What Sandra Bullock can teach showbiz dealmakers

We’re starting a new feature today: attorney guest posts. Got a short take on a hot entertainment law issue? E-mail us at [email protected]. First up: Dina Appleton, special counsel at L.A.’s Sheppard Mullin Richter & Hampton and the co-author (with Sony Pictures attorney Daniel Yankelevits) of the new book “Hollywood Dealmaking: Negotiating Talent Agreements for Film, TV and New Media.”

By Dina Appleton

We've all heard the current mantra: DVD sales are down, the economy is in the toilet, digital media has not yet transformed technological breakthroughs into cold hard cash.

As a result, most studios have now imposed informal caps on the percentage of "first dollar gross" collectively payable to talent (excluding parties that put up cash to help finance the film) on a single picture or moved away from gross participation altogether towards a break-even position. 

But there's no need to panic -- this doesn't have to mean less money for talent. With a little creative and savvy dealmaking, in success, talent can potentially make as much as 2 to 3 times their standard fee while still working within the studios' revised frameworks.  

Just look at Sandra Bullock's recent success. Accordingly to the L.A. Times, when the $35 million budget of “The Blind Side” couldn't accommodate Bullock’s quote of $10 million against 10% of gross, Alcon Entertainment offered her $5 million upfront with a greater share of the backend, including DVD sales. She accepted and the arrangement has paid off handsomely, as Bullock reportedly looks to net about $25 million. 

So even though the studio might not agree to honor your client’s backend quotes, or might say your client’s movie can only be greenlit if no more than 20% of first dollar is payable to all parties in the aggregate, you can condition your client’s "cramming down" upon getting something in return. 

Depending on the circumstances, this "something" should be anything from a bigger up-front paycheck to a larger cut of DVD sales (beyond the ‘standard’ talent royalty of 20%) to increasing the back-end percentage while agreeing to delay the point at which such participation kicks in. If the studio won’t budge -- or even if they do -- you also should fight for bonuses triggered by reaching predetermined domestic or worldwide box office levels. 

You might also negotiate bonuses tied to industry awards (e.g., a Golden Globe) and/or nominations. Of course, the risk is that in commercial failure, talent will make much less than their quote. But if the film performs, a little creative dealmaking can certainly ensure your client -- like Sandra Bullock -- will be nicely rewarded.