Why Hollywood should be afraid of the iPad (video)

By Eriq Gardner

The technorati may be drooling over the iPad, but you'll forgive the Hollywood elite if they don't line up at the Apple Store to get their hands on this brawny new tablet computer.

In fact, the introduction of this device could interfere with with one of Hollywood's biggest cash cows -- adapting literary works for the big screen.

New TV pilot deal language putting a squeeze on residuals

By Matthew Belloni and Nellie Andreeva

“Test deals” are making a lot of people, well, testy this pilot season.

TV studios and broadcast networks are insisting on new talent concessions to shave off-the-top costs like residuals. The test deals, which set the terms of employment for both the pilot and series, are tough for talent reps to negotiate because they must be signed before an actor auditions — when he or she has little leverage to extract concessions.

“The TV studios are getting more aggressive in that area,” a veteran talent agent said.

Several studios now are including non-negotiable language allowing residuals for a first primetime rerun to be considered a “prepayment” of a regular’s series compensation. For instance, an actor who makes $30,000 an episode as a regular on a broadcast series usually might make $2,500-$3,500 more when that episode (depending on its length) is rerun for the first time. Under several new test deals, the residual already would be included in that actor’s salary. 

'Terminator': The franchise that keeps giving to lawyers

By Eriq Gardner

Get ready for Round 2 of the race to acquire the rights to produce new "Terminator" films, TV shows and other spinoffs.

A couple weeks ago, Santa Barbara hedge fund Pacificor was the surprise winner of an auction held by Halcyon Holding Corp. for the rights to the "Terminator" franchise. With a reported bid approaching $30 million, Pacificor beat out studios including Sony Pictures and Lionsgate. 

No deals yet for 'Twilight' stars to return for fifth movie

By Matthew Belloni

Summit Entertainment has denied reports that a decision has been made to split the fourth "Twilight" novel "Breaking Dawn" into two movies. But if the studio is planning to move forward with that plan, its lawyers should get busy locking in that cast first.   

We've learned that no talent deals are in place with the principal actors to return for a fifth movie. And they're not even close, we're told. That means neither Kristen Stewart nor Robert Pattinson nor Taylor Lautner has yet signed on to a (possibly 3D?) supersized "Breaking Dawn."

Is seeing Bobby Flay the contractual right of cable subscribers?

By Eriq Gardner

Can TV viewers do anything but complain when disputes between networks and cable providers yank popular programming off the tube?

On Tuesday, Cablevision subscriber Barry Bragger filed a class action lawsuit against his cable provider for taking HGTV and the Food Network off the dial. The lawsuit is probably rendered moot now that Cablevision and Scripps Network Interactive have reached a new carriage deal that will restore both networks to the New York tri-stage region. But since these programming fee standoffs are becoming a regular headache, Bragger's lawsuit won't be the last.

The class action claimed that Cablevision's elimination of HGTV and the Food Network from its offerings represented a material change from its contract with subscribers for cable.

We don't have Cablevision's terms of service as we're not a customer and the lawsuit doesn't provide one in the complaint, so it's hard to render a judgment about the claim. We may expect cable companies to adjust their future contracts with customers to foreclose this line of argument.

We'll also point out a thought-provoking counterintuitive article this week by The New Yorker's James Surowiecki, who argues that "bundling" of TV networks by cable providers and the inevitable disputes over carriage fees actually benefits consumers, and that legislators and regulators who wish to mandate so-called “à la carte” programming may do some harm.

Conan/Leno madness: the settlement aftermath

NBC announced today that lawyers for the network and Conan O'Brien had finalized a settlement. Key components of the deal:

• Worth $46-47 million, with $33 million going to O'Brien and the rest to his staff
• O'Brien leaves the network and won't be able to host a TV show elsewhere until September 1
• NBC retains the rights to characters that O'Brien created  
• Includes a non-disparagement clause, both for O'Brien and NBC. 

A roundup of interesting reaction and fallout from the news:

• What does the Conan-Leno-NBC debacle mean for entertainment law? [Above the Law includes our quick take on the issue]
• Fox is treading carefully, asking its affiliates to run the numbers on bringing O'Brien onboard. So far, they're somewhere between lukewarm and intrigued. [Broadcasting & Cable] 
• Conan's show will be in reruns until Leno takes over [TMZ]   
• "Jay Leno Show" already declared biggest bomb ever in TV [Entertainment Weekly] 
• Column: Why Leno leaving prime time hurts all broadcast TV [Advertising Age]
• Column: How NBC gave Conan his groove back [Time]
• Column: NBC shouldn't pay Conan a penny [Marketwatch] 
• Poll: What should Conan do next? [People] 

Finally, our favorite clip from last night's show. Conan riles NBC by making it pay the exhorbitant amount of money it takes to license the rights to Rolling Stones' "Satisfaction":

 

Q&A: Sundance power lawyer John Sloss

By Jay A. Fernandez

From corporate lawyer to top film-sales agent, Cinetic Media's John Sloss has brokered deals for such indie gems as "Napoleon Dynamite," "Super Size Me," "Little Miss Sunshine" and last year's Sundance breakout "Precious." But even he's not sure whether buyers will turn up to spend at this year's festival, which kicks off tomorrow.

THR, Esq.: We know the doom-and-gloom state of the acquisitions market. What's happening in indie film that's positive?

John Sloss: I'm very bullish on cable video-on-demand. Last year, I spent the summer going around meeting with every cable operator, and we started our own cable VOD channel called FilmBuff. So we are sitting on 43 million TVs with our films that people can purchase. My feeling is, the eyeballs are still there for independent, specialized content. There may be upheaval in the middle among the distributors, but the audience is still there. While the distributors are figuring it out, we can just go directly to the audience.

THR, Esq.: Do you see that as a permanent third way?

Sloss: The distributors will sort it out, and they will come back stronger. But VOD is a reality that will only grow, whether it's cable or broadband, eventually -- if you can market virally and you've got an articulated audience for your films. Yes, trying to compete against studio movies and trying to get above the din for the P&A costs of a theatrical release is really hard for a lot of good films that have specific audiences. But we are very jazzed about this.

THR, Esq.: What's happening in the indie space that's negative?

Sloss: Releasing costs are still too high. When you look at the economics of films over in France, where you're not allowed to advertise movies on TV, it makes so much more sense. The problem is, things have been ratcheted up. The people who benefit from it are the people who get paid for advertising. Because if everyone's spending $20 million to release a film, it probably wouldn't be any different if everyone spent $5 million to release a film. So it causes this sort of movement toward the lowest common denominator. It's the same thing as budgets going up. It blots out the sun from some deserving films. My vision of the future is, the studios all together release 52 movies a year, and then everyone else is left to figure out how everything else comes out.

THR, Esq.: Do you see any companies that seem especially hungry for content at Sundance?

Sloss: I don't know that Apparition is funded for acquisitions yet. I don't know if Daniel Battsek's going to be up and running (at National Geographic Films) and what his agenda's going to be. We hear that Focus is back in the acquisitions market. Searchlight's always a player. Overture I'm sure will be looking for stuff. SPC is never too booked up; they said they don't have anything after the spring, but I don't believe that.

THR, Esq.: As distribution becomes fragmented and piecemeal, how much are online rights becoming a part of deal negotiations?

Sloss: I think that is the future, at least for the time being. It's the nature of Cinetic, and because we're so staffed up and we have an ancillary group, we understand the idea of a la carte distribution, where you're windowing and fragmenting the deals. It's a reality. We did "Precious" last year at Sundance, so you can make that kind of big deal. But more often than not, you're going to be left to go out and maximize by fractionating your rights. We have a number of films that in past years would have had significant all-rights deals, and I can't guarantee the filmmakers this year what's going to happen with any of them.

THR, Esq.: Do these new deal structures come anywhere near comparatively compensating for traditional theatrical-distribution deals?

Sloss, Esq.: If we're doing our job right. More and more it's weighted toward payment-on-performance. Distributors, even a group of distributors on a single film, don't shift the risk to themselves the way it used to be when buyers used to come in and pay multimillion dollars for all rights. But because you're uncrossing many of these rights, then you're setting yourself up to actually benefit more if the film performs.

THR, Esq.: Where new sources of film capital are on the horizon?

Sloss: Because the states have literally been a financing partner for the last seven years, it hasn't been bad. I think there's a crisis in distribution; I actually don't believe there's a crisis in funding. I still think there are probably too many films being made. They're fewer than before, but still too many. There may be a crisis in terms of slate financing for studios, and the higher-end specialized movies may be challenged -- the $10 million, $20 million, $30 million films. But traditional independent financing, it feels like there are as many sources as ever.

The surreal nasty/nice Conan negotiation

By Eriq Gardner

If and when it ever gets officially announced, NBC's settlement with Conan O'Brien will go down as one of the strangest in Hollywood dealmaking history.

Forget the size of the reported $40 million-or-so payment, which could approach what NBC might have had to pay Conan had it lost a breach of contract lawsuit. And forget that NBC is apparently keeping the Masturbating Bear and other intellectual property in this divorce.

What makes the potential pact so strange is the context.

Here we have two parties huddling together in private on the verge of a deal while continuing to pummel each other repeatedly in public.

One moment, NBC honchos are at the dealmaking table, exchanging terms of divorce, including a reported non-disparagement clause.

The next, Dick Ebersol is blabbing to The New York Times and Jeff Zucker is going on the Charlie Rose show branding Conan a failure.

Meanwhile, night after night, O'Brien is using NBC's own forum to ridicule the network and its leaders.

 

Journalists have been tripping over themselves to report confirmation of a deal, and yet, no official announcent -- merely continued verbal jousting. Very surreal.

Conan/Leno madness: the 5 big unanswered legal questions

By Eriq Gardner

NBC may be on the verge of more "Law & Order"...and we're not talking about what's replacing Jay Leno at 10 pm.

NBC brass and Conan O'Brien reportedly have reached a detente, with Conan said to be receiving a payout and the ability to appear on another network before his contract expires, according to news reports.

Let's assume a deal is made. We don't think this ends the legal fallout from this saga. Here are five big unanswered questions:

1. Besides the $$$ changing hands, what else is in the settlement between Conan & NBC? For instance, are there stipulations about what one party can say about the other? Given how ruthless Conan has been toward NBC and Leno, can NBC negotiate a deal that will muzzle CoCo and vice versa?
2. Will Triumph the Insult Comic Dog and the Masturbating Bear follow Conan wherever he goes? NBC and O'Brien are likely negotiating whether the intellectual property created on "Late Night" and "The Tonight Show" stays with NBC or goes with Conan. If you'll recall, this became an issue when David Letterman left NBC for CBS.
3. NBC has been telling folks that it had to make a move to quell its unhappy affiliate stations. If Fox is indeed courting Conan, what about the network's affiliates who are tied into their own contracts with syndicators and may not want a late night host whose ratings weren't fantastic?  
4. We know what NBC thinks about O'Brien's job performance (thanks, Dick Ebersol). Could Conan sue NBC for defamation for damaging his effort to get a job elsewhere? What about a possible suit by NBC against Conan for things he said on the air?
   
5. How will this debacle influence future negotiations in Hollywood between A-list talent with leverage and studio/producers? Will the ordeal push one side to try to get more specific with contract language and the other side to pull back from long-term contractual commitments?

Why did Microsoft settle a Perfect case?

By Eriq Gardner

Adult entertainment publisher Perfect 10 has for years been fighting to stop search engines from displaying thumbnails of its copyrighted photos of nude women.

This week, Perfect 10 filed a motion against Google for allegedly abusing the discovery process in their long-running litigation. What we found interesting is that Perfect 10 has apparently settled a similar beef with Microsoft. Why would Microsoft settle a case that most believed it would win?

Conspiracy theorists might think that Rupert Murdoch had something to do with this. 

Last month, the media world was buzzing about a possible deal between Murdoch and Microsoft wherein Microsoft's Bing would have exclusive access to News Corp. content and would pay to block Google from indexing the media company's news websites.

One possible hiccup in these plans is that Google has the capability of modifying its technology to direct its spiders to crawl News Corp. properties like the Wall Street Journal and Fox.com anyway. As attorney Jonathan Steinsapir pointed out on the Huffington Post, if Google ignored a request by News Corp. to stop indexing its content, the result might be an epic copyright battle. Steinsapir says there would be a "race to the courthouse" as Google would try to file first in the Ninth Circuit.

Why there? Let's jump back to the Perfect 10 case.

In 2007, the Ninth Circuit Court of Appeal reversed a lower court opinion and found that Perfect 10 was "unlikely to succeed in overcoming Google's fair use defense" for directly infringing the plaintiff's copyrights. This decision would probably give Google a leg-up in claiming it has "fair use" to index content from News Corp. too.

When Perfect 10 first sued Microsoft in 2007, the defendant resisted entreaties to settle. Now Microsoft has changed its mind. We don't know details of the settlement, but a District Court was asked to review the Microsoft settlement to see if the deal had any bearing on Perfect 10's outstanding copyright claims. Hmm.