The Movie Business Podcast is a series hosted by GHJ Profit Participation Services Practice Leader Ilan Haimoff and USC School of Cinematic Arts Professor Emeritus and Editor of The Movie Business Book Jason Squire. In this installment, Ilan and Jason talk to Barbara M. Rubin, Partner and Entertainment Department Co-Chair for Glaser Weil about her role in negotiating deals on behalf of talent.

Ilan: Welcome back to another installment of our Movie Business Podcast Series with our focus on the new normal in the film and television industry. My name is Ilan Haimoff, and I'm a Partner and Department Head of the Profit Participation Services Group at GHJ.

In this podcast episode I'm joined by Jason Squire, Professor Emeritus at USC School of Cinematic Arts as well as the editor of The Movie Business Book, now in its Fourth Edition, to discuss with our distinguished guest Barbara Rubin of the law firm of Glaser Weil to discuss legal talent representation in the new normal in our entertainment industry. Jason will introduce Barbara and get us going with our discussion.

Jason: Thank you Ilan. Barbara M. Rubin is a Partner at Glaser Weil and also Entertainment Department Co-Chair representing writers, producers, actors, station groups and small production companies in both reality and scripted television. She was dubbed a top industry negotiator by Emmy Magazine, was named a top dealmaker by Broadcasting & Cable magazine and has been highlighted for seven years in a row in Variety’s “Legal Impact Report” and “Top Dealmakers.”

Barbara cofounded the entertainment law firm Raskin, Peter, Rubin & Simon and headed business and legal affairs for A&E West Coast, Rysher Television and Spelling Television, reporting directly to Aaron Spelling. She has served on the Board of Governors and Executive Committee of the Television Academy and is often a guest lecturer or panelist at entertainment law events. Barbara is also a Professor and Director of the Entertainment Law Practicum at Loyola Law School where she graduated.

Welcome, Barbara.

Barbara: Thank you, Jason.

Jason: Let's begin. When representing talent, what does a transactional attorney get involved in?

Barbara: Let me begin with my distinction between a transactional attorney and a litigator. A litigator — an attorney who litigates — is responsible for cleaning up a mess that somebody else made, while a transactional attorney makes sure that mess never gets made in the first place. So, one is looking backward and the other is looking forward. One has happy clients and the other has unhappy clients.

What does a transactional attorney get involved in? Well, a talent attorney is basically somebody who represents individual talent in a negotiation against a media company. He or she knows how to structure deals, negotiate deal terms and draft contracts consistent with the deal made, but is usually under the wings of a talent agent. He or she is not licensed to procure employment for talent — procurement is in the agent’s arena, and what constitutes “procurement” is a hot-button issue in Hollywood legal circles.

Ilan: Thank you, Barbara. That's a good background and we appreciate it. I'm going to now jump into our focus on the changing world around us over the last couple of years with respect to COVID, but more importantly with the convergence and the overall changes from linear to streaming from the larger pool of studios to the now smaller pool of consolidated studios.

What opportunities and challenges do you see for transactional attorneys and their clients in this new and ever-changing normal in the film and television industry?

Barbara: It's really a complicated and unique situation with a lot of moving parts. For example, as of June 30, the two-year legal battle between the Writers Guild and the talent agencies ended with a victory for the WGA. The power lock of the agencies shifted: agents are not allowed to collect package fees from the studios or substantially own production companies. After decades of competition with their clients, the agent’s financial interests must now be aligned with those of their client’s.

Concurrently, major studios will distribute a film both in theaters and simultaneously on streaming. You've also got the broadcast networks shrinking while trying to bulk-up their streaming service on the backs of the network’s popular shows (e.g.,” Dancing with the Stars” is off ABC and, starting this season, on Disney+). In addition, there is a new model of distribution for documentaries whereby the filmmaker bypasses the traditional distributor and goes after its audience in the highly lucrative non-commercial markets before selling to a streaming service like Netflix. Attorney Peter Broderick crafted this unique approach. And with the pandemic, it has gone almost mainstream.

I have a client who, over twenty years ago, produced a very successful half-hour comedy television series for a broadcast network. He is still collecting royalties and profits. Now, a streamer wants to re-run the old episodes on their platform and reboot the show for their audience. How do you take a profit participation tailored for a broadcast network and replace it with a streaming participation? It just doesn't work.

There are so many significant elements that are changing simultaneously, each change impacting the other in ways we cannot foresee.

We don't have a common “executive producer of legal” who would provide us with a prototype. We’re all trying to figure it out at the same time, using our prior entertainment experience and hoping there is some continuity in this strange new world. It's going to take a while before we can completely understand what is going on.

And all this change is occurring just when we are all stumbling into the world again having been locked up for more than two years.

Jason: It really is an interesting transitional period, especially for lawyers. From a negotiation standpoint, on behalf of your clients, what room is there for negotiating the new types of deals?

Barbara: It depends on the leverage that you have, obviously. But when you're negotiating with the streamers, talent is not going to get a really high profit participation nor will they receive a really low one. For most of the streamers I'm familiar with, their deals for studio productions are cost-plus with annual pick-up bonuses for talent. And that plus is where the profit participants can take their share of profits. A vast divide may exist between the expected streamer profits and the actual profits received.

I'm not sure where we're going with this, because there are no court cases on point, nor will there be, due to the studio’s insistence on arbitration clauses — so that's a problem. The streamers are negotiating bonuses that are triggered by a pickup or a certain level of success measured by the increase in subscribers. But how many subscriptions have they gotten as a result of one show? How do you know that increase or decrease in subscriptions is related to a particular show? The streamers are stone-cold quiet about measuring success.

After discussing this topic with a colleague, we concluded that, instead of granting profit participations and bonuses in success, streaming TV should grant company stock as another measure of success because when a streamer does well with a show, it increases their overall subscriber base significantly. And when you increase your subscriber base significantly, you don't know if it's a result of your show or somebody else's show.

Jason: It really seems that there's some stuff going on among streamers who really don't seem to want to be transparent in their levels of success, knowing full well that that information would enhance the talent-streamer relationship, and putting the representation side of talent in a quandary, as you've described. So, it takes some time, it seems, for this to be resolved. And you're right in the middle of it. That's really a tough position.

Barbara: Right? Yes. What happens if a streamer is in production with a theatrical motion picture and talent is hired accordingly, but the film is distributed on both streaming and in theaters simultaneously even though the deal was based upon windowed platforms? Well, box office bonuses are generally based on the box office revenue, and that film is not really going to make a lot of money at the box office because the revenue’s going to be siphoned off by streaming. How do you see that as a benefit to talent?

Jason: It seems like it's going to take some time for all of this to be resolved. Finally, I’d like to ask a general question. With your vast experience, what is your advice to negotiators?

Barbara: My advice to negotiators is this: If you have leverage, use it. If you don't have leverage, don't pretend that you do have it. It is risky business to behave badly with your opposing counsel — it will come back to haunt you.

And always leave goodwill on the table because once this deal is closed, your client has to go work for the company you just negotiated against. You, the lawyer, set the tone for your client.

There are going to be times when you really missed something in the negotiations and you have to call that opposing counsel for help. If you left some goodwill on the table, you're going to get some goodwill back. So, know your leverage, but don't overdo it and don't underdo it — it's a delicate balance.

And after you're done with your negotiations, invite them to lunch.

Ilan: Well said. Thank you so much, Barbara. Thank you, Jason, for some of the follow-up questions, and I appreciate everybody for joining us.