Housewives Heroes:and How High-Tech Viewing Patterns Drive the Deals for Entertainment Content

by LEIF W. REINSTEIN

ome of Orange County’s greatest tablets, smartphones, and laptops. Already sufficiently advanced for content to be exports are its real housewives. re-running on Hulu, with this move, the delivered in a high enough quality manner Well, at least the Bravo cable Housewives brand continued its vanguard except on the big screen and television. channel, and this writer, would efforts to adapt to the quickly changing With the rise of social media technology make the argument. Bravo content and viewership landscape. in the mid-2000s, which allows engagers Slaunched The Real Housewives of Orange to share and watch their own and friends’ County in 2006 right around the rise of Consumer-Driven Tastes and lives minute-by-minute, basic cable social media, and it has spawned at least Technology are Changing the Nature of channels increasingly tapped into viewers’ five spin-offs and inspired countless other Content similar desire for “pull-back-the-curtain” docu-series from Duck Dynasty to the Emerging technologies, viewer non-scripted programming. Kardashian conundrum. Seven years and consumption patterns, and audience Now, as basic cable networks and eight seasons later, the OC ladies continue expectations for entertainment are finally Netflix flourish, and Amazon and to tap into viewers’ insatiable appetite for beginning to dictate how, when, and Microsoft, among others, enter the original voyeuristic “real life” programming. And where content is produced and content fray, a new era of programming why not? After a hard day at work, many broadcast. In the late 1990s and proliferation has begun. And it is limited enjoy the guilty pleasure of watching early 2000s, neither technology only by how far technology and consumer Tamra Judge (née Barney) and Heather nor business models were tastes can go. Some have called it the Dubrow gallivant through Coto de Caza. “golden age of television,” but it is bigger; But, of course, their audience call it the “new age of content,” watches at its own DVR- where high technology scheduled pace and skips takes audiovisual product commercials, while also instant- in continuously unfolding messaging on Facebook, directions. This shift in tweeting, and photoshopping entertainment production Instagram shots. As if viewers and distribution is obviously aren’t already multi-tasking a boon for consumers as more enough, for the show’s recent and more providers vie for their 100th episode special, the vérité attention with top-quality housewives interacted live with shows targeted to all niches fans via zeebox, an interactive app and tastes in as immediate a which provided the episode with manner as possible. a concurrent second screen on In the face of this barrage

10 Orange County Lawyer of technology and content, entertainment seeking to own all, or a substantial part, The Demise of the Big Screen? lawyers need to be diversified and of shows in the process. Endemol USA, Spielberg’s foray into series programming open-minded in their approach to deal Gaumont International Television, and with Microsoft represents another structures, and in advising clients and BBC Worldwide America have all recently significant shift in the entertainment interacting with companies. Whether entered the scripted television game with marketplace—the distinction between big for talent agreements or for business- considerable success. and small screens is becoming irrelevant. to-business transactions, the “one-size- Digital companies have also sought Feature films and television are now on an fits-all” approach to entertainmentto tap into the original programming equal playing field in the eyes of talent and dealmaking no longer applies. zeitgeist. E-commerce and web portal consumers, with television and digital— companies like Amazon, Netflix, and call it non-theatrical content—having the The Rise of the Small Screen Yahoo are leveraging their shoppers, rental advantage. Before the influx of so much The current content boom has its subscribers, and homepage/search engine/ top-shelf cable product, television was roots in basic cable. Even as recently as email users, respectively, in an attempt to considered a somewhat embarrassing last five years ago, premiere programming resort for A-list performers. Similarly, was primarily reserved to the Big Four FCC rules meant that broadcast network broadcast networks (ABC, CBS, NBC, In the face of shows have had to be more family friendly, and Fox), and pay cable stations HBO less artistic, and therefore not as attractive and Showtime, with all other cable this barrage creatively to filmmakers. However, networks’ offerings limited generally to recently, there has also been a tendency by reality programming, syndication re-runs of technology feature film studios to make fewer movies, of broadcast network shows, movies, and and to focus only on brand-driven tent- lower budget series. and content, poles with global appeal. Determining that such kinds of content As a result of this trend and cable and portfolios limited their viewership and entertainment digital companies’ newfound cachet, an bargaining power, basic cable outlets increasing number of actors and behind- started to diversify their product. They lawyers need the-camera talent are gravitating to non- began to provide higher quality scripted theatrical content. programming which was able to avoid to be diversified recently decried the state of cinema at FCC rules regarding sex, violence, and the San Francisco Film Festival and language and to target niche and/or and open- subsequently stated he would be leaving genre consumer tastes such as horror and the movie business to direct ten episodes fantasy. Additionally, cable programmers minded in their of the television series The Knick for have been able to produce edgy, darker approach to deal , starring . Five years material full of murky anti-heroes and ago, Owen would never have considered themes which resonate with consumers structures . . . . starring on HBO’s subsidiary channel. facing a financially and culturally However, theatrical luminaries such as troubled world. These adult-oriented make them “audiences” for their original the Emmy Award-winning Claire Danes series have fueled rabid fan bases and content. Microsoft is doing the same with on Showtime’s Homeland and Academy garnered awards, which in turn have its Xbox hardware purchasers, and just Award-winning and now Emmy- improved such networks’ negotiating announced its first interactive original nominated Kevin Spacey on Netflix’s position with cable carriers and satellite series, based on the immersive Halo game to House of Cards have paved the way for providers. Fundamentally, though, it also be executive produced by Steven Spielberg. Owen’s segue to an alternate screen. helped new smaller networks to establish Netflix in particular has invested large This summer’s big-budget flops like strong brand identities. One of the best sums in its shows and is reaping critical After Earth, The Lone Ranger, R.I.P.D., examples of a cable network recently re- acclaim on par with the cable channels as White House Down, and Pacific Rim inventing itself into a pedigreed purveyor seen with its recent fourteen Emmy Award further solidify the media conglomerate- of top content is AMC with , nominations. Hopefully, Wall Street will based studios’ position that mainly proven , and The Walking Dead. be equally, if not more, impressed. Both brands sell movie tickets and improve There is a reason AMC’s stock now trades cable and digital companies have realized market capitalization (think comic book at over 50% more per share than two that content is good business. By creating heroes like Batman, Ironman, and, of years ago. high-quality, successful shows, these course, Superman—an eighty-year old As basic cable companies have media broadcasters are in the process property). These recent failures also reflect flourished, there also has been an influx of building libraries that provide them the general decline of “A-list” talent as of smaller, independent studios wishing with long-term assets for monetization insurers of financial success for movies; to produce for them in the United States on multiple rights-based levels, including the presences of Will Smith, Johnny Depp, using various business models, and those yet to be invented. Ryan Reynolds, and Channing Tatum in www.ocbar.org September 2013 11 the foregoing films did not mitigate their headache for these networks, they are also These patterns mean that, rather than respective studios’ losses. As a symbol of battling Barry Diller’s Aereo service in the produce episode by episode, broadcasters this shift, at this summer’s Comic-Con, courts. Aereo takes over-the-air television may require executive producers to deliver The Walking Dead had a more prominent signals gratis and streams them to private a certain number of not necessarily around-the-clock interactive display at the paying customers via the Internet, yet linear minutes of content by a certain convention center (plus a separate offsite another example of networks’ having to date with no concept of a production obstacle course called “The Escape,” address and adapt to new technologies, season or schedule. Moving away from accessible for a fee, no less) compared with and likely sooner than they want. once-a-week episodic programming for a Marvel’s quieter stage presentation for finite seasonal duration and toward new the next Captain America film. Another Representing Entertainment Clients viewing and distribution models will sign of the times is that Spike Lee is Now Requires Broader Business and undoubtedly affect how talent attorneys attempting to finance his next movie by— Legal Skill Sets negotiate certain deal points. They will get this—crowdfunding on Kickstarter. The synergies between technology and need to reconsider issues such as the term Fewer movies mean more opportunities content, and the evolution of television of a deal, exclusivity during that term, how for television, digital, mobile, and other viewing into a multi-media, personalized long and in what way talent is locked to a non-theatrical content where budgets endeavor, mean that traditional show, and how talent shares and vests in are lower, distributors are eager to make dealmaking models for television have backend. This last issue of participation a quick impact in the marketplace, and become increasingly beside-the-point. For in a show’s revenues is particularly thorny more creative risks are allowed. example, director McG recently eschewed a when one considers that the viewers, and typical overall television studio agreement not always the creator/talent, may also Mixed Messages From the Big Four to partner with a private equity-backed LD be co-producing or, at the very least, Broadcast networks have been much Entertainment, presumably so he could enhancing a show to the content owner’s slower to adapt to the digital revolution own more of his shows. Accordingly, with financial benefit for which there is no as there continues to be a strong talent striking “outside-the-box” deals like direct attribution to the original talent. demographic, albeit an aging one, for these, successful entertainment lawyers their once-a-week, autumn-to-spring need to be able to amass corporate and New Owners, New Models seasonal fare. Even so, there have been financing transactions experience. With the end of the FCC’s financial some indications of their commitment to On a smaller level, how content is interest and syndication rules in 1993, this space. For example, Disney/ABC and produced will affect the nature and scope thereby more easily allowing networks NBC recently announced that they would of creator and executive producer deals. to own and syndicate programming, not sell Hulu and rather would infuse the The notion of “seasons” is becoming media conglomerates quickly realized distributor with $750 million in order to less relevant as broadcast networks’ that combining studios, networks, increase its subscriber base. Additionally, original programming is becoming and distribution entities ensured their CBS recently extended its streaming deal year round, including the expensive control and monetization of television with Netflix which includes more of the summer series Under the Dome which programming. More recently, smaller number one network’s programming. CBS aired to compete with all of cable’s cable networks have also come to the same Nevertheless, these are cautious, somewhat popular product during the same period. realization; A&E Television Networks passive moves, which reflect a general Episodes on cable and digital networks just formed A&E Television Studios, no network reticence to upset their tried and are repeatedly re-broadcast to gain doubt to produce and own more product true advertiser-based model. new viewers, to allow them to catch- in-house. Similarly, rather than license all While not a broadcast network, Time up, and/or to “binge view” (i.e., watch of their content from third parties and Warner’s HBO has realized the benefits a full season of a series in succession as have limited ownership, USA/SyFy co- of offering a streaming service for its quickly as they wish). Netflix released produces some of its shows via its studio shows with HBO GO. As the younger all thirteen episodes of House of Cards at affiliate, Universal Cable Productions, demographic ages, and new generations once, thereby encouraging binge viewing with partners in order to own and have even more demanding expectations and hopefully increased subscriptions. control more of its properties. The next for what and when they watch, the Even social media companies are step in this evolution is with talent, like traditional broadcast networks will be now experimenting with episodic McG, who also want to own their shows, forced to follow HBO’s lead in making programming, as Twitter is leveraging and will partner with co-financiers and more drastic changes on the digital front to its immense social media user base and hedge funds in order to do so. Another reconcile their businesses with consumer offering @EpicEDM. This immersive, example is Brett Ratner who partnered desires. Perhaps News Corporation’s electronic, dance music experiment links with Australian billionaire James Packer recent backing of streaming device to Twitter-produced videos and also to finance films with Dune, which just company Roku’s new round of funding is contemplates providing viewer-produced closed a slate financing deal with Warner a glimpse of where Fox is headed. And as content so that its users can choose from Bros. Thus, typical talent overall deals and if the digital landscape weren’t enough of a multiple experiential perspectives. straight license agreements with networks

12 Orange County Lawyer IN BRIEF may become less the norm Due to has strong potential to programming to audiences. The broadcast as an increasing number HIGH TECHNOLOGY, produce or connect to networks’ lack of decisive digital moves of critical industry players global consumers content. Semi-conductor and other signs of corporate culture clash seek to control more chip maker Intel just between the tech and entertainment now expect immediacy and rights, and therefore made a surprising business segments indicate some industry unlimited personalization revenue, in produced announcement that it will recalcitrance. Nevertheless, consumers with their content. Going further, offer its own set-top box will exponentially demand timely multi- more parties’ controlling or entertainment. and à la carte cable service screen access to everything they watch. splitting these revenues also to anyone with an Internet These marketplace symptoms, along may mean a market adjustment connection. Another example is with the rise of new technologies like downward in deals for more fungible British pay television provider BSkyB’s cloud management systems, strongly talent, particularly with their backend recent commitment to 3D television and suggest that, in the near future, most if participations. Entertainment lawyers producing “event” television to match not all commercial audiovisual works, would therefore benefit by gaining an in- the technology’s scope. Will we see a including feature films, will be released depth knowledge of evolving marketplace similar commitment to this technology by undelineated “content studios” on all business models, film financing structures, by an American network? Or perhaps, revenue-producing screens at once. If the and domestic and foreign co-production conversely, a 3D or similar innovator specific content is designed for multi- rules, as well as an understanding of the like RealD or Imax may enter the platform distribution, then it likely will value of the different types of content in original content fray in order to build be released on the smallest mobile to various key foreign territories. their brand further. the largest four-dimensional theatrical Similarly, digital distribution of content Second, the communications, technology, experience at the same time. There would signals that typical syndication deal and media companies will continue to just be different price points depending models are eroding. CBS’s The Good Wife diversify beyond their core businesses. upon the technology and value added by sold into off-network syndication using a Telecommunications conglomerate the applicable platform. It may not mean reverse window strategy, meaning it would Comcast already bought content provider that Tamra and Heather will ever be at be run on Amazon and Hulu first before NBCUniversal. Now cable carriers the local multiplex, but, rest assured, the going to cable on the Hallmark Channel. like Time Warner Cable and satellite walking dead will soon be coming to a Another example is Scandal, which ABC companies like DirecTV are trying to theater near you. syndicated to BET after only twenty-nine obtain “over-the-top” rights (broadband episodes (rather than the more typical delivery of content without a multiple The author would like to thank Laju M. eighty-eight or more episodes) in order system provider; think Netflix) from Obasaju, an associate at Rosenfeld, Meyer to increase viewership interest and offset broadcasters in order to enter the digital & Susman LLP, for significant help with production costs sooner. Attorneys can distribution realm. If these carriers are this article. best serve their clients by becoming fluent successful in making such inroads, a in all digital rights and off-network and similar converse move by an Amazon or multi-media window issues, for example Yahoo may not be far behind, whether it Leif W. Reinstein is a Partner at knowledge of the different streaming is in cable or satellite, or simply by buying Rosenfeld, Meyer & Susman LLP, Beverly video-on-demand technologies, systems, a lackluster studio operation unaffiliated Hills, CA, where he represents top studios and platforms. Nowadays, issues like with a network. It is also worth noting and networks, digital media companies, which party controls these revenue streams that DreamWorks just made a deal with and Fortune 500 corporations in all aspects and when they are exploited can make or Netflix, bypassing a traditional television of entertainment law, particularly for break deals with co-production partners, network and thereby acquiring economies television, multi-media content, and brand- studios, and networks. of scale on a new screen. And what to driven dealmaking. Leif can be reached at make of Apple? With its popular array of [email protected]. Marketplace Predictions hardware, Apple TV, and slew of iTunes As the distinctions between feature users, it is somewhat surprising that this This article first appeared in Orange films, television, digital, and other non- technology pioneer has not yet made a County Lawyer, September 2013 (Vol. theatrical content continue to fade significant content play to leverage its 55 No. 9), p. 10. The views expressed away, some entertainment marketplace consumer base. herein are those of the Author. They do not trends emerge. First, the lines between Due to high technology, global necessarily represent the views of Orange technology, entertainment, e-commerce, consumers now expect immediacy and County Lawyer magazine, the Orange and hardware are blurring. There are no unlimited personalization with their County Bar Association, the Orange rules on who produces original audiovisual entertainment. A new breed of content County Bar Association Charitable material anymore; any entertainment, provider is beginning to match these Fund, or their staffs, contributors, or leisure-related, or convenience-based expectations with innovative ways advertisers. All legal and other issues must technology or consumer product now of delivering compelling, targeted be independently researched. www.ocbar.org September 2013 13