The Business of Media Distribution by Jeffrey Ulin

Jeffrey C. Ulin. The Business of Media Distribution: Monetizing Film, TV, and Video Content in an Online World. Elseiner: Focal Press, 2010.

Film studios make most of their revenues from distributing movies. A movie’s value, or content, is determined over time and is affect by market conditions, repeat consumption, price differentials, exclusivity, etc. There are multiple markets in theater viewings, home viewings (i.e. pay television, DVD, video, cable television, free television, paid online viewing, hotel/motel viewing, airline viewing, and non-theatrical viewing on cruise ships nd colleges. The product can be altered for extended versions, versions with commentary, etc. A movie may have 150 different versions, including different formats.

“Negative control” over distribution includes an outsider having rights of approval over a distribution element, such as an actor approving advertising.

Some studios engage in joint venture to reduce the cost of overhead each studio pays and to increase the number of films they can produce.

International box office revenues accounted for about 40% of all box office revenues in the 1980s and increased, reaching 50% in the mid-1990s, and were 64% in 2006 and 2007.

United International Pictures is a joint venture of Paramount and Universal and includes Dreamworks and once included MGM. This allowed shared managerial overhead which is more cost efficient. Revenues are not shared.

Russia has increased from being an insignificant market to becoming one of the ten largest foreign markets during the 21st century.

Spain fined major studios $15.3 million for price fixing and devising schemes against competition.

NBC, Fox, and ABC was Hulu to distribute on-demand programming.

It takes large organizations to distribute movies. Independent producers, sich as Imagine, operated by Ron Howard and Brian Grazer, released one film in 2009 while New Regency, led by Aaron Milchan, released eight films in 2008 and three films in 2007.

Fox created Fox Searchlight and Universal created Focus for distributing lower budget films.

Disney has Touchstone, which is mostly for releasing movies, Walt Disney Pictures, which releases family movies including animated films, Hollywood Pictures, and Miramax.

Sony has Columbia, Revolution, Screen Gems, Sony Classics, and Tristar.

Fox has 20th Century  Fox, Fox 2000, Fox Searchlight, Fox Atomic, and Fox Walden (which used to be Walden under Disney).

Warner has Warner Brothers, New Line, and Warner Independent.

Paramount has Paramount, Dreamworks, MTV / Nickelodeon, and Paramount Vantage.

Universal has Universal, Focus Features, and Rogue.

A high budget film is when its budget is over $100 million.

The average cost of a major studio budget in 2007 was $70.8 million.

A “tentpole” movie is one that significantly increases studio earnings, such as “Titanic”. Studios will place higher budges into expected tentpole movies such as the Harry Potter series for Warner Brothers, Spiderman movies for Sony, and Pirates of the Caribbean movies for Disney.

Many movies come fro real world events,books, or comics, sequels, or spin-offs.

Movies generally receive revenues for up to three months in theaters and hotels, from video releases usually beginning six months afterwards, residential videos on demand 30 days to three months after home video release, pay TV one to five years afterwards, and free TV for years after pay TV showings.

France has laws stating a movie may not be released on DVD prior to three months from when it was released to theaters, it may not be shown on pay TV for 18 moths or on free TV for three years after its theatrical release.

2929 Entertainment, owned by Mark Cuban and Todd Wagner, released their movies to 32 Landmark Theatres which they own and to DVD at the same time. Their philosophy is this reduces marketing costs as only one marketing campaign is required

Clickstar releases its movies for Internet download at the same time as their theatrical release. They fear Internet piracy and believes this prevents it.

Many successful movies emerge from books or comics. TV shows are usually origian ideals yet many are either about challenged marriages, hospitals, police, or sexual tension.

TV is testing different video on demand (VOD) markets. Some TV series off pay VOD upon showing the episode, some have free VOD for past episodes, and Europe offers pay VOD for next week’s episode.

Pixar attributes its success to its philosophy of approving people rather than approve specific projects. Pixar allows quality people to create their own ideas. A brain trust picks the best ideas.

Merchandising can be an important part of deciding which projects are approved. Disney gives large consideration to merchandising.

Some prospective TV shows have appeared first as several minute Internet shows. “Sophia’s Diary” in England is an example. “Quarterlife” went from the Internet to NBC but it did not last long on NBC.

Developmental costs are all overhead costs with no revenues.

Some proposed ideas are considered as storyboards and/or temporary voice tracks.

A copyright for a movie is the life of the author plus seventy years. If there was corporate authorship, the copyright is for which comes first: 95 years after being published or 120 years after being created. Extensions were created in 1998 for copyrights on films such as Mickey Mouse.

A copyright protects the whole while a trademark protects an element of the whole.

The MPAA estimates that Internet piracy accounts for about 40% of industrial financial losses (such as pirated DVDs). In 2006, it was estimated that hard goods piracy cost MPAA studios $3.8 billion while Internet piracy cost $2.3 billion. It is believe Internet piracy now costs more than hard goods piracy,

It costs a studio an average of over $70 million to produce a movie plus an average additional $30 million in marketing and distribution costs. Some moves cost over $200 million. Studios thus face great risks on a small number of investments. Sometimes risk is lowered by investing in other projects such as television shows.

The most common means of funding a movie is by the studio using its own financial resources. Studios will lower investment risk by taking on independent financing producers. Other financing means include bank loans, pre-sales proceeds, completion bond revenues, negative pickup structures, and debt and equity slate financing.

Some wealthy independent producers self-finance their films and use a distribution model. This occurs with Lucasfilm and Fox, as well as with Dreamworks and Disney, and used to exist between Pixar and Disney.

Some film obtain venture capital financing, as did “Polar Express” with Steve Bing.

Online productions are financed numerous ways, including self-funding, venture capital funds, company investments into websites, studio delivered services, etc. The advertising on these sites are used to generate revenues.

There is a poor correlation between awards and financial success. Those voting on awards reward artistic talents. Many financially successful films do not win awards. None of the top 15 commercially successful films in 2008 were nominated for a Best Picture Oscar. Only tow of the nominated for Best Picture in 2008 and 2009 had over $100 million in box office revenue.

Studios may reduce financial risks by creating an agreement with another studio to share financing and distribution rights. This is also done when two or more principals are connected to different studios, as in “War of the Worlds” where Steve Spielberg of DreamWorks worked with Tom Cruise of Paramount.

Fox was warned of risks in the high costs of making “Titanic”. Some believe Paramount purchased half the rights to “Titanic” at less than half the costs. This was very profitable for “Titanic” set box office records.

Studios with a strong brand such as Disney may obtain equity financing for a slate of movies. Hedge fund investments have partially financed some movies Their investments sometimes spread their risk by investing in multiple films.

Hedge fund investments have partially financed some movies. These investments sometimes spread their risk by investing in multiple films.

Some movies receive funds for producing films by pre-selling foreign sales. Some films receive 60% of their production budget from some presales.

Some films sell merchandising or video rights or advances for obtaining financing.

Some film distributors guarantee to reimburse a movie production for its production costs, which is known as negative costs. A distributor often has appraisal rights on budget production schedule, script, main cast, director, contingent compensation, film running time, and rating. A completion bond is often required, which allows a company to take control of a film if it goes over budget or over time schedule or defaults. The producer borrows financing using the guarantees as collateral.

Movies may obtain bank loans or a bank revolving credit. The bank will seek repayment and is not involved in a share of film film rights.

A studio may create a mini-studio that raises its own funds, as when Disney created Revolution Studios.and when Harvey Weinstein created the Weinstein Company. These mini-major studios often obtain financing from distribution deals and bank credit.

Marvel Entertainment, with $500 million from Merrill Lynch, created its own studios for films on its comic book characters. Marvel thus retains creative control.

DreamWorks SKG was created with a $1.5 billion in financing.

In rare occasions, a producer pays the production costs and receives a low distriibtuion fee.

Intelligent co-financers receive a share of the same revenues as do studios and receives them when they receive them. How net profits was defined and over which revenues streams they are from makes a difference.

Most TV shows cost more to produce then they receive in network licensing fees. TV shows become profitable from international licensing syndication and DVD sales.

Networks and studios produce several TV shows as only some receive enough in syndication to earn profits.

Cable TV networks obtain revenues from subscribers. Cable networks with higher demand may obtain a larger share of package fees.

Pay TV receives a subscriber fee and has the least risk financing. Free TV has the most risk financing.

There are few consistent models of profitability for Internet programming, despite low production costs.

Australia provide relatively significant tax incentives for movies produced in Australia. 12% of the “Superman Returns” budget was accounted for by these tax incentives. Europe and Canada also offer financial incentives for film productions. Canada has a point system where incentives are provide according to the number of Canadians involved in the production.

Distributors control the distribution process. The makers of the movie, the director and the producer, often have different ideas on how the movie should be marketed, which creates uneasy relations. Those involved in making the movie are often also part of the marketing.

Some films, especially those of Woody Allen, open in selected large cities. The marketing goal is to create interest in the film that takes it to other cities.

From 1988 to 2000, the number of theater screens in the US went from 23,000 to 37,000,  61% increase, while theater attendance increased 36%. Several theaters went bankrupt. As of 2004, there were 36,000 theater screens, Megaplex theaters that had revenues on concessions, coffee bars, and video arcades, drove much of the newly opened theaters. There were more screens at fewer locations. There were 7,151 multi-screen theaters and 5,629 in 2004. Major theater chains were bankrupt, such as Loews, Cineplex Entertainment, Carmike Cinemas, United Artists, Royal Cinemas, and General Cinemas as many were filling 10% to 15% of their capactity.

Digital cinemas present movies in good quality as film deteriorates and develops scratches. It cost about $100,000 for a theater to convert to digital film showings.

A theater may have a minimum guarantee deal with a certain payment over house expenses with guaranteed minimums that decrease each subsequent week. The splits between distributors and theaters are negotiated. A 90/10 split with minimums was once common yet remains in a minority of time.

A four wall structure is when a distributor rents a theater and keeps all the box office receipts.

Theaters receive increasingly larger shares the longer a movie appears in the theater. Distributors are more prone to seek to put new releases into theaters to keep their share higher.

Holiday periods are generally good periods to release new movies.: Batman: The Dark Knight” opened in mid-July and had the second largest theatrical gross ever.

Most films have two or four week deals to be shown in a theater, with six week deals appearing less often.

Foreign distributors often attempt to have the same person do voice overs for the same actors in all their films.

The biggest foreign markets are Great Britain, France, Germany, Italy, Space, and Russia. Due to demographics, the most prints are often needed for Germany, then France, and then Great Britain.

The U.S. Supreme Court agreed by 5 to 4 in Sony Corp. v.Universal City Studios taht time shifting by recording did not undermine a copyright value. Sony was supported by sports commissioners who favored people watching games they missed as well as by the Corporation for Public Broadcasting who wanted children to watch educational shows they missed.

By 1986, the combined movies rental and sales revenues of $4.38 billion was greater than theaters and office revenues of $3.78 billion. In 1988, rental revenues of $4.46billion were greater than theatrical box office revenues of $3.78 billion. An irony was Universal gained financially in losing the case while Sony’s Betamax lost financially.

In the early 1990s, a major movie title had 200,000 to 300,000 rental units.

From 1989, with “Little Mermaid” to 1999, with “Toy Story” Disney had annual animated hits with home use that children watched over and over. “The Lion King”, released in 1994, reached 30 million units.

Consumers liked DVDs over VHS because they did not have to rewind the DVDs.

Movie rental chains such as Blockbuster and Hollywood Video gave studios 60% of rental revenues. The movies were then sold usually for $5 to $15, with revenues split evenly with studios.

Studios made direct to video market sequels of major selling videos. Concert videos successfully entered the direct to video market.

DVD rentals surpasse VHS rentals in 2003.

Netflex marketed rental DVDs. It delivered 100 million DVDs to 1 million subscribers in 2003. In 2007, it delivered over 1 billion DVDs.

The average release to video after release to theaters period shrunk each year from 5 months, 22 days in 1998 to 4 months, 10 days in 2008.

In 2008, DreamWorks expected to sell 40 million units of “Shrek 2”. It only sold 35 million units which caused its stock to drop 12%.

Studios sometimes place a moratorium on a video. Disney markets this to increase sales. This also discourages retailers from returning unsold copies if they know they can’t later be reordered.

One entity may own the two TV stations in the same designated Market Area, as long as that at least one of the stations is not in the top five in ratings within that area.

It is estimated that 300 pitches for network TV series are made, from which 50 scripts are commissioned with 6 to 10 leading to a pilot.

4 Kids, which owns the merchandising rights to “Pokemon” and “Yu-Gi-Oh” paid from $25 million annually to broadcast their shows. 4 Kids made its profits in selling merchandising from those shows.

Stations may lower their costs of purchasing shows for syndication by ceding some advertising time.

“Baywatch” was unique in that it continued producing more shows for syndication after NBC canceled it.

Shows usually need at least 65 episodes and preferably over 100 to generate syndication.

“The Cosby Show” has earned over $600 million in syndication and continues earning more.

“24” cost $300 million to make at an average of $2.5 million per episode. The broadcasting rights produced $276 million and it took DVD sales to make the show profitable.

It is estimated that 35% to 40% of people watching T shows on DVRs skip through the commercials.

Hulu sells two minutes of advertising per half hour. Half hour episodes on TV usually have 8 minutes of advertising.

Pay TV channels create agreements according to runs on exhibition. They run often runs of primary and other channels. Sometimes there is a flat fee. There are rights issues on territory, foreign showings, formats, whether free TV and video on demand is included, any technical limitation, any carriage over delivery subscriptions, and if there are multiple feeds.

Some foreign countries have state broadcasters. In some countries, there are only state owned broadcasters This often means negotiating with a monopoly.\

International TV licensing has a high margin of fixed costs in creating different formats, dubbing subtitles, etc. as well as overhead costs in personnel and marketing.

There are over 50 foreign TV territories. The licensing fees for U.S. programs can reach into millions of dollars from England, Germany, France, Japan, Spain, and Australia

Canal is a pay TV network in Spain, France, Poland, Netherlands Sweden, Norway Denmark, Belgium, and French-speaking Africa.

Leo Kirch earned billions in Germany supplying and showing TV shows in Germany. He had a monopoly on U.S. programming, He also owns the rights to a library of old films, including 20,000 animation films.

Downloading media on the Internet is a growing market. Online advertising can be a source of revenues for showing films on the Internet.

In 2007, film marketing spent 22% on network TV, 14% on spot TV, 4% on trailers, 4% on online, 24% on other media, and 22% on other non-media.

The Hollywood Economist by Edward Jay Epstein

Edward Jay Epstein. The Hollywood Economist: The Hidden Financial Reality Behind the Movie. (Release 2.0) Brooklyn, N.Y.: Melville House, 2012.

The author notes that ticket sales are just a part of movies’ incomes to studios. There are also sales from DVDs, foreign distribution, digital purchases, video game affiliations licensing rights, etc.

In 2007, the average costs of advertising and prints was $40 million per major studio film An average of $3.7 million per movie was spent on newspaper ads, Newspapers in return hype movies and ticket sales news.

Film distributors generally receive from 15% to 33% of all theater receipts.

In 1929, an average of 95 million Americans (about 80% of the population able to go to movies) went weekly to one of 23,000 movie theaters. Actors, directors, and screenwriters then worked under contracts with specific movie studios. Studios owned movie theaters until the U.S. Supreme Court ordered studios to divest their theaters,

Movie theaters with stadium seating, which is where everyone is about 14 inches above the row in front of them, increases attendance between 30% to 52%. People are found to drive up to 20 miles in favor of theaters offering stadium seating, due to the better views of screens, over theaters that don’t offer such seats..

Movies seek promotional tie-ins with retail companies. 

Of almost 1,4 billion movie theater tickets sold in 1977, about 500 million are sold during summer. 230 million are sold from Thanksgiving to New Year’s.

The Americans with Disabilities Act requires theaters with 300 or more seat to have wheelchair access to all rows.  Most movie theaters have less than 300 seats.

An R rating for nudity makes a movie unattractive to toy manufactureres and fast food tie-ins.

$17.9 billion in DVD sales were registered in 2007. Walmart and Sam’s Club sell about a quarter of all DVD sales. Walmart has a “decency policy that puts movies with nuridy into its adult section which lowers sales.

Analog films costs about $1,500 to print per film. Some films may have prints for 9,000 U.S. theaters and 12,000 foreign theaters. The costs are assessed to a film production company, created separate from the studio. After a few weeks, all print except for a few hundred sent to military bases, are destroyed to capture the silver in the film. Movies are moving towards digital projection.

For “Terminator2”, Arnold Schwarzenegger created Oaks Productions Inc. for tax advantages in being paid a guaranteed $29.25 million plus 20% of worldwide gross receipts including videos, games, DVDs, etc.

Movie stars who get $20 million per picture often agree to work on independent moves at or near the $788 per day scale. This often allows actors to work in more artistic projects they enjoy, especially if they have no other work at that time. The existence of a star attached to an independent movie allows the independent movie company to pre-sell it to foreign distributors. Since these pre-sales are promised payments, the independent film production company may get a bank loan against the promised sales to pay for making the movie. The company obtains a completion bond that guarantees the bank will be repaid should the film fail to be made on time or at all.

Film Finance, Inc. and the International FIlm Guarantors provide most of the completion bonds These two companies are owned by Lloyds of London and Fireman’s Fund. The bonds generally require the movie to have full insurance on the star actor and must provide the bond company with complete budgetary control The bond company usually is paid 2% of the budget.

One per cent of 2,000 independent films the Sundance Film Festival receives find a distributor.

If someone is pad a “contingent compensation” above “cash breakeven”, it is important how “cash breakeven” is defined. Even actors, directors, and others on the same film may have contracts with different definitions of “cash breakeven”. the definition depends on what costs are considers, including the contingency payments paid ot others, advertising, printing, etc.

Few who have “net points” even receive anything for net points. The points are often based on profits to the separate production company that often absorbs the overhead and distribution costs. These companies rarely show a book profit.

Nicole Kidman injured her knee while acting in “Moulin Rouge”. This created a $3 million insurance loss. She withdrew from “Panic Room” which had a $7 million insurance loss to obtain Jodie Foster as her replacement. Fireman’s Fund refused to insure Nicole Kidman for “Cold Mountain” Kidman put $ million of her salary in escrow towards insurance while Lakeshore Entertainment added $500,000 to this escrow in order for International Film Guarantors to issue a completion bond for “Cold Mountain”.

A movie’s actual budge is usually known to people within the studio.

Merrill Lynch started hedge fund investing, eventually through Melrose Investors, that provided 18% funding of all 26 Paramount movies made in 2003 and 2004. Paramount charged a 10% distribution fee that lowered payments to the hedge fund. Similarly, Warner Brothers used Legendary Pictures as hedge fund investors who funds about $500 million into some of their films.

MGM no longer has the physical capacity to make films, such as a sound stage or a backlot. It has a library of 4,000 movies and 10,600 television episodes. This library includes the James Bond movies, which is the most valuable film franchise there is. Sony paid $300 million to put MGM titles in Blu-ray, thus creating Blu-ray as the industry standard. Comcast paid $300 million to show MGM titles on Pay Per View cable. A group of investors borrowed $3.7 billion from 200 banks to invest in MGM only to discover MGM’s DVD sales fell from $140 million in Fiscal Year 207-2008 to $30.4 million in Fiscal Year 2009-2010. MGM could not pay mandatory interest payments. Creditors gave MGM a forbearance to raise cash since insolvency would contractually revert the rights of the James Bond franchise to Danjaq, LLC. MGM obtained funds with a deal for Sony to distribute a new James Bond film with Sony providing half the financing. MGM had $4 billion of debt removed y a bankruptcy court and received $500 million in credit for JP Morgan Chase.

If a director, screenwriter, or one of the two highest paid actors in a film in Canadian, Canada offers a tax credit which in 2008 was 16% of the labor costs and a 20% tax break on any digital efforts produced in Canada. British Columbia provides an additional 18% rebate on labor costs. Over 1,500 movies and TV productions are done in Canada.

Movie studios usually obtain about 15% of foreign movie gross after paying for foreign advertising, translations, foreign prints, taxes, insurance, etc.

40 states compete with each other by offering incentives from filming movies within their states. New Mexico offers a 25% production cost rebate. 

The leader of Louisiana’s film program pled guilty to receiving $67,500 in bribes to overstate production costs so film companies could receive larger tax credits.

Each of the six major movie studios owns their own distribution company. Movie theaters bank with these distributors as they know the studios advertise nationwide for their films. The distribution companies create zones so movie theaters do not lose to each other in competition. The distribution companies will create favorable terms for poorly performing movies.

The distribution costs of distributing a movie is usually around 8% of costs.

Even though Paramount had six of the ten best grossing movies in film history from 1994 to 2004, a series of six financial disappointments led to Paramount Chairman Sumner Redstone to bring in new management and to fire over 100 executives. Existing film projects were canceled and Paramount found they did not have enough movies that they needed for distribution to maintain income. Redstone bought Dreamworks SKG for $1.6 billion and financed the deal by selling the Dreamworks library for $900 million. Redstone also discarded Tom Cruise’s deal with Paramount where Cruise received 22% of theatrical release gross and 12% of DVD receipts.. Thus Paramount ended its relationship with Cruise’s Cruise-Wagner Productions. Stephen Speilberg left the new Paramount-Dreamworks and created a new studio for $500 million that was borrowed from investors from India.

Tom Cruise starred in and produced the movie “Mission Impossible: 2” for no salary in return for 22% theatrical gross and 12% DVD sales. Ordinarily a star could be entitled to 10% of video gross. Yet some studios keep 80% for costs of manufacturing, distribution, and warehousing so that 10% in gross in reality becomes 2% of gross. Cruise received $70 million for “Mission Impossible”.

For “Mission Impossible 2”, Cruise agreed with Paramount for 30% gross share and a DVD share of 40%. In addition, Cruise paid director John Woo from his share. This earned Cruise $92 million. Cruise earned more money that did Paramount on “Mission Impossible: 2”. MGM the signed Cruise to a United Artists contract.

The National Research Group (NRG) began as a part of Nielsen Entertainment. NRG created a “Competitive Positioning” document for the six largest studios. NRG conducts telephone polling of likely movie attendees to see which movies they have heard of, which they may see, and their age and gender. Reports are made for males under age 25, males over age 25, females under age 25, and females over age 25. Studios often arrange to release films that are not in competition with other studios for the same demographic, Sometimes NRG data can warn a studio of a conflict and if a studio releases a move it may lose the competition. This my delay a movie’s opening to a different date.

In 2008, more studios received over $8 billion. Studios get distribution fees ranging from 10% to 33%. Studios obtain funds for movies projects through pre-sale agreements to foreign market rights, hedge fund investments, product placement deals, leasebacks on title copyrights, and tax relief deals. This often amounts to 20% to 60% of the film’s budget. Studios use funds from other movies or “revolvers”, which are bank credits.

Studios look for movies that are remakes, sequels, TV spin-offs, or from video games.

Movie stars no longer guarantee box office sales. Julia Roberts in “Everyone Says I Love You”, released by Miramax, had an opening weekend of $132,000 while her next film, in the same romantic comedy genre, “My Best Friend’s Wedding”, distributed by Sony, had an opening weekend of $11.7 million, or 150 times more. Similarly, Mel Gilson in “What Women Want” released by Paramount had an opening weekend receipts of $13.6 million while his next film “Million Dollar Hotel”, released by Lion’s Gate, had $20,483 opening receipts, or 1,000 times less. The difference was mostly the pre-release advertising committed by the studio.

The author states the “Midas Formula” for movie success is a movie 1.) based on something familiar to children, 2.) has a child or adolescent protagonist, 3.) has a flawed youth turn into a hero, 4.) has only platonic relationships between the sexes, 5.) has characters available for game and toy licensing, 6.) has no bloodshed, 7.) ends happily, 8.) uses animation, and 9.) does not use major stars that demand shares of the gross. Such a film can earn a studio $400 million to $600 million.

Disney used to release “Snow White and the Seven Dwarfs” every seve years to a new group of young audiences. It became the first movie to reach $100 million in gross.

Movies need to find villains that will not enrage ethnic groups. Corporate executives are often acceptable villains.

Many action films had over 70% of their earnings from foreign viewings. The formula is to be high on action and low on dialogue.

Studios have a limited number of theater availabilities to release their films. Small budget films may have a large profit margin, yet some studios will not consider even very profitable ventures if they are not expected to hit $150 million in box office receipts. Several independent and mini-major distributors had closed by 2010. The American value of an American independent movie today is almost nothing An independent film will require a foreign pre-sale agreement in order to be made. A bank loan or subsidy will be necessary. A completion bond will be required. Even then, there is usually a gap in financing.

Move theater receipts were 55% of studio revenues in 1980 and 20% in 2007.

Clearance & Copyright by Michael C. Donaldson

Michael C. Donaldson. Clearance & Copyright: Everything You Need to Know for Film and Television. 3rd Ed. Los Angeles: Silman James Press, 2008.

This is an excellent resource book on legal issues involving clearance and copyright issues affecting the film industry. Numerous sample contracts are presented within this book.

For the first 150 years of the printing press, printers could print what they wished, excepting censorship from the King. Queen Anne in the 18th century gave authors the right to determine which printers were allowed to print their works. The authors usually were paid by the printers they chose for that right.

The British and French idea of a copyright hold by authors extended to the British colonies. The idea of a copyright
was included in the U.S. Constitution.

A copyright automatically exists to any original book, play, song, photograph, etc. There is no registration required.

It is a violation of the copyright law to make even one copy of a movie.

A copyright lasts 70 years after the death of the author. If a work was written by a corporation, employee or hired employee as a condition of employment, the copyright lasts the lesser of 1.) 120 years from when if was created or 2.) 95 years after it was published.

A derivative work must secure permission from the copyright owner in order to produce an alteration of an original work.

A public performance of copyrighted material, even if performed for free, must request permission from the owner of the owner of the copyright.

Ideas can not be copyrighted. Copyright protects something in a tangible form. Thus, the more written, the more it is protected is someone steals it.

An implied contract bonds an agreement between parties even though the terms have not been settled.

An express contract is an agreement between parties of specific terms, either in writing or orally.

A dispute where a court agrees a story concept was stolen requires both parties to be industry professionals. A studio has no obligation to pay a non-writer for a movie concept. The court also has to agree that the stolen concept was specific enough to the concept used in the movie. The courts in most states will require the concept must be a novel one. Payment for the concept requires showing the author was denied the ability to make money for it in order for it to be a contract dispute rather than a copyright dispute.

A producer who pitched an idea that a studio makes has an implied contract. Courts have upheld this when the studio than made the film with no payment to the producer who pitched the idea. Such cases are often difficult to prove. The person accusing another of stealing ideas has to show by the preponderance of evidence that the accuser’s ideas were sent and received by the defendant, that it was clear the sender expected payment should the idea be used, and the accused knew this and accepted the idea on such payment terms.

Many studios require writers to agree to waive their rights before allowed to pitch ideas. Some studio lawyers avoid making this requirement too overbearing that a court would find it unenforceable.

Writers should keep all writings from a studio mentioning their ideas. This may be useful if a paper trail is every needed. It is helpful to keep a record of all meetings and telephone discussions.

Treatments and scripts should be registered with the Writers Guild (WGA). Mailing a script to oneself and not opening it until a trial may not work as opposing counsel may dispute that the seal can not be proved to have never been altered.

Another may make fair use of another’s work depending upon how it is used, depending whether or not it is used for profit, the nature of the work, the degree to which a copyrighted work is used, and how much the use of the work affects its value. Appellate courts have made inconsistent rulings regarding fair use. There are arguments between the need for copyright protections versus the needs of First Amendment expressions.

The resuse of the Reginald Denny tape by stations that did not obtain a license to show it were found to not have had a fair use to show it. Even though only 30 seconds of the tape was shown, it was considered the “heart” of the film.

It is not fair use to show the heart of someone else’s film.

The reuse of another’s film that is transformative, such as put into a documentary, can be a fair use of that film.

The publishing of concert posters in a book transformed the original use of posters and were fair use in the book/

The test of fair use is whether art of science is advanced move by the use of a copyrighted material than if it is not used.

A copyrighted material may be used for critique, whether social, cultural, or political, so long as the use is a presentation of the work.

Copyrights material should be attributed. Duplication of an attributed copyrighted material should not be more than what is required for the reuse purpose.

A copyrighted material unintentionally filmed for another purpose can be reasonably used so long as the copyrighted material does not become a main focus.

A copyrighted material can be used in a historical documentary, so long as it is not used more than required to make the intended part.

Court rulings have failed to produce clear definitions of what is or is not fair use of copyrighted materials. Fair use will require that it was necessary to make a point, only enough required to make the point was used, and there is a clear connection between what is used and the point.

A resume fee is required to be paid to a Screen Actor Guild, Directors Guild, or Writers Guild member for reuse of a post-1960 film. A reuse fee is not required when it is reused under fair use.

Used works should be credited, including naming the director. This is required in France and other foreign countries.

A copyrighted material on a book cover can only be enough to inform what the book is about but not enough to persuade the buyer to buy the book.

A movie whose advertising noted the existence of clips as an inducement to buy the film violated the fair use of the clips for historical purposes.

There are insurance policies for films that include a fair use rider.

Background music that unintentionally appears in a background and its sound is reduced as much as possible can appear in a documentary.

A short amount of music discussed in a film may be fair use.

A biographical documentary may allow small amounts of the music by the subject of the documentary.

Compositions and recordings have different fair use standards.

Satire can directly take material and comment on it.

A parody can be made of a copyrighted work that criticizes or comments on it so long as it does not diminish the value of the copyrighted work. There is no requirement the parody contain humor. 2 Live Crew’s “Pretty Woman” was ruled a parody of Roy Orbison’s “Oh, Pretty Woman”.

Critical commentary may parody another’s work. Parody may be done by a serious work.

Public figures can be parodied.

A trademark can be parodied.

A copyrighted song presented humorously or by an impersonator is a violation of the copyright.

A slight change to a recognizable song violated its copyright.

A trademark’s reputation can not be abused in a film.

“Animal House” is an example of a movie that made satirical comments without using any copyrighted materials to make those points.

Jokes usually can not be copyrighted, although parodies can.

A comedian’s expressions copied verbatim can have copyright protections.

All pre-1923 works are in the public domain.

Some pre-1978 works have expired or renewed copyrights.

Works produced by Federal government employees as condition of their employment are public domain.

Studios and movie financiers prefer that a film purchase all underlying rights.

The retelling of a story an author claimed as fact cannot than have the author cliam it really is a protected fictional story.

“Snow White and the Seven Dwarfs” is a public domain story. Independent additions to the work Disney are copyrighted by Disney.

A pan and scan alteration of a public domain film can be protected and create a copyright infringement if reused by another.

A non-commercial Creative Commons license prohibits any commercial use of the work.

A no-derviative Creative Commons license prohibits any derivative work of that work.

An Attribution Share Alike 3.0 license allows others to obtain the license granted for its use in the same manner as the work itself is licensed.

An Attribution 3.0 license allows use of the owkr so long as attribution is given.

A work whose owner can’t be found after a legitimate substantial written search is an orphan work that can be used. If the orphan work’s owner later appears, fewer copyrighted protections are afforded the owner/

Filmmakers often pay archives for public domain films as payment for the services for the archives/

The updating of the soundtrack in a public domain movie recaptured the film’s copyright.

Popular visual characters or drawn characters are licensed so royalties must be paid on advertising.

A music video using a character looking like Freddy Krueger was prevented from being shown.


A television commercial that used a James Bond copy was successfully sued for violating James Bond’s copyright.

A “holdback period” is when a copyright owner allows one party, but no others, to develop a film proposal.

A “right of first negotiation” requires a copyright owner to conduct good faith negotiations with one set party before negotiating with anyone else.

A “right of last refusal” gives a party the right to match the final offer made by another.

A “franchise” character is a popular character that can be expected to attract many viewers, especially during the first weekend of a movie’s release.

A copyright dispute over a character may depend on whether a character has enough original “character delineation”. Also important, to a lesser degree, is the degree to which the “story being told” concerns the character in dispute.

A copyrighted logo that appears on clothing used as costume in a film that uses the clothing in its intended use should not be a trademark violation. Documentaries have less to worry about. A lawsuit was filed by the trademark owner of the Barney costume, but lost as it was a parody, over the commercial use of a Barney-like costume.

The owner of source material which a script is based upon owns “underlying property”. The “underlying rights” must be obtained from this owner.

A film company has to own the underlying work in order to do anything with the story that involves a film, including re-releases. A work with a –re-1978 copyrighted story may have seen its film rights to a studio cease when a writer died and those rights were inherited.

Often a studio buys an option of a film which gives the studio the right to decide if it will make the film. No other studio could bid on the film while the option remains in effect. The author advises the option be in writing.

A bible is a descriptive detail of a script story. There can be separate owners of a story, bible, and screenplay. Characters can also be separately copyrighted.

Film rights for most books are held by their authors.

The copyrights for most comic books are held by the publishers.

Magazine articles, newspaper stories, and non-fiction books may have two tiers of ownership by the authors and the subjects.

Films based on a song usually need to obtain rights from the song’s publishing company.

The film rights to most plays are held by the playwrights.

Film rights to sequels or prequels can be held separately from other film rights.

Unless a screenwriter is a “work for hire”, the copyright of the screenplay belongs to the screenwriter.

The copyright for a work for hire is the shortest time of either 95 years after publication or 120 years after its creation.

Most studies are double vested, with one production company that signs WGA members to a Minimum Basic Agreement (MBA) and another that signs non-union writers without the MBA.

Absent a written agreement, each joint author of a script has a right to make deals and is required to provide a share to the other writers.

In a joint writing effort, if one person has the right to decide what goes into the script, that person has superintendence over the script. Courts have varied over the degree to which superintendence determines the rights between joint authors.

The rights to a spec script remain with the author. The purchaser a script can change it as the purchaser desires/

A submission agreement allows someone to read a script and not be sued bo the author if the reader produces any similar film.

An enforcement contract has to specify what one party gets in return for how much payment, who the parties are, and the length of time the contract will last.

Copyrights are not required to be registered. The author recommends registering a screenplay before pre-production.

A court may award damages if a copyright is infringed.

A bank lender, investor, or creditor may have a security interest in a film.

People have a right of privacy, even to factual information about them. Courts have made different rulings on what can be discussed about a person’s private on film.

A person generally does not have a reasonable expectation to privacy when in public. Usually a person can be filmed in a public place. The following, though, may be disallowed to be shown if an affirmative misrepresentation was made in the filming.

The tort of false light occurs when a false statement harms or embarrasses a person.

A written release should be obtained from a person who is filmed in order to best avoid lawsuits from filming a person.

A Life Story Rights Agreement allows a film to be based on someone’s life.

A trademark used as intended and is not disparaged does not required permission to be used.

Caterpillar sued Disney for diluting its trademark by showing characters misusing their products. Caterpillar lost as it was the characters who were inept and not the product.

Whammo sued Paramount for depicting a character misusing its Slip ‘N’ Slide product. Whammo lost as it was obviously the misuse of the product that was shown.

American Dairy Queen Corporation successfully sued a movie that was planning on using the title “Dairy Queens:. The title was close enough to the established product Dairy Queen and the film title would damage its reputation.

Copied set designs can cause the original set designer to sue. Universal settled in such a lawsuit.

The filming of a building does not require the permission of its architect. Artwork in a public open space can be shown without permission in one court decision.

A documentary does not need a location agreement.

A fictional film should obtain a location agreement for all locations used. Government permits may be necessary for public locations. The author advises making sure the permission is obtained from the right sources. A building owner may not have the right to grant permission for filming inside a tenant’s space. A tenant may not have the right to allow cable for filming brought into a building/

Permission may be required to film a decorate art piece. Different court rulings have been reached on this issue. Issues to consider are whether a short focuses on the original art piece, if it is recognizable, and if it is a focal point rather than set dressing.

Books, magazines, and newspapers are not decorative arts.

A prop used as it is intended can be depicted in a film even if it has a copyright.

A prop created for a film should be an original piece. Using a knock-off protected by a copyright still can violate the copyright. A sculptor sued Warner Brothers seeking an injunction to prevent distribution of a movie using a similar sculpture. Warner Brothers settled the suit.

Music used in a film must be cleared. Deals must be negotiated with the holder of the rights to the music. Even adaptations of songs require approval.

Some films hire original composers.

A film that depicts a TV set another film requires permission from both the holder of the copyright of the film and the actors shown in the film.

A movie title has to be cleared. Movie titles do not have copyrights. They can be a product protected by trademark. Some movie titles have trademark status. The Motion Picture Association of America registers titles.

A title should not indicate an endorsement from anyone when no endorsement exists.

Errors and omissions insurance protects a film against accidental infringement of a copyright, trademark, person’s privacy, etc. Media/Professional and Chubb offers the bulk of this type of insurance.

A chain of title shows all ownership of a film from its beginnings.

A final film, called a locked film, should be registered with the Library of Congress.

A copyright infringement can occur if too many specific details of another film are used in a film. A court prevented the release of the movie “Great White” for being too similar to “Jaws.”

Entertainment Law by Sherri L. Burr

Sherri L. Burr. Entertainment Law. St. Paul, Mn.: Thomson West, 2007.

The entertainment business is an important part of our culture and our economy. Its exports are financially larger than our food exports. Foreigners learn about American culture through entertainment exports and are apt to see and desire American fashion, products, etc.

A main film producer often hires creative staff, hired actors and directors who can work with the studio and with each other, chooses film locations, develops a budget, makes legal arrangements (if necessary) with shooting locales which can sometimes include foreign governments, supervises the screenwriting and then the filming and then the editing, and consults with studio personnel on marketing and publicizing the film. Producers without a financial interest in the film or the company doing the film who are employed by a studio or a production company are “employee-producers”.

Some producers are financial investors or primarily involved in obtaining investors in a film. They may have budget oversight.

Producers obtain distribution agreements, including domestic and foreign. These rights are agreed to before a film is finished and encompass the release date, a list of theater showings plus the contract details of theater exhibitions, the cost of advertising, as well as contract details for DVD, cable, TV broadcasting, etc.

A screenwriter has a right to buy back a script that contains no preexisting material if it is not produced after five years nor is in active development. The writer must repay the purchase price and/or the price of writing services. A subsequent purchaser must pay the rest of direct material costs and interest and so pay before principal shooting begins.

A director has the responsibility for a film’s images and “feel”. A director sees the screenwriting producers an appropriate script, directs rehearsals with actors, and provides direction to camera and sound operators, as well as providing direction to costume designers, set designers, editors, music composers, and the film laboratory technicians. Preproduction often takes two to six months.

Independent directors may be responsible for some activists a major studio producer would handle, such as raising financing, costumes, obtaining permits, seeing laws such as child labor laws are obeyed, and working with local film commissions.

Leading actors may work for 6 to 7 years while character actors may be employed for 50 years. Character actors master the ability to use body language and dialects to obtain various effects/

A “star’ is an actor a studio executive seeks and a “superstar” is an actor all the studios seek. The name of a star attached with a film should attract investors to finance a film. Some question the economic differences that stars bring to film profits, as in 2003 less than half of the most commercially successful films were star vehicles.

Technical staffs arrange sets and lights into their proper positions. Actors then arrive to act. Film editors craft raw film footage into usable film stock for post production.

The director of cinematography is responsible for all the movie photography.

Gaffers handle lighting.

Michael Orvitz, a former agent and cofounder of Creative Artist Agency, received $140 million to leave employment after 14 months with Disney, an amount that was almost 10% of Disney’s 1996 earnings.

Joe Roth was a leading executive at two major studios before creating an independent studio, Revolution. Revolution producer 47 films before it failed after six years.

Over 300 film commissions are members of the Association of Film Commissioners International. These are local commissions that assist nonlocal film productions.

Film and television was a $34 billion industry in California in 2005. Other states seek to attract filmmakers.

Louisiana has a 25% investor tax credit rebate and a tax credit for up to 20% when employing a Louisiana resident.

New Mexico has a 25% tax credit on all production and labor costs. The New Mexico Investment Council invests up to $15 million a film and that can be the film’s entire budget. This investment requires a guarantor who will guarantee the loan’s payment, a completion bond, the existence of a distribution or a presales agreement, 60% or more of below the line payroll going to New Mexico residents, and a substantial part of the film being shot in New Mexico.

Florida has a 15% reimbursement once $850,000 or more is spent by a film on various qualified expenses within Florida/

Action films often earn the most revenues, both domestically and in foreign revenues. They are often the more expensive type of film to make. They are often dangerous to make. There people were killed during filming “Twilight Zone: The Movie”. The film’s director went to trial for involuntary manslaughter and was acquitted.

Animated films often are less expensive to produce.

Documentaries are often less expensive to make. “Fahrenheit 9/11” has been the most financially successful documentary. It cost $6 million to produce and $10 million to generate. It has made about $250 million worldwide.

A person who signs a release and is paid to appear in a documentary still may sue. A contract is valid even if the person doesn’t read it all. Some who have sued claimed they were given alcohol before being shown the contract.

Television executive Brandon Tartikoff seeks enthusiasm when people first wish to create a TV series. That enthusiasm may need to last for years to keep the series fresh.

Major networks generally begin new TV series in early September, offer mid-season replacements in January, and have summer shows. Fox TV offers new shows year round.

There were 30 Western TV series on the three networks in the 1950s. In 2004, the only Western was “Deadwood” on HBO. The Western “Gunsmoke” ran from 1955 to 1975 and is the longest running TV series at 633 episodes.

TV executives want shows that can last five seasons. Full season orders of shows are 22 episodes. After about 100 episodes, a show is generally considered as having enough episodes for syndication. Desilu earned $60 million between 1955 and 1965 form syndicate licensing of its shows including “I Love Lucy”.

Michael Constanza sued Jerry Seinfeld, contending he was the inspiration for the character George Constanza on “Seinfeld” and that the character cast him in a bad light. The New York courts determined the suit was frivolous and sanctioned George Constanza and his lawyer each for $2,500. The Appellate Division ruled the dismissal of the lawsuit was appropriate but removed the sanctions.

TV show contestants who win prize money are required to pay taxes on the prize money. A contestant winner of “Survivor” was sentenced to 51 months imprisonment for failing to pay taxes on the money he won.

A reality show may require a contestant to sign a confidentiality agreement. A person who signed and then challenged this was unsuccessful in California court.

TV game shows have a right to limit the number of times a person can appear on all game shows.

A release statement to appear on a game show that included a provision that the decision of the producers at to the game was upheld in New York court when a contestant challenged that he had given an alternative correct answer on a game show that stated his answer was wrong.

TV talk shows usually require interviewees to sign release agreements.

A TV news station, whose crew followed paramedics and filmed an unsuccessful attempt to revive a patient, had a California court rule the widower had a cause of action for trespass, privacy invasion, and intentionally inflicting emotional distress.

A Circuit Court held that KMGH in Denver engaged in illegal age discrimination in not renewing contracts of anyone in news reporting over age 40 and limited those over 40 to late evening news.

A class action suit of 50 television writers over age 40 claiming age discrimination. Citing that two third of TV series lacked any writers over age 40, was dismissed. 23 separate similar suits were all dismissed.

An American Family Physician study of school children and the amount of time they spent viewing TV concluded there was a correlation with increased TV watching with increased attention deficits, aggression, externalization, delinquency, social problems, and thinking problems. The study advised that children view two or less hours of TV a day.

Clarence Muse was the first African American to appear on TV when he appeared on W6XAO station in Los Angeles. Bob Howard was the first African American to star in a network TV show on a show that ran from 1948 to 1949, “The Bob Howard Show”.

The U.S. Supreme Court rules in Adarand Construction v. Pena in 1995 that Federal Communication Commission (FCC) rules to encourage the employment, as well as station ownership, or members of racial minorities violated the equal protection component of the Due Process Clause of the Fifth Amendment. This overturned a 1990 Supreme Court ruling that had upheld the FCC rules. In 1999, none of the major networks’ new shows had a lead actor who was African American, Latino, Asian American, or Native American. A threatened boycott by the NAACP led the networks to agree to create more characters who were racial minorities.

A study by Robert McIlwraith concluded people can become addicted to watching TV.

Cable began with the Community Antenna Television when TV salesman John Watson put an antenna on a Pennsylvania mountain to capture and transmit TV signals to his store so he could sell more TV sets. 60% of households had cable in 1992. 80% of households had cable in 2001.

The U.S. Supreme Court in Turner v. FCC in 1997 upheld FCC rules requiring calbe television to carry local programming.

In 1999, the Satellite Home Viewer Improvement Act became law. This requires direct broadcast satellite companies to include all broadcast stations if they include at least one. To make it easier for direct satellite companies to do this, it allowed them to show these stations without having to obtain copyright authorization for each program shown. The U.S. Circuit Court of Appeals upheld this rule as necessary to key an array of local broadcast stations in existence.

The U.S. Court of Appeals halted FCC rules that would have prohibited a conglomerate from owning multiple media outlets in the same city, meaning no one can locally own two TV stations or a TV station and a newspaper, or a TV station and a radio station.

A Center for Public Integrity study found that over eight years that FCC employees took about 2,500 trips costing $24.8 million that were mostly paid for by the telecommunications industry. Las Vegas was the most popular destination for these trips.

TV networks had a recent financial interest in 67% of their prime time shows compared to 32% in 1992.

NBC, CBS, ABC, and Fox offer TV shows online. They may be viewed for free and have advertising.

YouTube allows people to post videos for all to see. Google purchased YouTube for $1.65 billion in 2006.

Over 305 million units of music were sold in 2004. Compact discs account for 98% of those sales.

A music publisher contracts with companies to sell sheet music of a composer’s works and shares the revenues with the composers. A performance may perform a composer’s song by paying statutorily set royalties to the music publisher who then gives the composer a share of these earnings.

A recording company granting a right for a song to be in a movie allows the song to remain in the movie for future distribution, including DVD and by any means or methods now or hereafter known.

Many recording companies pay for a band’s touring expenses out of the band’s royalties. Some band members have not been aware of this.

The U.S. Supreme Court ruled in Miller v. California in 1973 that “obscene material is not protected by the First Amendment” and rules obscenity is determined by whether “the average person, applying community standards, would find the material pruient, if the work describes or shows sexual conduct, and if the whole work lacks an artistic, literary, or scientific value.”

The Motion Picture Association of America (MPAA) sought movie self-regulation by creating ratings of G (for general audiences), PG (for general audiences with parental discretion), R (minors restricted unless viewed with an adult), and X (obscene, not to be viewed by minors) to provide viewers notice of a movie’s content.

The U.S. House Committee on UnAmerican Activities (HUAC), which began in 1938, investigated Communist influence in Hollywood. Many suspected members of the Communist Party were blacklisted. Several of those blacklisted sued. U.S. District Court in 1962 found that the movie industry had a legitimate interest in controlling possible subversive activities from being introduced to movie viewers and in protecting themselves from anti-Communist boycotts. HUAC was abolished in 1974.

The U.S. Supreme Court in 1961 in Times Film Corp. v. City of Chicago upheld the right of states and cities to require a film to be submitted for local determination if it was obscene. In 1964, four states (New York, Virginia, Maryland, and Kansas) and four cities (Chicago, Detroit, Providence, and Fort Worth) had active censorship laws. In 1954, the U.S. Supreme Court in Freedman v. State of Maryland overturned a conviction for violating local obscenity laws stating the Maryland law posed too great a burden on film exhibitors.

Mirimax Films Corp. sued the MPAA for giving an X rating to the film “Tie Me Up! Tie Me Down!”. The New York Supreme Court in 1990 dismissed the case stating the courts was not the appropriate place to seek relief for an internal industry dispute.

A District Court of Appeals remanded a District Court’s dismissal of a case brought by Maljack Productions against MPAA. Maljack argued MPAA gave an X rating to a film because Maljack was not a member of MPAA. The Appeals Court stated that was a breach of fair dealing and good faith.

A court ruling allowed a school superintendent to refuse to allow a history teacher to show an R rated film “Schindler’s List” to his class.

MPAA ratings have been criticized for being based on sexual content rather than considering violent content.

A court rules that Paramount Pictures and Saxon Theater Corporation could not be sued because a person who viewed the movie “The Warrior” about juvenile knife violence then committed a similar knifing death. Similarly, a victim of a violent crime committed by people who viewed the movie “Natural Born Killers” was unable to successfully sue the studio, Warner Brothers, and the director, Oliver Stone, declaring the movie as protected speech.

The FCC fined CBS $550,000 for a two second showing of Janet Jackson’s bejeweled breast. (Note: Since this book’s publication, this fine has been overturned in court.)

The FCC fined Clear Channel $1.75 million for indecency of the “Howard Stern Show”.

The U.S. Supreme Court ruled that since cable TV could have shows blocked on a household basis that Playboy had a First Amendment right to broadcast whenever they wanted. Prior to then, sexual oriented shows were limited to cable broadcasting between 10 pm and 6 am or else had to be blocked or scrambled.

The Michigan Court of Appeals held, and the U.S. Supreme Court denied a writ of certiorari seeking an appeal of the holding, that “The Jenny Jones Show” was not liable for damages and did not have a duty to anticipate that a guest would react to learning that a second guest had a crush of the first guest would lead the first guest to later murder the second guest.

A court decision disallowed a trial against NBC by the victim of a rape that was seen and then simulated from the TV show “Born Innocent”.

Two people were convicted in U.S. Court of Appeals in 2005 of obscenity for selling videos that showed sodomy and torture on the Internet.

The title of a movie or TV show may receive a trademark if it is going to be used in the marketplace or merchandising.

The Law of Ideas protects story segments that lead to movies of TV shows. Copyrights protest those expressions of ideas.

The Law of Ideas means the originator or an idea that is developed must be compensated. Many court cases have resulted in attempting to establish whether one party factually heard and agreed to compensate for an idea discussed in confidence.

A screenwriter can copyright a script and receive credit for the script. Upon selling the script to a studio, it legally becomes a commissioned work and the copyright is in the name of the studio.

In 1976, Monty Python successfully won an injunction to prevent ABC from broadcasting an edited version of a work of theirs they argued misrepresented the original work. They argued for the Right of Integrity. ABC had removed 24 of the original 90 minutes and left a program that was difficult to follow.

French court refused to allow a colorized version of the film “Asphalt Jungle directed by John Huston to be shown on French television and ordered Turner to pay 200,000 francs in damages and cost. John Huston objected to showing of the version that had been colorized by Turner claiming he deliberately shot and crafted it as a black and white film. The French court agreed that while Turner owned the economic rights to the movie that John Huston retained authorship of the film.

In order to prove a copyright has been infringed, it must be shown that a copyright is owned and that another person either copied or used an exclusive right of the work.

In 1936, a court found that the movie “Letty Lynton” was substantially similar to and thus had violated the copyright of the play “Madeline Cary”.

A District Court ruled in 1977 that certain aspects of TV show are protected from infringement. The court ruled that McDonaldland TV commercials were similar to the TV show “H.R. Pufnstuf”.

The Los Angeles News Services (LANS) sued Reuters for sending a copyright videro of riot beating to Europe and Africa from a satellite transmission originating in New York. Copyrights do not apply outside the U.S. The Court of Appeals declared the New York means of sending the unlicensed film infringed copyright laws and that LANS could obtain damages.

In Hochling v. Universal City Studio, a Federal court ruled that a book author’s theories about the Hindenburg disaster were not protected as interpretation of facts can not be copyrighted.

The fair use of copyrighted material is allowed for nonprofit educational reasons. Whether a copyright has been violated is determined according to how much of the copyrighted material was used, how much of the value or potential market value of the work is, and upon the nature of the work. Remedies may be ordered to prevent or restrain copyright infringement. A court may impound all copies, film negatives, tapes, plates, etc. of material infringing a copyright. A copyright owner may choose to receive statutory damages of $750 to $30,000 instead of actual damages. A court finding a copyright infringement was willful may award $150,000 or less in damages. Criminal willful copyright violations for financial gain over $1,000 could lead to five years or less imprisonment and/or $250,000 or less in fines.

The movie “Tomorrow Never Dies” received $110 million in product placement and merchandising contracts, which is about what it earned in domestic box office revenues.

Hormel sued Jim Henson Productions over the creation of a character Spa’am. Hormel feared its product SPAM’s reputation would suffer. The court decided the character was a legal parody.

California limits agents from receiving no more than 10% of their clients’ earnings. In New York, literary agents charge 15% of earnings.

Lawyers representing union members in negotiations should learn what collective bargaining already establishes so they don’t negotiate for a right their client already has.

California requires an agent who seeks to procure employment for a client be licensed according to the Talent Agencies Act.

Actor Kelsey Grammer sought to terminate having Artist Agency as his agent. Artist Agency and Grammer agreed to an interim contract where they would represent his TV work and another agent could handle his movie deals. A year later, Grammer sought out of his contract with Artist Agency. Artist Agency sued Grammer for $2 million. An arbitration panel agreed with Artist Agency. Grammer appealed in court but lost. Grammer would ridicule agents on his “Frazier” TV show.

There are no legal requirements to being a manager. A manager acting as an agent without being a licensed agent risks not getting paid. A manager advises a person on carrier and professional development. Managers may charge more than 10% of earnings.

A member of the Screen Actors Guild (SAG) can lose union protection if the member agrees to work for a producer who has not signed a basic minimum agreement with SAG.

The U.S. Supreme Court in Marquee v. Screen Actors Guild ruled in 1998 that SAG has no legal duty to notify someone about specific rights.

The Writers Guild settles writing credit disputes by having a committee hearing and then using three arbiters who read the materials and decide credits by majority vote. This decision is reviewed by a Policy Review Board. A decision must be made within 21 days or else the producer may determine the screenwriting credits.

The Producers Guild of American is a voluntary organization of producers. It can determine who receives producer credits.

The International Alliance of Theatrical Stage Employees, Moving Picture Technicians, Artists, and Allied Crafts (IATSE) has over 104,000 members. This makes it the largest union in the entertainment business.

The American Federation of Television and Radio Artists has 70,000 members. Actors Equity has 46,000 stage actor members.

In film credits, an ampersand between names means they wrote together while “and” indicates a writer who contributed a version of a script.

New York Court in Sophia Loren v. Samuel Bronston Productions ruled that receiving a billing does not damage one’s prestige.

The court ruled in favor of director Michael Apt who asked that his name be removed from the TV version of the movie “Thunderheart” when 22 minutes was cut from the film.

Stephen King sued to have his name removed fro a movie that described itself as “Stephen King’s The Lawnmower Man”. He believed the final story was very different from the original short story he had written to which he has sold the movie rights. The District Court held the film company in contempt for not having a required consent decree.

The Academy Award for Best Pictures award goes to the movie’s producers.

California court found removing a “film by” credit could cause the person who previously had such credit harm. Producer, writer, and production manager was awarded $25,000 when the 10th anniversary of this film “Four Stones for Kanemitsu” removed his “a film by” credit.

A Most Favored Nation clause in a contract requires the actor afforded such states to receive an increase in compensation equal to that of another actor should another actor in a work receive higher compensation that what the actor holding that clause receives.

William Smith sued and won $3 million damages in California court from MGM for its getting him to agree to less pay for a TV series in return for upfront billing at the start of the show. Instead, eleven actors received upfront billing, but not him. The case was appealed and settled out of court.

The weekly wages (circa 2007) for a key grip is $3,018, for a set painter $2,889 and for a screen actor $2,541.

A “pay or play” clause in a contract requires a studio to pay a stated amount in case the project is canceled.

Guaranteed compensation is paid at scheduled dates. Deferred compensation is paid when a listed event happens. Contingent compensation is paid according to a formula based on revenues, which could be either gross or net revenues.

Studio accounting systems seldom determine that a movie earned any net profits. For instance, Leonardo DiCaprio negotiated to be paid 18% of net profits of “Titanic”, which earned $2 billion, yet was paid nothing according to this clause in his contract. Studios deduct from net profits the costs of distribution fees and expenses, gross participation payouts, direct production costs, an overhead charge (usually 15%), and interest. Studies nearly always claim these expenses are larger than net profits.

Art Buchward and Alan Bernheim won a lawsuit over nonpayment for their idea for a movie in which they had been promised a percent of net profits. After discovering this meant no actual money, they sued. California court in 1990 found payments based on net profits were unreasonable. The court found most of the accounting overhead costs were not reasonable as to what actual overhead and interest costs were. Many costs were counted twice.

California court in 1994 ruled that a contract with part of a payment based on net profits wasn’t fair but since it was not coerced it was “not unreasonable”. The publicity over studios’ use of net profit caused them to use the term “adjusted gross profits” and “modified adjusted gross profits” which is a term where a person usually receives payments for an actual percept of gross profits.

The insurance company that insured two films that actor River Phoenix had been signed to film sued his estate after he died of a drug overdose. They noted he had signed a statement that he did not use drugs. The court ruled for the estate nothing that dying excused him from his contracts.

Main Line Pictures was awarded $9.8 million, twice more than what they asked for, when actor Kim Basinger breached her contract. Kim Basinger testified she could breach a contract “anytime I want to”, a statement to which the court did not agree.

An option contract to a writer gives a studio rights to something the writer has written. The writer receives a fee and a credit and keeps the rest of the copyright to the work, unless this is specifically changed in the contract; Authors should carefully read their contracts, as author Tony Hillerman unwittingly gave a producer all book rights to his character “Joe Leaphorn”, requiring him to hire an attorney to regain the book right sto his own book character.

Some book writers have words from their books placed into a movie and have been able to obtain a screenwriting credit.

Screenwriter contracts can contain multiple compensation criteria and have performance standards, including due dates and requirements of due diligent efforts at writing. Some contracts may include commitments to any sequels. Often the contracts determine ownership rights between writers and producers,

Writers should also have contracts reviewed by lawyers.

A director who agrees, even orally, to direct a film and accepts payment to direct is obligated to direct the picture. Some directors discover too late that a project is not what they initially thought, yet accepting money to direct the movie creates a legal obligation.

A contract between a director and a studio usually specifies the services requires of a director, such as location searches, preproduction meetings, rehearsal, principal shooting, editing, cutting, and final mix. Compensation can be handled a number of ways, including a mix of fixed, deferred, and contingent amounts. Some director contracts contain “pay or play” provisions. The contracts may have performance standards for the director and allow for a director to be fired.

A letter containing a commitment to pay can be held as a valid contract.

BBC allowed ABC to make changes to the Monty Python series. A count found that BBC did not have the right ot make major changes, only minor changes. A court ruled in favor of the Monty Python actors who sought to prevent ABC from airing of the edited versions of their work.

There are state law privacy rights protecting against intruding into private affairs, against public disclosure of private facts, falsely placing someone in a false light in public, or using someone’s likeness for profit. A celebrity’s right to privacy is often balanced with the public right to a legitimate interest in learning what a celebrity does.

Desilu was able to use the likeness of Al Capone in ads for the TV series “The Untouchables”. His widow and son sued yet the courts ruled dead people have no privacy rights.

A court ruled a portable toilet could not be named “Here’s Johnny” because the phrase was a signature phrase of Johnny Carson.

About thwo thirds of people die without a will.

Less than 10% of Australian films make a profit.

Many Indian filmmakers take advantage of filming and tourism offers in Switzerland.

The German government prefers supporting German filmmaking rather than attracting foreign filmmakers.

The United Kingdom spends $100 million to publicize films that feature British culture. They also have a government office that seeks foreign filmmakers.

Piracy is a concern, especially in China, Brazil, and Thailand. It is estimated 90% of Thailand’s video market is pirated.

Hello, Lied the Agent by Ian Gurvitz

Ian Gurvitz. Hello, Lied the Agent. Beverly Hills, Ca.: Phoenix Books, 2006.

The author, a writer of television shows such as “Wings” and “Becker” journals his writing experiences. Among the things readers learn is how he was developing a TV series for Tony Danza and discovering a competing writer was given the same assignment. He notes that’s how the film business works: people lie.

When a TV concept works, networks copy it. The networks don’t want to be left not cashing in on a good idea. This makes programs similar and dumber.

98.2% of U.S. households own at least one TV. Households own an average of 2.4 sets.

The key to successful shows are their execution. There are many good ideas, but shows need intelligence and soul.

The author does not recommend “how to “ books. He believes most people either can or cannot write.

Studio development executives are sales experts, as they need to convince networks to buy their show products. They need to be flexible to changing network demands.

Programming executives of current shows are liaisons between a show and the studio or network. Many of them are more relaxed. Some, though, attempt to interject their ideas into a show which can cause frictions.

Executives working on TV pilots tend to lack insights on creativity yet they often feel a need to provide their inputs. The author describes many of them as ‘much like a cow pushed out of an airplane might momentarily think it can fly”.

When pitching a show idea, Ian Gurvitz recommends being as entertaining and humorous as possible and then leaving. When seeing friends also waiting to make their pitches, engage in friendly conversation, realizing that, as the author explains “friends don’t want friends to fail; friends want friends to die After all, their success is your failure.”

The author warns that people in the business lie to spare feelings and maintain contacts. “I love it” is the only truly positive reaction. Further, a writer can gauge an agent’s interest by which meal they arrange meetings. Dinners are for their successful clients, lunch for clients with a chance of success, and breakfasts for clients needing a sale soon or the agent will stop representing them.

Networks often recommend changes to a pilot. 99% of the changes are adopted. Few other than Jerry Seinfeld ever get away with challenging a network’s desires.

The next step is producing an outline of the pilot story with the network’s changes. Then a new script is written, remembering that “writing is rewriting”. A multi-camera show script is 45 to 50 pages and a single camera show is 30 to 35 pages. The network will then send more notes. Often the networks wish for something new and for something similar to existing shows. It can be frustrating for writers to handle networks that want edgy and conformity simultaneously.

Casting occurs. Often a network will want an established star in a role, even if that actor doesn’t fit the part. Most stars are “children in adult clothes”.

Ian Gurvitz recommends for actors auditioning for a TV series to be great and then leave, don’t take in a prop, don’t overly compliment producers, don’t overly compliment the script, don’t discuss personal relationships with any producers, don’t change any word in a script, don’t ask what they’re looking for and instead give them your interpretation, children shouldn’t appear coached by a parent, if a part if offered accept it as is and don’t change it, and don’t campaign for more lines or work.

Hollywood describes things in one two ways. Things either went “through the roof” or “ they are ‘in the toilet.”

After the first production week, a series goes into testing before focus groups. Focus group members watch the pilot and turn a dial as they like or dislike what they’re watching. This is followed by questioning the audience in a group discussion. Then an analyst emerges and often predicts a show will fail, which is often correct as 85% of the time they do.

Once a show is picked by a network, it is important what time show it receives. Shows that premiere on a Monday through Thursday behind an established hit show at 8:30 or 9:30 pm have received good time slots. Shows that premiere on Fridays through Sundays or slotted opposite against another network’s huge hit have to quickly fit a strong audience or face early cancellation.

Networks are more prone to cancel shows quickly than in the past. Some shows used to have the support of the networks who gave them time to develop a following.

Premiere shows are sent to critics who usually dislike what they view. The author rates most critics as frustrated novelists or screenwriters who take their anger out in writing sarcastic wordplay reviews.

Ratings determine if a series continues or is cancelled.

A writer (circa 2006) can get $20,004 for a half hour script, $29,482 for an hour script, $41,480 for a 90 minute teleplay, and $50,000 or more for a pilot.

Most producers began as writers. Producers are experienced in the business.

Ian Gurvity states that writing involves taking ideas one has thought about over and over again and transforming them into a story. Much pre-thinking and passion are important.

The author mentions that laugh tracks are no longer used on multicamera shows taped before live audiences.

The Movie Business edited by James E. Squire

James E. Squire (ed.) The Movie Business. 3rd Ed. New York, N.Y.: Fireside Books, 2004.

This book presents insights from movie industry insiders. It shows how film is a high risk yet potentially high financial yield industry. It requires blending creative talent, business managers, and financial handlers.

This book looks at how films are created, such as the role of writers’ agents, how ideas are sold to and developed by the film industry, how movies are funded, the process of managing movie productions, and negotiations between agents and executives as well as legal dealings. It shows the process of creating a film including the roles of directors and actors, the timing of when movies are released, marketing the finished movie product, including how market research is conducted, the business of getting theaters to show films, international marketing strategies, the role of home video releases, the role of product tie-ins to movies, and the subsequent life of film on television, the Internet, and other venues. Examined in this book are the increasing costs in making films (including escalating star salaries) since the 1980s, and notes the fears that increasing costs may soon doom industry profits. Film is a part of the global economy. American films find international distributors, and often attract international financers seeking a share of international distribution rights. The global market is critical to the film industry.

Film producer David Putnam describes his personal research methods for finding film ideas (i.e. reading newspaper stories), finding screenwriters appropriate for the genre being developed, and mentions his belief that sticking with the same screenwriter though the redrafting process works better than using multiple subsequent writers.

Putnam tells the importance of producers in reducing risk. He warns about avoiding prematurely agreeing to a release date that can thrown an entire production off balance, of avoiding focusing film’s future on one actor, as this potentially gives that actor undue influence, the importance of appropriately comparing costs of filming at alternative locations by noting that wise preproduction spending can yield later cost savings during production, recommends shooting crucial scenes early yet also noting that it often takes three days for a crew to function in sync, notes that often a producer needs to evaluate the direction of production around the end of the second week of production, tells of the importance of positive relations between the producer and the director and crew, and notes the critical importance of time and seeing that operations are properly staffed to avoid losing crucial time, including undertaking editing while shooting.

Director Sydney Pollack describes the importance of developing a film idea into a better story. He tells of the rise of agents who are more aware of the entire film market who exert more influence of decision making processes in producing films. This is something Pollack fears does little to improve films although it does often increase profits. Pollack notes that major film studios spend $150,000 to $200,000 on daily location filming. He advises directors to be alert for unexpected problems, i.e. wardrobe stolen, and to be prepared to figure out how to solve these unforeseen incidences. He urges directors to note that sound, including the soundtrack and even when using reverb, is of critical importance. He also observes the importance of cinematography in blending sound and sight in presenting the desired moods.

Versatile Mel Brooks tells of difficulties that comedies face. Studios are often leery about their potential for financial success. He believes keeping a filming journal leads to reflection and creates better results. He notes that films are often financed with 60% 70 70% of domestic financing and 30% to 40% of foreign financing. He further notes it is often less expensive in the long run to go with higher paid union labor as they are generally more experienced and act more professionally and make fewer costlier mistakes.

Independent filmmaker Henry Jaglom recommends using selling foreign distributorships to raise funds to create one’s own pictures. He then shows his films in big city theaters and then seeks to get them released to several hundred theatres. His filmmaking process is to shoot for several weeks, edit for several months, and then up with a few days of shooting. His films have a typical budget of $3 million for shooting, $500,000 for advertising and prints, and he tends to earn a profit in the $4.5 million to $6 million range.

Screenwriter William Goldman urges screenwriters to find and develop their own style. He notes that while screenwriters often are treated with less respect than are directors, the screenplay is an essential part of the movie. He notes that few directors wish for a screenwriter to be present during filming, as directors and actors usually place their interpretations on their performances and that screenwriters are often upset at the differing visions giving to their scripts.

Literary agent Lee G. Rosenberg discusses the difficulties that unknown writers face in getting agents. This is especially difficult as agents will not look at unsolicited scripts. A writer needs to get an agent. An agent, though, will accept a writer either through a trusted source or by something unique in a writer’s letter that captures the agent’s attention. Of course, getting an agent’s attention to read a script is only the first step. The agent has to then like the script before representing the writer.
An agent attempts to find a studio to purchase a script written by a writer the agent’s represents. Once sold, the agent negotiates a contract for the writer. Sometimes writer may be 5% to 15% of either net profits, gross profits after breakeven, gross profits with an alternate calculation, or some other type of calculation.
A manager handles finances and publicity and often does so in conflict when jurisdictions between the manager and agent conflict. The manager and agent work better together when they trust each other.
Agencies receive 10% of all gross monies the writer earns. It is noted that agents are regulated and managers are not regulated. Managers often receive anywhere from 15% to 50%.
Writing credits in a movie are determined by the Writers Guild as opposed to the studios so deciding.

Story editor Romy Kaufman urges each screenwriter to find an agent who believes in the writer’s work. It is noted that aggressive, medium sized agencies can be as effective as larger agencies. Kaufman observes the screenwriting process often takes three months for a first draft and two additional months for a redraft and another month to polish the script.

Literary agent Roberta Kent and literary manager Joel Gotier note that guaranteed advances for novelization rights reach $600,000. They observe most book publishers earn small profits on hard cover sales. The larger profits are in paperback rights and book club deals. Authors usually keep their books’ rights. Some screenplays develop as a tie-in with a book such that both a movie and the book are released simultaneously.

Attorney Peter J. Dekom notes the average major studio film budget is $50 million plus $30 million for domestic opening of the film. Lately (circa 2000) profits to movie companies have been reduced. In addition, the number of movies produced has lowered. Movie profits typically were 30% to 100% more a few decades ago. Today, the typical movie’s profits falls within a -20% to 20% range. Many film companies do not see a profit until the movie is released for home video. Studios seek to increase the value of their films by reducing costs (i.e. film in lower cost countries), sell off their own films, and lower production costs by producing films without using high paid stars. Studios are looking to increase their pools of more affordable talent, create screenplays internally rather than making costlier purchase of externally written scripts, seek outside co-financing, and use fewer megastars per film.

Attorney Norman H. Carey states it is legally important how gross and net profits are defined. For instance, someone earning 10% of gross participation from the first dollar may earn a lot whereas someone earning 10% of net profit participation may receive little or nothing.
Carey notes many low budget films are produced by limited partnerships of investors to limit liability to that partnership without risking investors’ personal liabilities.
Financing producers usually will obtain insurance known as a completion guarantor. The insurer may place penalties if the picture is not completed on time. The insurer may have a right to take control of the film away from the director and producers if the movie is not completed on time.
Negative pickup is another method of providing financing for a film that can’t otherwise raise full financing. In this case, a studio agrees to pay a fee if it receives a negative of the film; otherwise, it need not pay anything.
Upfront bank loan financing is often obtained in return for the later negative pickup.
Producers sometimes negotiate gross receipts participation deals with studios. Often, the studio receives a larger share until it receives it costs, then the share favors the producer until a pre-established gross receipts amount is reached. After that, there usually is an equal distribution from that point on.
Other varying arrangements have been negotiated. If a producer can handle financing, the studios may receive only a standard 30% domestic distribution fee. Other percentages provided are often 10% to 15% to the director and 5% to 10% to the screenwriter, and possibly some actors receive a percentage. Thus, a producer’s share with studio financing may be 10% to 20% of net profits.

Venture capital financier Sam L. Grogg observes that regional independent film production with local investors reached places such as North Carolina, Vancouver, Toronto, Texas, Florida, etc. There are numerous financing structures that are found in these regional productions.

Financial analyst Harold L. Vogel notes in 2000 that within the U.S., $10 billion was spent on video rentals and $8 billion in movie tickets. In analyzing film companies, companies with a record of past profitability are then more reliably able to retain their creative talent. Companies that invest the best are more apt to continue being successful. Some good signs of a film company’s financial strengths are if it has a large film library or it is owns many intellectual property rights. It should be noted that films have become riskier investments and movie and television profit margins were approximately 10% to 18% during 1973 to 1980, approximately 8% during the 1980s, and 5% during the 1990s.

Fox Filmed Entertainment President Tom Rothman states that many movie company executives need to be both creative and possess business and legal knowledge. He notes he tries to match similar levels of financial risks to creative risks to yield edgier but profitable films. He is distrustful of pitches and prefers reading scripts in order to determine which should be filmed. He seeks good drama and notes that a lot of dialogue is not required to produce a good drama. His company often develops films rather than passively waiting for script submissions.

Marketing consultant Richard Lederer notes that special effects technologies allow for grander visual presentations. Still, the basics of stories and relationships remain requirements for good films.
Changes in audience tastes have allow movies to present greater presentation of sexual issues than before.
He urges studio executives to be hungry and willing to take risks which more likely lead to better films being produced. Successful film managers have a good sense of what the global audience desires to see in movies, knows how to avoid inflated production costs, hires power talent, understands diplomacy in handling hired talent, and knows how to integrate inexperienced managers into existing operations.

Financier-distributor David V. Picker observed that United Artists was able to become profitable after being purchased by Arthur Krim and Richard Benjamin by working directly with the creative talent that made their films. The talent has large artistic freedom and a percentage of profits while United Artists retained all distribution rights and a percent of profits. This arrangement, unique at that time, instituted a new, and what became a more common, era of moviemaking. He worries that high risk can lead to high profit, yet it is difficult to sustain high financial yields due to these greater uncertainties.

Former motion pictures President (at Sovereign and then Valhalla) Barbara Boyle believes independent films are often riskier, more innovative, and more compelling to viewers.
She credits United Artists for operating as a financier-distributor of independent films and interceding on the creative process only if a producer violates contract terms. She sees this as the roots of modern independent filmmaking. The emergence of the home video market in the 1980s encourage the growth of independent films, as it provided greater opportunities for such films to achieve commercial success. Yet, this increased production and marketing costs and led to the demise of financier-distributor independent companies such as New Line, Miramax, and Orion, who each were purchased by larger studios. Independent filmmaking turned to the nonprofit venue with the 1980 creation of the Independent Feature Project. While financing methods may change, she notes the independent filmmaking spirit continues.

Attorney Norman H. Garey encourages agents and attorneys working for a client to work well in coordination with each other. The agent usually handles negotiations and produces the basics of a deal and the lawyer refines the details. Some frequent issues to be handled includes who has the “final cut” approval, what influence if any the writer has, and the final authority of the film between the producer and the director. Sometimes an actor will have some control over the use of the actor’s image. Credit and billing decisions often need to be negotiated and determined. An issue that often emerges regards the amount of compensation to an actor when that actor’s work is cut from the film. Negotiations that are seriously stalled may wish to turn to arbitration. Norman Garey notes that the film industry overall leads to less litigation than exists in most other types of businesses. Entrainment lawyers, though, need to understand more handling complex human relationships in negotiations than found in other type of industry negotiations.

Attorney Stephen M. Kravit notes how the rise of television viewership as well as anti-trust consent agreements during the 1950s changed the movie industry. Movie studios switched from its prior emphasis on long term contracts to contracts per picture. Sometimes, though, studios will lock desired actors into multi-picture deals. This also changed the role of agents who negotiate these film by film contracts. After reaching a basic agreement, the studio attorneys present a detailed contract, which can range from short statements to 120 pages in length. Purely oral contracts are valid and do occur. Oral contracts though are more difficult to ascertain the facts of an agreement should they later be challenged. Areas of entertain contracts that are often hotly negotiated are rights to sequels and television spinoff rights.

Attorney Norman Grudman and completion bond expert Lionel A. Ephraim note that the costs of completion bonds, compared to other film costs, have reduced since the early 1990s. Completion bonds insure studios against financial losses from movies shoots that take longer than anticipated and go over budget. If this happens, producers and/or directors can be penalized if the studio does not approve of the additional time and costs. Other means of handling cost overruns is to write into contracts with investors that they may be required to provide an extra amount, perhaps up to 20% of prior investments. A completion bond is issued by an insurer. Completion bond insurance is a very competitive industry which has kept their costs low. Sometimes a studio or investors issue their own completion guarantees. Cost insurance is also available to insure the availability of major cast members, director, and producer.

Talent agent Jessica Tuchinsky states that motion picture talent agencies start all personnel from sorting mail for one to five years. Those who succeed at this level become an agent’s desk assistant for at least one year. It often takes about ten years before a person is able to be promoted to agent.
Agents must learn to negotiate film employment deals for their clients. Agents often attempt to match clients with directors and creative people and create full package deals with studios and/or financers. To be successful, agents need to know the filed of who is available so they may put together salable package deals.
Agents need to guide clients to reasonable career choices. Accepting the correct type of role can be critical for a director. There is no established correct path that guarantees success. It may require turning down the most lucrative offer in order to develop the best long term career.

Film production manager Michael Grillo explains how production managers work with creative staff to make financial determinations, including the costs of shooting at each site location as well as the costs of casting and staffing decisions, etc. Prepatory work is done in conjunction with the creative producer, who usually develops the screenplay and the talent package, and with the line producer, who oversees production.
Production managers need to be aware of details, such as length of daytime for outdoor shots, travel arrangements between filming locations, seasonal weather likelihoods, policing crowds, local laws, etc. as well as larger concerns such as the available of a director to remain within budget.
It is noted there is a difference between above and below line costs. Above the line costs include screenplay and rights purchases, producer compensation, director compensation, cast and casting costs, support teams costs, and all labor costs including living and travel costs. Below the line costs are film production costs, salaries of the production manager, assistant directors, extras, production design, art department personnel, set construction crew, set staff, property staff, wardrobe staff, makeup artists, hairdressers, camera crew, lighting crew, sound crew, transportation staff, location staff, etc, as well as postproduction costs, including editors, music, film lab costs, post sounds, and credits, as well as insurance and other general costs.
Production managers need to consider the costs of stunts, effects, prep work such as training skills actors need in a film, seeing cast and crew are fed over a normal 12 hour filming day, and deciding the logistics of arranging all these necessities. He recommends placing importance on hiring a good caterer to boost cost and crew morale.

Director Christina Fong notes the division of directing duties often given to assistant directors. The first assistant director works directly with the director and usually oversees with actors that shooting occurs according to schedule. The second assistant director handles communications regarding upcoming work and background players. The second assistant director is usually responsible for the call sheet, which is a list of people required for the following day’s shot and time they are required to report on the set. Assistant directors usually write the production report, which summarizes what was filmed along with an inventory noting cast and crew used that day, and presents this to the unit production manager.

Independent production company president Lindy Dekoen notes there are over 100 made for TV movies annually produced. It is noted that sometimes a network will counterprogram, which is when a network will run a newsmagazine story on a topic on another network plants to run a movie. This is designed to lower interest in a subject the public has thus already seen. Networks seek original movies that can have high ratings whereas cable networks may seek movies that will induce people to subscribe to their networks. Most production companies have final approvals on what is shown in these movies. Thus, most of these films are filmed to have appeal to both their networks as well as for foreign markets.

Film marketer Robert G. Friedman notes a film can open to 3,000 theatres. Proper publicizing this release is important to its financial success. Films are publicized during shooting. Unit publicists handle media requests for information. Still photographers take photographs during or after filming to be provided to the media. Electronic video press information and behind the scenes programs are often developed for press use.
Ads for movies are subject to market research, including concept testing of audiences that present the audiences with movie ideas and ads for the movies. Audience with preset demographic representation often preview a film or ad and are then surveyed for their feedback opinions of what they viewed. Advertising can be directed that presents the parts of movies that appeals to specific demographic groups.
Exit interviews are conducted on audiences after a movie opens.. Movies that open poorly with poor reviews are often abandoned.

Market researcher Kevin Yoder notes that major studios release about 15 to 20 movies annuals with about 200 major releases in total every year. With so much competition, a movie must open strongly in its first week in order to successfully continue into being shown in subsequent weeks. Movies need to be examined for their marketability and playability. Marketability involves determining how much of an audience a movie should attract. Playability attempts to determine the degree to which audiences like the movie. Focus groups are used for qualitative research into learning what people think of materials shown to their groups. Sampling research produces some quantification analysis on how effective materials are. The results from these studies guide marketing decisions. This can be tricky as it involves forecasting trends in an uncertain future.

Film festival juror Steve Montal explains that independent films can be shown at film festivals and markets in hopes they will be viewed by distribution executives who will then be willing to distribute them. Festivals involve showing movies to paid audiences as well as distribution executives and film journalists. Markets are where films are shown only to film industry insiders. It can cost around $15,000 to show a film in a festival, including costs for the film print, travel, publicist, promotion, application fees, etc. It should be noted that competition to get a film into a festival as well as the competition amongst the films at the festivals to be accepted by a distributor are both tough.

Financial officer Steven E. Blume writes how movies get revenues from theatrical showings, home video rentals and sales, pay per view and pay TV showings, TV network showings, later pay TV showings, cable TV showings, and syndicated TV showings. He notes that movies theaters usually earn 25% to 30% of their gross revenues from concession sales. These earnings stay totally with the theater and do not go to the film companies.
Many movie studios owned theatre chains which controlled what movies the theaters carried. A Supreme Court decision found this to be an improper restraint on interstate commerce. This forced the movie studios to sell the theatres.
Major studios control over 95% of the U.S. theatrical market share as well as approximately 65% of the foreign theatrical share. Some studios have partial investments in theaters. The theaters pay to the movie studios rental fees for the movies as well as a percentage of ticket sales. This percentage increases for each week of showing. Often the theater pays the movie company the larger amount of either a.) the rental fee plus a percentage or gross ticket sales above a prior set amount or b.) an amount with a lower percent of gross ticket sales with no preset amount subtracted.
When the movie is released to video, American rental receipts are usually earn approximately half the gross ticket sales and foreign rentals are often about 40% of gross foreign ticket sales. Nontheatrical revenues, such as showings on airplanes, ships, armed forces, prisons, libraries, etc. are usually approximately 5% of domestic film rentals.
In the video rental market, a distributor typically sold a VHS to a rental store for $65. Average rentals were for $3. An alternate system existed where a distributor changed around $6 to $10 for a VHS and would then receive about 45% of video rental money received.
A VHS was sold to the public for about $15 to $30 with about $20 being the typical price. Royalties paid by distributors on DVD sales typically are 20%, which is often lowered to 10% when the DVD is sold directly to the DVD market without a theatrical release. Some film talents have demanded more income that drives the royalty percentage to 25% or 30%.
Pay per view and video on demand revenues generally are set around $4 per pay TV viewing. These revenues are typically divided with 45% to the distributing studio, 45% to the cable operator, and10% to the third party biller and collector.
Paid cable television pays a share to studios of the movies it shows according to a licensing agreement with payments dependent upon the number of subscribers the cable station has.
TV networks typically pay $7 million to $10 million to broadcast a movie. Usually this agreement prohibits the movie being shown on any other TV medium. This is changing as some networks are creating deals for subsequent showing on their affiliated cable networks. TV networks seldom show a movie that has been shown in theaters. Major network movies are original movies.

Domestic distributor Daniel R. Fellman notes that distributors are usually responsible for printing film, sending film to theaters, handling licensing films to entities other than theaters such as airlines and military showings, handling legal matters regarding film distribution and exhibitions, maintaining accounting and financing operations, monitoring film negotiations and distribution, handling administrative tasks such as checking box office receipts, and providing promotional assistance to exhibitors.

Independent distributor Bob Berney notes there are numerous differing examples of what an independent distributor is. Some independent distributors have strong relationships with major distributors and others have no such relationship. Independent distributors must rely on their skill and perhaps correct timing in finding good movies to present to the public.

Exhibition executive Shari E. Redstone notes how the increasing costs of buying land for drive-in theatres drove the exhibition business towards multiple screen theatres. She recommends that theatres own the land they are on. This land can also create rental opportunities for other businesses that do well being near a cinema, such as stores selling books, music, etc. This also allows for expanding the market by opening a nearby theatre, as the rentals to other stores offsets the decreased volume at the original theatre.

Independent exhibitor Robert Laemmle states that most movies negotiate the exhibition of independent movies and foreign films. Some cities like Los Angeles are divided into zones and competition exists within each zone. Many theatres create images of themselves as ones that show specialty films. Newspaper advertising often costs theatres move than what newspapers charge retail advertisers.
Laemmle warns that attendance of indigenous films in foreign countries has not been rising as quickly as the increase in foreigners viewing American films. This is jeopardizing foreign film production.

Home video business executive Benjamin S. Feingold states home video viewing produces larger revenues to a movie than does theatrical viewing. Home video viewing is more common among people age 25 to 40. People under age 25 are more apt to see a film in a theatre.

Video reporter Paul Sweeting notes that the largest American seller of VHS and DVDs in the world is amazon.com. There are three major video rental chains, which (in circa 1993 data) are Blockbuster with over 2,500 stores, Hollywood Videos with 1,800 stores, and Movie Gallery with around 1,400 stores.

Studio executive Louis A. Feola notes some large studios create films meant for direct to video distribution. Some of these are cartoon movies and sequels.

Studio consumer products executive Al Ovadia notes studios often charge a producer of a product tied to a movie a licensing fee generally ranging from 3% to 14% of whole revenues. The first movie tied product ever may have been comics and books based on Charlie Chaplin’s film character Little Tramp. This can be a big business, as Star Wars products grossed over $1 billion.

Media consultant Bob Aft notes that Americans have been increasing their investments into foreign produced films. Japanese films are receiving the largest share of American nondomestic film investments.

Studio executive Steven Gerse notes that tax incentives can save a film in the range of 2% to 20% of production costs. Several countries and states offer tax incentives to attract film producers.

Film trade editor Dan Ochiva predicts that high resolution film will be the future of film. Viewing film on personal computers will also become much more common, he predicts.