SCAMS: Fact or perception?

Alright alright, let’s go ahead and get this answer out of the way. Are there scams in life? Sure. Are there, have their been and are there scams today in Hollywood? Sure, probably, most likely and yes. But ultimately the question for me, with regards to this particular subject, is “what defines a scam…really” in Hollywood terms? Because we’re constantly Continue reading

Silence: Seriously not a form of communication!

Ok…wait, silence is a form of communication. I mean sure, we all realize that sometimes it isn’t what you DO in life…what you DON’T do…speaks volumes. Yeah, so I get that, but my point about silence is that it really is NOT a form of communication and never will be. What silence does, between ALL humans, is it leaves too much room for confusion, as Continue reading

Neilsen Ratings: Coming to mobile device near YOU!

Well, it took over 10 years, but you knew this day would come. Since the dawn of television its meal ticket is advertising. You certainly could always say that the existence of TV is really due to the use of toothpaste and laundry soap. But since the 21st century erupted with digital technology, the content creators have no way to truly track Continue reading

TasteTest + YouTube = KickMe-GoGo

From sizzle promo video, to show concept to then PLEASE give me money. Ha. Listen, I completely, and absolutely, get the beauty and the wonder of new media funding. Not only does it allow you to utilize friendships, family and other outlets to fund your idea/project but it also allows complete strangers to get behind your vision…which is GREAT, BUT… Continue reading

Getting Paid (Part 4 of 4)

Box Office Bonuses: While back end points are based on a percentage of the profits, box office bonuses are usually a flat rate, based upon Daily Variety’s weekly box office chart.  They work as follows: If your film earns $1 million dollars in the box office as per Daily Variety, then you will get a $10,000.  Then, for every additional $1 million the film earns, you will get an additional $10,000.  These bumps are negotiable, and vary in how much the bonuses are and how often, and often the producers will try to put a cap, so that the actor stops earning any bonuses after $50 million.  The reason why box office bonuses are attractive for talent are that they are easily verifiable.  There are no auditing statements to look at, no accounting to do, you can simply open the trade and see when you should start bugging your agent to get you your check.

Back End Compensation v. Box Office Bonuses:  Depending upon the success of the film, the size of the budget and the drafting of the profit definitions, sometimes it is better to have profit participation over box offices bonuses or vice versa.  You can imagine that even when a film does very well, if the film had a high promotional budget, or if a star was taking a big chunk up front, it would take longer for the film to earn profits, as the investors get paid in full before anyone can earn their profit participation revenues.  It is not uncommon for a film to do very in the box office but barely break even because it was so expensive to make.  Not to say this is all guesswork, and an experienced attorney and/or producer would be able to advise you regarding the likelihood of what the film can make.  Sometimes, an actor will get both back end and box office bonuses, and then they don’t have to predict, they are covered on both aspects.

Please note: The information contained herein does not constitute legal advice and is intended for educational and information purposes only.

Getting Paid (Part 3 of 4)

Interchangable Terms:  When negotiating a profit provision in a contract, the definition of profits must be well worded, clearly defined and negotiated very carefully.  Net profits, gross profits, gross revenue, gross points, adjusted gross profits, adjusted net profits, producer net profits—these terms can necessitate extremely different calculations or very similar accountings, depending how they’re worded, when they are calculated (i.e., before or after certain other profit participants) and what deductions are or are not acceptable.

Percentages: Many indie films will offer their actors a percentage of the producer’s net profits, and usually that is defined as 50% of 100% of the total profits.  This isn’t always stated clearly, and it obviously makes a big difference if you’re getting 2% of 50% or 2% of 100%.  These nuances become significant when and if the film earns a profit, and that is why a considerable amount of time is spent negotiating these definitions.

MFN in Profit Definition: If there isn’t time to come to an agreement on the definition before a client agrees to take the role and signs a deal memo, I will push to have the deal memo add a phrase that obligates the producers to give Most Favored Nations (MFN, further discussed in a previous posting) on the definition, i.e., “2% of Producer’s Net Profits, to be defined no less favorably than any other profit participant, including all cast members and producers.”  This way, no matter how they define ‘Producer’s Net Profits,’ as in this example, I know that the actor will be participating in the same pool as all the participants, including the producers. There is no doubt the producer’s will negotiate the most favorable definition they can draft for themselves.

Please note: The information contained herein does not constitute legal advice and is intended for educational and information purposes only.

Getting Paid (Part 2 of 4)

Profit Participation on Lower Budgeted Films:  Sometimes actors receive back end points if they are working below the SAG minimum and on a lower budgeted film.  SAG has 3 alternatives for films budgeted under $2.5 million: Low, Modified Low and Ultra Low Budget Agreements.  These agreements allow producers to pay less in up front fees, so if an actor agrees to work under “scale,” sometimes the producer will add profit participation to the deal to attempt to make the actor “whole” by allowing them to earn their fees if the film does well.  Profit participations attempt to make up the difference between what the actor should have made at full union rates and what the actor actually earned with the reduced fees.  Also, profit participation ‘rewards’ the actor for agreeing to the reduced fee, and allows the actor to participate in the profits of the film for their contribution in its success.

Defining Profits: Now we have to take a brief moment to discuss the definition of ‘profit.’ While it is no surprise that most independent films rarely see a full return of their investment, let alone make a profit, negotiating profit participation becomes one of the most important provisions in a talent agreement.  Frankly speaking, that’s the whole ballgame, folks.  How the profits are defined could make the difference between you getting paid or not.  There have been numerous lawsuits regarding Hollywood accounting practices and the major studios’ creative accounting methods, where it is common practice to inflate the film costs in order to reduce or remove the production company’s obligation to pay profit participants.  What this means is that even if you are entitled to receive profits from a film that is doing well, you may not see dime one if your definition of profits (if any) is overly broad, one-sided or otherwise prohibitive.

Please note: The information contained herein does not constitute legal advice and is intended for educational and information purposes only.

Getting Paid (Part 1 of 4)

There are different ways an actor can get compensated on a feature film: 1) Flat compensation, which is an “up front” daily or weekly rate, payable in lump sums or on a weekly basis; 2) back end compensation, which pays an actor out on the “back end” of a project, once the film has been released and starts to earn money (if ever); and 3) residuals, which compensates an actor for re-use, after a project’s initial release (I’ll tackle this topic in another posting).

Flat Compensation:  This is a flat rate you will be receiving on a weekly or bi-weekly basis.  Sometimes you can get your fee all in one lump sum upfront, which your representatives should negotiate for you in the event the production company is not established or well known, and there are concerns about their ability to pay their cast and crew.  As a SAG member, producers must comply with the union’s minimum day/weekly rates, with a reduction in those basic minimums for projects under $2.5 million.

Profit Participation: Deferred compensation, contingent compensation and box office bonuses are all different ways an actor can make money on the back end after a film’s release.  When someone mentions “back end” compensation, they are usually referring to contingent compensation or profit participation, where if the film makes a “profit,” then the actor gets a percentage (a/k/a “point”) of the profits.  Back end compensation provides actors additional opportunities to earn money on a film dependent upon the profitability of the film.  Actors receive back end participation if the producer’s are trying to sweeten the deal and give the actor more incentive to take the job and get them fully behind the project.

Please note: The information contained herein does not constitute legal advice and is intended for educational and information purposes only.

Most Favored Nations (PART 2 OF 2)

Most Favored Nations or MFN is particularly useful for SAG Ultra Low and Modified Low Budget films, where the pay scale is considerably reduced from the SAG Basic Agreement day/weekly rates.  If my client is only getting $100/day on a SAG Ultra Low Budget project (a film budgeted for under $200,000), I want to ensure that all actors on the film are working at this rate as well.  If the producers offer a higher rate to another actor during casting, then they must increase my client’s rate to match the higher rate.

MFN also works with dressing rooms, film festival tickets, transportation to and from set—if my client’s “private dressing room” on location is a curtain in a corner of a high school auditorium, is he or she is driving himself or herself to set, or we can’t get the producers to guarantee a seat at the premiere, then you can be damn sure I don’t want other actors on the film to have their own private air conditioned honeywagon, sedan pickups to and from set, or first class flights to Cannes.  If my client is willing to work at this reduced rate in order to allow the producers to spend their money on hard production and post-production costs, then this should apply to all the actors in the cast.  For this reason, MFN on lower budgeted pictures allows for camaraderie among cast members–all for one, one for all.  If the entire cast is wiling to work on a project for a reduced fee, the success of the project becomes the priority above the desires of the individual participants.

Sometimes, producers will need to carve out exceptions on their MFN obligations.  For instance, if I am negotiating a deal for a client who is being cast in a supporting role on a film that has Philip Seymour Hoffman attached, you can be damn sure my client will not be getting MFN with PSH for anything.  Thus, if the producers agree to MFN, the clause will read: “…no less favorable than all other talent except for Philip Seymour Hoffman. “  Sometimes these carve outs are for character names, instead of particular actors, if the parts have not been cast and it is clear that whoever is playing that role would be in a position to get a better deal than those with less prominent roles.

Please note: The information contained herein does not constitute legal advice and is intended for educational and information purposes only.

Most Favored Nations (PART 1 of 2)

The “Most Favored Nations” clause came about as an international trade term, giving one country equal status to another country with respect to tariffs, regulations and quotas.  In the talent agreement context, this concept is used similarly, so an actor receives equal treatment to all other actors on a project with respect to any number of provisions, including the type of compensation the actor receives (e.g., flat fee, profit participation or box office bonuses) or the standard of travel (first class versus coach).  When I am representing an actor on a talent agreement for a feature film role, I always ask for Most Favored Nations (or “MFN,” as is the industry nomenclature), to ensure no other actor on the film is getting a better deal than my client.

How does this work?   Since all actors on a movie are negotiating their own deals separately, each actor will be receiving different compensation and different “perks,” depending on a variety of factors, including the stature of the actor, the size of the role, the aggressiveness of the talent’s representative, or how badly the producers want to cast that particular actor, for example.  If the producers want to sweeten the deal to get an actor, they will offer more money, different types of compensatory incentives (e.g., box offices bonus), better credit position, better perks or whatever the budget will allow to get the actor to accept the role.

However, since the other actor deals are confidential, I can’t be certain my client is getting the best deal possible unless the producers agree to MFN.  With MFN, I don’t need to know what any other cast member is receiving as long as I know that whatever they are receiving, my client will receive the same (or better!) for that provision.  MFN allows me to feel content that my clients are getting treated equal to the rest of the cast.  Just the phrase “no less favorable than any other cast member” added to certain clauses in the talent agreement gives my clients and I the confidence they need to close the deal.

Please note: The information contained herein does not constitute legal advice and is intended for educational and information purposes only.