Negotiating Theatrical Deals In A Digital Environment

In California, talent agents are regulated by s. 1700 of the California Labor Code (the “Code”) and are required to be licensed. Other professions that are required to be licensed are doctors and attorneys-at-law. The regulations require, amongst other things, for talent agents to maintain a trust account and submit the agency’s form of talent agreement for approval by the Labor Commissioner. Together, Guild regulations and the provisions of the Code govern the activities of talent agents in California.

Many managers claim that they can solicit employment on their client’s behalf. However, under the Code, managers can only negotiate employment agreements if done “in conjunction with and at the request of, a licensed talent agent”.
The primary role of an entertainment attorney is to protect his client concerning the legal aspects of a deal. As such, clients stand to benefit when they engage the services of a talent agent who has a law degree and has also practiced as a lawyer.
With regards to the art of deal-making in the current age, there are many different opinions as to how negotiations should be conducted. Some common principles espoused by talent agents in the relevant literature are:

-Always leave your adversaries’ dignity intact – you never know when you will be negotiating with them again.

-Only commence negotiations with regards to a project when you are certain that it will be a commercial/critical success.

-Know what your client’s walk-away point is.

-Studios negotiate according to precedent. Know how much they will bend/what they will be willing to pay.

-Form relationships with people who you will end up negotiating with. When there is trust and respect, a deal can often be reached that is fair and reasonable.

THE CHANGING LANDSCAPE

The emergence of reality programming has meant that TV series budgets are shrinking. Gen Y is using the Internet, mobile phones, etc at an unprecedented rate and this means that more and more advertising dollars are being directed toward these communication mediums. In addition to this, those watching TV are increasingly using technology such as TiVo to skip over commercials.

Branding and merchandising are also becoming a huge source of income for talent agencies. Packaging a celebrity personality creates strong brand recognition which equates to increased revenue.

Studios and networks are attempting to expand the scope of required services from projects to include work for the Internet, video games, extended content, etc. Talent agencies need to be allowed to participate in the revenues generated by these ancillary areas.

In the current environment, a talent agent will need to consider every possible source of commercial exploitation of a project, including pay-per-view, VOD, electronic sell-through, online and digital distribution, cellular and wireless distribution, live attractions, video games, ringtones, publishing, merchandising, commercial tie-ins … what’s next?!

Becky Kim