensed entertainment law firm like ours.

Feel free to contact our office about rates for our tax planning and loan-out company formation services, and please do not decide 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 18 years. Please feel free to contact my office at www.filmtvlaw.com about a quote.

- By Brandon Blake, Entertainment Lawyer

Web Series Versus Television Development

Web Series Versus Television Development

Question for FilmTVLaw.com:

Been playing with the idea developing my dramatic series concept as a web series first, with the idea of selling it for network television later. A producer buddy of mine said it is a bad idea. Is there any legal reason this is a problem? 

Answer by Brandon Blake, Entertainment Lawyer:

Thanks for a great question. The television industry in the past 10 years has grown exponentially, and in some sense many high budget series could now be considered “web series.” SVOD, TVOD and AVOD platforms like Netflix, Amazon and Hulu are quickly taking over the television industry. Netflix alone has 50 million subscribers, which is more subscribers than the top five cable-TV companies combined. But as streaming platforms have grown, so has the percentage of original content. 

This means that while a streaming platform might be the ultimate venue for a series, there is still a distinction between independently producing a web series and developing a series with one of the major streaming platforms, networks, or major television production companies. When considering the best route, it is important to think about your ultimate goal for the series. I will explain how to make the decision whether to pitch to an established production company, network or platform or produce a television series independently in the following article. In addition to this article, you can also look up our Q&A blog at http://filmtvlaw.com/entertainment-lawyer-qa/.

Format Choices

The format of the series is critical. If you want to develop a scripted one-hour drama or a half-hour sitcom you really need to consider traditional television development for a couple of reasons. Getting at least one or two well recognized cast members is a short cut to building an audience. You have to think about how television audiences decide where to spend their viewing time. A recognizable face can give a show a shot at an audience that would not materialize otherwise. A-list talent is relatively expensive, especially for a web series, so it might pay to develop the project for a networks or platform, rather than try to raise the money to retain the talent independently.

If you decide on the network or platform development route, our firm can help pitch to executives, show runners and production companies. Development can save money, because you are looking for other financial partners like networks and production companies to cover production costs, although development is not free either. In order to stand out from the multitude of other projects being shopped, producers need to put together pitch materials that will impress development executives and get picked up.

As opposed to dramatic and sitcom series, reality television and children’s television is wide open for independent production. Producing a series pilot independently is often not too costly and will go along way to validating the concept can be successful. A strong pilot is a great way to get the attention of development executives. However, I have also had network executives tell me that depending on the program type, they can pick up reality series as concept pitches without even a sizzle reel. It just depends on the type of series and the novelty of the concept. 

Web Series

So, what defines a project as a web series? Web series today are produced for Youtube.com or other open platforms. If you intend on showcasing directing or writing talent, then web series are an option. In some ways web series are like film festivals are for independent film. They should be approached as a means to demonstrate your abilities and get public recognition. 

But revenue is a problem for web series. Since YouTube has reduced the CPM rates (Cost Per Mille), which is the amount of money paid per 1000 ad impressions, the real average CPM is now around $3. So that means $3 per 1000 ads viewed. But ads do not play on every video view, and if the viewer skips the ad or blocks the ad, then no revenue is generated at all from that view. Realistically you could be looking at $1 per 1000 views or less, equating to about $1000 for 1 million views. Producers will need a lot of episodes with an astonishing number of views before making back costs for even a modest web series.  

The second problem involves whether a network or platform will pick up an existing web series after it has been on YouTube. This point is two-fold. First, if a producer wants to approach a network about an existing web series, that web series must have over 100K, and preferably over 1M views per episode 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 themselves are fighting like crazy right now to stay relevant, and not to end up being considered just another YouTube channel. That relevance means seeing fresh, unique content that is not available anywhere else. So, network executives will run the other direction when producers bring web content to them, unless of course the series has several million views per episode.

Choosing a Path

Although there are creative ways to generate revenue from web series, mostly involving sponsors and targeted content, in the end most web series end up being showcases for the directors and writers, and not much more. In order to generate revenue from a series, most experienced television producers will choose to do so with a network, platform or major production company to pick up the bills and guarantee marketing and distribution of the project.

Please contact our office to discuss how our firm can help connect series concepts with networks and platforms actively looking for new content.

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 18 years. Please feel free to contact my office at www.filmtvlaw.com about a quote.

- By Brandon Blake, Entertainment Lawyer

The Section 181 Film Tax Deduction Is Back

The Section 181 Film Tax Deduction Is Back

Question For FilmTVLaw.com:

My producing partner got a couple of investors interested in a feature project of mine, and one of them asked about the Section 181 Film Deduction. Has that deduction already expired?

Answer by Brandon Blake, Entertainment Lawyer:

Film and television producers are very fortunate this year, because a new version of the Section 181 Tax Deduction was passed as part of the Tax Cuts and Jobs Act of 2018 (TCJA). This is great news for anyone looking for private investor financing for a feature film, television series or live stage production. 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.

For those who have been following the saga of the Section 181 Film Tax Deduction, it did expire at the end of 2016 with a lot of people assuming it would never return. But without much fan fair or publicity, a new tax provision emerged from deep in the 2018 Tax Cuts and Jobs Act (TCJA) that does the same thing, and it specifically references the original text of the Section 181 Tax Deduction, even though that deduction has expired.

WHAT IT DOES

Anyone familiar with the old Section 181 Tax Deduction knows that the purpose was to create a tax incentive for investors to invest in feature films, television shows, and later live stage productions made in the United States. The new Section 181 Deduction under the Tax Cuts and Jobs Act of 2018 (TCJA) likewise creates a 100% deduction for any money invested in a film, television series, or live stage production that is produced in the United States and that qualifies under the original qualification standards of Section 181.

What does a 100% tax deduction mean for a film or television investor? It means that for every $1.00 that a high net worth investor invests in a film or television series, the investor can write off 37 cents from that investor’s tax return. That is a tremendous incentive to invest in a film, television or stage production, when more than a third of the investment can be written off.

WHO CAN TAKE ADVANTAGE OF IT

Like the original Section 181 Tax Deduction, the new version of the Section 181 Tax Deduction can be taken when a producer sets up a qualifying securities offering, in which the private placement memorandum (PPM) and other provisions of the securities offering have been drafted to incorporate the new depreciation rules found in the 2018 TCJA version of the Section 181 Deduction.

The new Section 181 Tax Deduction under the Tax Cuts and Jobs Act applies to any investor that is subject to United States federal income tax. 

HOW THE NEW SECTION 181 TAX DEDUCTION IS DIFFERENT

The new Section 181 Film Tax Deduction is different in a couple of ways that make it even better for investors and producers. First, there is no longer any cap to the Section 181 Deduction, meaning that even projects budged over $15 million can take advantage of the deduction. The studios and networks might be the biggest beneficiaries of the deductions, because now every film and television series produced in the United States for the next 5 years will get to take advantage of it if the production qualifies.

Second, the way that the deduction is taken by the production company is now different as well. Rather than an expense, it is a form of depreciation. The provisions are complicated for anyone that is not familiar with tax law, but the net effect is to create the same benefit for investors as under the original Section 181 Tax Deduction.

Third, there are no longer special zones where certain geographic areas get a higher cap, since the cap has been removed altogether.

If you are pursuing investor financing for a United States based production, contact our office for rates on a TCJA complaint securities offering. 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

International Co-Productions for Film and Television

International Co-Productions for Film and Television

Question For FilmTVLaw.com:

I’d like to co-produce my feature film with a Chinese production company. Besides setting up the production company, is there anything else I need to be aware of? Do we need a contract and what law applies to an international co-production?

Answer by Brandon Blake, Entertainment Lawyer:

Having just gotten back from the Hong Kong Filmart, I certainly encourage everyone to explore the market for your film or television series in Asia, and particularly in the Chinese market.

The energy and activity at Filmart is no comparison with the last AFM in November. Although AFM was busy, I found many of the most active buyers were coming from Asia, and especially from Chinese streaming platforms. Filmart this year was on a whole different level. Many active buyers, many new and impressive Chinese production companies represented, and surprisingly, a level of technological innovation that was entirely missing from AFM. From glasses-free 3D, to emersion VR production, to 3D color printing technology, cutting-edge entertainment technology is being incorporated right now by many Chinese production companies on a big scale and there is not any analog to it in the US at the moment except at the studio level.

So, exploring Asian co-productions, especially with China, is a good idea.  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.

Co-productions between production companies can occur at a lot of different levels. For example, when you hire a Canadian post-production house to edit your feature, that is, in a sense, a kind of co-production. Of course, on an informal level, co-productions go on all the time, and there is no limit to working with production companies based almost anywhere in the world.

However, there are a couple of things that producers are usually trying to achieve through a foreign co-production, and when we talk about an “official co-production”, we are talking about the opportunity to take advantage of international production incentives, tax credit schemes, access to television markets, and the ability to sell your film or television series as a “local production” in the particular country or countries of the co-production.

Official co-productions are created by treaties between nations. Canada is the king of co-productions, with co-production treaties with more countries around the world than any other country. China has also been actively entering into co-productions treaties around the world. Many EU countries have co-production treaties, and there are also EU wide incentives available, but interestingly EU membership does not automatically create co-productions between EU countries. Contact the film commission of each country to determine potential co-production partners.

There is good news and bad news about setting up a co-production with China. The good news is that China is one of the few countries in the world to have a co-production treaty with the United States. Strangely, the US has negotiated fewer co-production treaties than any other industrialized country in the world. In fact, the US does not even have a co-production treaty with Canada or Mexico.

The bad news is the co-production treaty between China and the US is not very broad. There are no film incentives available from China for US co-productions, and film and television projects produced under the treaty do not qualify as local productions in China. 

To truly take advantage of the world of foreign co-productions, you must gain access to other national co-production partners. It is not uncommon anymore to have multi-party co-productions, sometimes involving three or more countries. Many countries around the world have done a better job protecting their national film and television industries and supporting their local production companies. 

There are opportunities to gain access to foreign co-production incentives, and our firm can work with you to strategically plan a co-production to take full advantage of international incentives, even if your production company is based in the United States. 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 Television Pitch Decks

Protecting Television Pitch Decks

Question For FilmTVLaw.com:

I have an awesome reality television pitch deck and want to start shopping it to networks and production companies. I filed a copyright already. Am I covered? Is there anything else I can do to protect my pitch deck?

Answer by Brandon Blake, Entertainment Lawyer:

Congratulations on getting your television series pitch deck together. You can’t get your project made without getting the pitch deck in front of development executives, so active submissions are the key. However, a word of caution, the rules of the game in television are a lot different than film, and some independent producers end up losing control of projects if they are not careful.  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.

None of my clients’ intellectual property rights have ever been stolen, whether that involves film, television, music or high-tech projects. Even Emmy award-winning executive producers choose to submit projects to networks through our firm to protect the rights and avoid “unsolicited material” issues. 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 television series pitch deck are not protected by copyright law. For example, the underlying concept and idea of a television series is not protectable under US or International 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 important to 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 hosts and 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.

Another issue to carefully consider are submission releases. Networks and studios may ask producers to sign submission releases, which essentially contractually specify that the producer will not later sue the television network for infringement by the television network. When an independent producer deals with platforms like Amazon and Netflix it is even worse, because often there are submission releases built into click licenses that the producer never even notices. 

Typically, submission releases can be avoided by having our entertainment law firm represent 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

Crowdinvesting Without the Catch-22

Crowdinvesting Without the Catch-22

Question for FilmTVLaw.com:

Last year you posted an article about crowdinvesting with a couple of companies you liked. Any recent developments? I have a couple of investors lined up but looking to avoid any upfront costs to set up the offering materials. Is that even possible?  

Answer by Brandon Blake, Entertainment Lawyer:

Thanks for following up about crowdinvesting. A lot of changes to talk about since last year. Short answer is that ideaPledge.com looks set to become the “Facebook of Finance,” by finally removing the catch-22 from equity financing. Gone are the membership fees and startup costs, replaced instead by a flat 10% compliance fee paid from the proceeds that covers everything from escrow costs to transaction fees. This is a major finance tool clients need to know about.

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 last year. 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. 

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 finally became effective May 22, 2017.

REMOVING THE CATCH-22 IN EQUITY FINANCE

ideaPledge is now the only crowdinvesting company that I am aware of with no upfront costs of any kind. When ideaPledge started last year, there were several membership fees, but ideaPledge has wisely removed those, providing a real financial tool with no commitment upfront from users or investors.

Historically, it has always ‘cost money to make money.’ To raise investor financing, it was required to set up a limited offering, which included a private placement memorandum (PPM), state and federal securities filings, and the organization of an investment company. 

However, all of that is in the past now since ideaPledge handles all the SEC compliance and financial documentation as part of the app, accessible both from mobile devices and desktop computers.

HOW IT WORKS – SHORT ANSWER

There is a short answer and a long answer to how this all works. Full disclosure, I have been retained to review and prepare some of the compliance portion of this app, so I know how sophisticated this is from a legal standpoint.

But from a user standpoint it is very simple. Someone seeking start up financing registers as a “Creator” (there is no membership fee now), and then posts a project to the Project Grid. Simple dropdown choices let Creators choose what percentage of the company to share with investors. Creators can upload video and photos for the project. Then Creators click the “Share Project” button to share on Facebook, LinkedIn, Twitter and Google+, or instead Creators can share links through email or even old fashioned postal service mailings.

Investors can look at the project for free and without registering, but to “Reserve Shares”, an Investor must register and go through a short questionnaire. It takes about 2 minutes and there is a nice interactive whiteboard presentation to take your investor through the process.

After Reserving Shares, the Investor then waits for the project to reach the Funding Goal. When it does, the Investor automatically receives securities disclosure materials and can purchase the units. The Creator receives the funds in about 10 days after the close.

HOW IT WORKS – LONG ANSWER

The long answer is that a lot is going on under the hood, and that ideaPledge takes advantage of a new Regulation A+ exemption, in addition to some longstanding SEC regulations, to create a forum where business owners and investors can privately share information about prospective offerings. Throw in a virtual currency issued by the app to Investor users and a very robust finance structure emerges.

One of the outcomes of this is that the offerings are private, unlike on other crowdfunding sites that use the Reg CF exemption, where projects are open to the public. Creators can invite individual contacts to view their projects, but before the investor can access the full website or Reserve Shares, the contact must first register and agree to the terms of the User Agreement.

That should give Creators a real sense of security, because materials are not being put out on the web for unregistered investors to see, and before any contact can Reserve Shares, they will have to agree to limited liability clauses that serve to protect the Creator.

FINAL REVIEW

I have to say that the entire app is very impressive, and given that it is no cost, it will catch on quickly. One point I will make is that ideaPledge is designed to bring in outside contacts, Facebook Friends, email lists, etc. and convert them into investors. Basically, ideaPledge replaces the use of offerings and investment companies, but it does not replace marketing and the need to have a list of contacts and relationships to which you can present your project.

I would recommend ideaPledge for any equity financed project, even those funded by close friends and family. Because ideaPledge handles the legal and compliance with no cost upfront, why not utilize this tool for even closely financed projects? It brings a level of professionalism and liability protection that no other service can offer.

As with any entertainment matter, please do not make a decision about complex finance 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 Legal and E&O Insurance

Production Legal and E&O Insurance

Question for FilmTVLaw.com:

Dear Sir, I have the budget raised for an independent feature, but need to know what the first steps should be to legally protect my project. How can I make sure production runs smoothly without any hitches?  

Answer by Brandon Blake, Entertainment Lawyer:

Having worked with feature filmmakers for more than 18 years, I know that perhaps the busiest time is during pre-production as a producer begins to think about all the requirements that will go into making a successful film or television pilot. I would be happy to discuss the production legal process and some steps to consider to secure your project legally. There are additional articles available as well at www.filmtvlaw.com, on my Entertainment Lawyer Q&A Blog. 

This article will address Production Legal, Legal Opinions for E&O Insurance, Chain of Title for film and television projects, and Negotiations with a Distributor and Sales Agent.

PRODUCTION LEGAL

Do not wait until the film is shot, or until you have a distributor, to get the legal paperwork in order. I have seen many producers get into trouble by being so eager to start production that they put off the documentation for the project until it is too late. That is an easy trap to fall into for any producer, no matter how experienced.

Remember, no matter how it feels at the moment, it is always easier to have contracts signed earlier, rather than later. Whether you are dealing with cast, writers, co-producers, or even crew, it is always easier to have contracts signed early in pre-production. Once production starts, and especially after production is over, some members of the production staff may decide not to sign, or to hold out for more backend or more deferred compensation, rather than signing.

This occurs because under copyright law, anyone that contributes to a copyright gains rights to that work, unless a valid, binding contract is signed. So, if there is a producer or writer, or even cast member or director of photography that has not signed a contract before the start of production, that person becomes recognized by copyright law as an “author” and part owner of the work.

LEGAL OPINION FOR E&O INSURANCE

At some point before the start of production, everyone that participates in the production will need to sign a contract if the project is going to get a commercial release. That is because distributors require E&O insurance (errors and omissions insurance), and before the insurance company will agree to cover a film the insurer will require that all production legal has been completed.

E&O insurance companies are the key to distribution, because without it, any reputable distributor will not take the risk of distributing the project. Of the items that an E&O insurance company requires, one is complete paperwork for every participant in the film, including for the “chain of title” for the project, and the other is an opinion letter from an entertainment lawyer specifying that the paperwork for the film is complete and that the production company is the sole owner of the project.

CHAIN OF TITLE

Of course, having copyrights and trademarks filed for the work are important too, and help to secure the rights to the project. Filing copyrights are not as easy as they once were, because now that the copyrights are filed online, the US Copyright Office has made many more options. The way that the copyrights are filed will determine whether your script is original or a “derivative work” or a “joint work”, all of which will eventually determine whether or not your production company has the right to distribute the film, or whether you need to seek licenses from other parties. Trademark is also important for protecting parts of some projects, and very important to animated projects and projects based on comic books or other graphic works.

Never let a third-party file a copyright or trademark on behalf of your company. For example, do not trust a writer or co-producer to handle that work on behalf of your production company. This is one of the leading causes of “chain of title” problems with film and television series. Make sure to hire your own attorney to handle all chain of title issues, because more often than not, co-producers and writers will succumb to temptation and will end up filing works in their own names, or as derivative works based on their own original stories, rather than as original works for the production company. This can create years of litigation and paperwork to correct after the fact.

NEGOTIATING WITH A DISTRIBUTOR AND SALES AGENT

When it comes to post-production and film sales, I routinely attend film markets around the world, including the Cannes Film Festival, AFM, Sundance, and Hong Kong FilmArt. Finding distributors and sales agents for projects is critical to the financial success of the project.

Just as critical is the negotiation of sales agent agreements and distribution agreements. After 18 years negotiating distribution and sales agreements, it is still incredible to me the number of terms in these agreements that are negotiable. And these negotiations equate to real revenue that comes back from the film. Properly negotiating a sales agreement or distribution agreement is very literally the difference between profit and loss for a filmmaker. Ultimately, no matter how well a title performs, a producer cannot make money if the sales agent or distributor does not pass through the money. This revenue stream is entirely controlled by the contract that is signed.

With the appropriate legal representation, any film and television series can be a success, and can generate revenue for the producers and investors. The key to success is starting early on the legal backbone of the project, and making sure all the key provisions are in place well before the start of production. I have been representing feature films for over 18 years with the law firm of BLAKE & WANG P.A. (www.filmtvlaw.com). 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 us for a quote.

- By Brandon Blake, Entertainment Lawyer

AFM Report: What's Hot With Buyers

AFM Report: What's Hot With Buyers

Question for FilmTVLaw.com:

A friend of mine recommended the forum! The only real inside information around anymore. So, what is selling at AFM? I am trying to decide what to push between two or three projects I’ve got in development. 

Answer by Brandon Blake, Entertainment Lawyer:

Thanks again to everyone that came down and visited during AFM this year. It was a busy five days. After meeting with so many buyers I did get a sense of where the market is and am happy to share some insights. I am dividing the following article into the following reports: Pre-sales, Market Stratification, Genre and Foreign Buyers, and Independent Television. I have represented more than 50 feature film and television series over the last 17 years and our firm consults on development, finance, marketing and distribution. Find out more about me at www.filmtvlaw.com.

To start, I can provide the first really good news about the film market since 2008, which is that according to nearly every buyer I talked with, this was a sellers’ market! Sellers means filmmakers, so this is a big improvement for all of us who are out there financing, producing and distributing film and television projects. Uniformly buyers were complaining that first, there were not enough new films available at the market, and second, that the quality of what was available was low.

Pre-Sales

As a result, for the first time in a longtime, buyers are interested in pre-sales again. When there are not enough finished films, buyers have to get involved with financing new projects, just to secure a stream of films for the coming years.  This is a huge victory for independent filmmakers, who have been struggling with self-financing since the 2008 financial crisis. The lack of financing has finally caught up with the buyers and the catalog of finished films is so low that we are entering a period of production demand again.

Rise of the Ultra Low Budget

Another dramatic change is that ultra low budget films, films with budgets under $500,000, are in demand. For years this was viewed as a supply driven market segment, where self-financing would take care of the demand. But no longer, as VOD and download platforms have created an almost insatiable demand for projects that can recoup at the lower price points that video-on-demand platforms create. And we are not just talking about Netflix and Amazon either. This is a worldwide phenomenon.

Continued Market Stratification

And as the ultra low budget film is gaining its market, the high budget $30 million to $50 million “independent” films also continue to do well, as big stars and famous properties draw out high finance for these international films. While it seems a little crazy to call a $50 million dollar film an independent, in today’s market studios have competition and the big budgets are driven by an entirely different type of financing.

Genre Is King

Perhaps to an unprecedented level, buyers are buying based on genre, rather than based on stars or on story. The first question is “what genre is the film?” or even “We are buying the following genres.” Forget about trying to pitch a cross-genre film or an arthouse statement film. Unless it fits the buyers check boxes, it is not going to get picked up. This is especially being driven by foreign buyers who are not necessarily familiar with B-Level American star power or name directors. This is also tending to further push the stratification of the market. One of the development services we offer is consulting on genre and foreign territory options for films while still in the development phase.

International Buyers

Finally, the international market is the key to success for most films. To some extent every territory is different, but there are also broad rules about what succeeds and what does not in foreign and non-English language markets. It has been my experience that every film can find an international audience, but only with substantial attention to genre and to story in the development phase. More than ever, films need to “fit the market” to find success in financing and distribution.

Independent Television

Without a doubt, the age of independent television has arrived, and there is an international market for series and episodic programming. This is an amazing development for television producers, because while a market existed for independent films for decades, television generally had to find international network buyers, and hence the demand was more limited. But the transition from DVD and Blu-Ray to video-on-demand and streaming platforms has eliminated the practical difficulty in delivering independent television.

Our firm represents independent film and television producers, and offers consulting packages that include development strategy, genre analysis, international territory sales projections, financial planning, marketing and representation services that can launch any film or television project. In today’s market, there is almost unlimited demand for properly placed 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

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