Do you know your showbiz deal terms?Thu Jul 01, 2010 @ 10:36AM PST
Regular commentator Schuyler Moore is back with another attorney guest post, this time tackling the difference between "gross," "adjusted gross" and "net" in Hollywood deals. Test your knowledge against the master....
By Schuyler Moore
Hey, ever been at a Hollywood party and wanted to impress a member of the opposite sex with your mastery of Hollywood jargon? Just print out this article, fold it up, stick it in your wallet, whip it out at the opportune time -- after a drink or two -- and use it for speed seduction as a form of neuro-linguistic programming.
But brace yourself because there is a complete disconnect between what a word means in English and what it means in Hollywood. When Humpty Dumpty said, "When I use a word, it means just what I choose it to mean" in "Through the Looking Glass," he must have thought he was in Hollywood.
So here we go:
United States means the United States (including our 51st state, Canada, and, for the hell of it, all of the Caribbean).
Domestic means the United States (including our 51st state, Canada, and all of the Caribbean).
North America means the United States and -- you guessed it -- Canada and all of the Caribbean. But it excludes Mexico because, on Hollywood maps, it is part of South America owing to the fact that Mexicans speak Spanish.
First look means, depending on whom you ask, either (a) a right of first negotiation, the weakest form of a right to acquire something; or (b) an option, the strongest form of a right to acquire something. So, if you like litigation, use this term often.
Gross. How could "gross" need a definition? Well, if that's all you say, then based on custom and practice, it actually means that only 20% of video is included, and it also means that a bunch of "off-the-top" expenses are deducted (see below).
Adjusted gross means, well, actually the same as "gross," unless you are an agent that wants to tell your client that he got a share of "adjusted gross," in which case it might mean "net" (see below).
Net means you go hungry.
Actual break-even means "net" (see above).
Off-the-top expenses means a bunch of expenses that someone decided at some point always should be deducted, even from "gross," in the interest of fairness -- even if they have nothing to do with the film (like trade dues) or shouldn't be deducted at all (like taxes for which a credit is available).
Budget means a forward-looking estimate of anticipated production cost, except when it means a backwards-looking statement of actual production costs.
Attached (as in, "Tom Hanks is attached") means that you sent the script to the actor's agent and haven't received a rejection letter yet.
NDA agreement means non-disclosure agreement. It also means that whatever is disclosed pursuant to it will be summarized on an online blog within minutes.
Pay or play means that the person is guaranteed to be paid (unless a number of standard conditions neuter the guarantee).
Pay and play means you can't get a completion bond (see "completion bond").
Completion bond means a guarantee that your film will be professionally completed on time exactly as originally envisioned (though the bond company will use a camcorder and have the actors read their lines if it has to take over production).
Loan out corporation is what is left if you remove the skin of a balloon.
Deal memo, term sheet or letter of intent means the lame, half-baked document attached as Exhibit A to a complaint.
Green light means that someone says that the film will be produced (unless it's not).
Residuals are one of the main reasons most films lose money.
Gap means the difference between reality (the few bucks the producer has) and fantasy (the fully funded budget).
Pre-sale means the sale of a film before production based on a pack of lies.
Notice of assignment means a document sent by the bank loaning against a "pre-sale" that overrides all the lies in the "pre-sale."
Single-picture financing means a transaction in which investors lose money on a single film.
Slate financing means a transaction in which investors lose money on a bunch of films.
Soft floor and hard floor have subtle Freudian connotations. Use these last.
Schuyler M. Moore is a lawyer at Stroock and the author of "The Biz, Taxation of the Entertainment Industry, and What They Don't Teach You in Law School." He is an adjunct professor at UCLA Law School and UCLA Anderson School of Management. He can be reached at firstname.lastname@example.org.