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Course Descriptions

Course Descriptions

Deal Strateg, Structure, Drafting and Neogitation (Spring 2018)

  • Course Number: LAW-673
  • Class Number: 03344
  • Instructor: Alan J. Levine

Course Description

Using the motion picture business as a proxy for any media content producer, financier and/or distributor, this “skills” course will examine the legal and business skills, concepts and practices, involved in structuring, drafting and negotiating various types of employment contracts, rights acquisitions, financing, production and distribution deals in the entertainment and media industry. To do so, students will work with a running hypothetical that progressively covers certain operational aspects of a major studio/distributor and an independent production company in connection with their development, production, distribution and exploitation of motion pictures (“Pictures” in the Topic Outline below) by such companies for worldwide distribution, and their related dealings with third parties. Students will examine the financial, economic, and practical aspects of each transaction, and will also engage in “mock negotiations” of some of the more important transactions that will be examined in class. 

            The instructor is a veteran entertainment attorney, studio chief executive, investment banker and media consultant with over 46 years of practical experience in the entertainment and media industry. Accordingly, this is a practical “hands on” course that will cover the details of selected transactions and related agreements encountered during development (e.g. overall term deals), production (e.g. production financing, completion guarantees), and distribution (e.g. agreements with distributors, exhibitors and other end-users) of motion pictures, and accounting and financial reporting of film performance to participants and other interested parties. Students will be exposed to the structuring, reviewing and drafting of deal memos, term sheets and formal agreements documenting such transactions examined from all sides of each relationship, corporate operation and/or transaction. Like a real-life corporate attorney, business executive, and talent lawyer, students will encounter a wide gambit of legal issues and business considerations addressed by players in the hypothetical deals discussed in this course.

            This course can be identified by many different titles. It combines aspects of courses in Business Planning, Legal Writing and Negotiation with basic principles students would encounter in many Advanced Contract, Entertainment Law and Intellectual Property courses. Unlike basic Contract Drafting & Negotiation, this course will provide the student with an experience of a lawyer, business executive or deal maker advising or representing a client or company, or managing the creation of a strategy, in the structuring and negotiation of selected transactions and the drafting of related term sheets, deal memos and formal agreements.

            While the focus of this course will be on transactions (deals) in the motion picture business, the issues, skills and principles presented can easily be applied to any media business involving the development, production, financing and distribution of content in today’s diverse media world. While the basic market considerations and customary practices of the traditional motion picture business may appear to be different, all of the basic legal and business issues, skills and principles presented can easily be applied to any corporate or general business environment.

Class Meetings & Enrollment:

            This class will meet twice a week for 4 units of credit for a numerical grade only; this course qualifies as an experiential “skills” course under Law School and ABA requirements. Class sessions will be held from 10:00 am to 11:50 am on Mondays and Wednesdays in Room 130. While other qualifying courses for a Business Law Certificate or Entertainment Law Certificate (including Business Organizations, Contract Drafting & Negotiation, and Professor Levine’s Business Planning: Structuring & Financing a New Enterprise course) may be helpful, they are not prerequisites. This course does not duplicate any of the subject matter covered in Professor Levine’s fall semester Business Planning course.

Course Materials:          

            All assigned reading will be from a Course Reader (including term sheets, deal memos, formal agreements and other documents, financial notes and illustrations, class slides contained therein) prepared by the instructor, which will be made available to students at the Copy Center at the Law School before the first class session. Additional handouts, slides and other materials may be posted on Blackboard, or distributed in class, during the semester (all of the foregoing materials “Course Materials” herein.) The Course Materials attempt to cover as many material issues and principles, as well as secondary commentary and documentation, that are relevant to the subject matter of this course and the transactions described in the course hypothetical – students are expected to use the Course Materials as a handbook or reference guide for required reading and short class assignments as well as the final exam. Students may not be required to read and/or master some of the topics in the Course Materials due to time constraints or other circumstances; however, all of such material has been included to give students exposure to its existence and an understanding of where it fits in the sequencing of some of the transactions described in the hypothetical, and to make it available to those students who are interested in reading more on the subject matter in greater depth.

 

            The financial information and projections included in the Course Materials is intended to give students exposure to the type and form of financial projections that are commonly used in many of the transactions to be discussed in class to illustrate what other professionals are using in the preparation and analysis of the business planning and legal work necessary to complete the transactions covered in this course. While the fundamental understanding of such basic financial information is necessary, students are not expected to master the more sophisticated financial projections contained in the Course Materials. Students will be advised when a basic understanding of the structure and purpose of such information and projections is expected.

Reading Assignments; Class Discussions:

            At the end of (or shortly after) each class session, an announcement, email and/or posting on Blackboard concerning the reading assignment from the Course Materials for, and the topics expected to be covered in, the immediately following class session will be made. It is not possible to pinpoint upfront the specific timing for reading assignments for each class session; this will depend on our progress through the material in class. Even though all of the topics, concepts and documents that have been included in the Course Materials may not be covered in detail during the semester, the matters that will be covered (and the reading and short class assignments) will be taken from the general Topic Outline below.

            Additionally, class discussion may only focus on a few important issues, principles and/or provisions of each of the materials; students will not be responsible for knowing all of the specifics of every document or other material that are not reviewed in class unless specifically assigned to review the same as part of a reading or short class assignment. Therefore, the Course Syllabus and the Topic Outline below may be revised from time to time to accommodate the progress made by the class through the Course Material. Nevertheless, it is important for students to understand where all of the general topics fit in the sequencing of the transactions included in the course hypothetical, even if not covered in class.

Attendance; Class Participation:

            Attendance and class participation will also be considered and graded within law school parameters. Regular and punctual attendance is expected of all students. Attendance will be taken at the beginning of each class session. Lack of preparation, early departure or inappropriate behavior will influence the final grade. Laptops may be used only for taking notes and for the final exam as noted below. All other communication and entertainment devices (e.g. cell phones, iPods, iPads, etc.) must remain off during each class session. Students engaging in any social media or other communications (or surfing the internet) with any device during a class session may be dismissed from such class session and graded accordingly. 

Written Exercises; Final Exam & Grading

            Students will be assigned several short written assignments (“Exercises”) during the semester that will focus on the review and drafting of provisions of term sheets, deal memos and formal agreements on topics taken from the Course Material or class discussion. The final exam will be open-book (using only hard copies of the Course Materials and the student’s notes), in class for which students may use a laptop computer with SofTest. The exam may cover all assigned readings, all distributed Course Materials and any other matters discussed in class. The final grade will be based on a combination of (i) in-class participation and the written Exercises given during the semester (30%), and (ii) the final exam (70%).

Office Hours; Teaching Assistant:

            Professor Levine will be available for individual student conferences in his office (Room 306B) to review questions regarding the Course Material, or a student’s class participation, drafting skills and the Exercises. To schedule an appointment with Professor Levine, students should email Professor Levine at alevine@law.usc.edu. Students should note that the Professor prefers to respond to substantive questions in person, and preferably during class so all students can benefit from a discussion of the questions and answers.  

            Irina Dykhne will serve as Professor’s Levine teaching assistance; Irina has distinguished herself in Professor’s Levine’s courses. Irina will be available to meet with each student to assist those who are interested in better understanding class discussions, drafting and the Exercises; she can be reached at dykhne@usc.edu.

Topic Outline:

            The Topic Outline below is generally organized to correspond to the Chapters in the Course Reader. One or more Chapters may be covered in a given class session, and it may take several class sessions to cover just one Chapter. Therefore, although the sequence will remain the same, students should use the Topic Outline below as a guide rather than a specific schedule for anticipated reading or short class assignments until announcements are made regarding such assignments. As with the Course Materials, this course has been organized around a running hypothetical, which will continue to evolve throughout the semester. A more detailed set of facts and assumptions for this hypothetical will be discussed during each class session to better focus on the issues and principles to be covered in each and subsequent class session. It is anticipated that this course will track the following topics covered in the Course Reader:

Introduction

Review Course Syllabus and Course Materials
Initial review of the running hypothetical
Discuss your role(s) in this course
Introduction to Business Planning
“Organize Your Thoughts Before You Begin”
Review of Glossary of Terms & Phrases
Organization of Formal Agreements
Review examples of Standard Contract (Boilerplate) Provisions
“How do you review a contract?” – Suggested approaches
Structure, review and negotiate a typical Executive Employment Agreement
Review of selected principles of contract law (e.g. Doctrine of Mitigation)
Other related topics (e.g. ethical obligations of deal lawyers; lawyers as investors and/or directors)

The Motion Picture Business

Background Reading on the Business
Discussion of Industry Players

Major & Mini Studios
Typical Studio Organization
Typical Film Group Organization

Distribution Windows and Revenue Streams
Calculating ultimate film revenue and costs
Guild and Union Agreements
Optional Reading: Motion Picture Industry Economics & Statistics

Development of Pictures

Development Process

Employment Agreements with Studio Executives
Freelance Agreements with Producers and Others
Overall Term Deals with Producers

Acquisition of Literary Material

Review Author’s Deal Memo

Formal Literary (Option and) Purchase Agreements

Hiring a Writer

Review Writer’s Deal Memo
Formal Writer’s Loan-Out Agreement

Greenlight Process (i.e. Election to proceed to Production)

Review film budgeting process
Financial considerations and projections
Examine the concept of “pay or play”
Abandonment of development or production

Reversion of project with a lien
Turnaround Agreements

Financing the Pictures

Examine various sources and forms of financing content

Formal Co-Financing Agreements
Formal Co-Production Agreements

Financing Independent Films

Examine various structures of financing

Negative Pick-Up Illustration

Completion Guaranty
Completion Agreement and related agreements

Production of the Pictures

Structure and drafting of talent & other production agreements

Formal Producer’s Loan-Out Agreement
Formal Director’s Loan-Out Agreement
Formal Actor’s Loan-Out Agreement
Location Agreements
Production Service Agreements

Insurance policies and related issues
Additional Topics (e.g. Chain-of-title clearances; delivery requirements; agreements with labs, and payroll services; visual effects)

Marketing & Distribution of Pictures

Marketing and Distribution Agreements
Theatre Bid Confirmations
Review Basic (Standard) Booking Terms
Box Office and Post-Release Reporting

Counting the Money: Profit Participations

Examine basic calculations

Defined Gross Proceeds
Defined Net Proceeds
Company’s Share of Defined Net Proceeds
Defined Gross Proceeds After Initial Cash Breakeven

Structure, drafting and negotiation of formal Exhibits
Review illustrations of actual participation statements
Examine accounting and audit provisions
Audit Reports; litigation and settlements

 

            Should students have any questions concerning any of the matters discussed in this Course Description, please email Professor Levine at alevine@law.usc.edu.

 

Course Details

  • Unit Value: 4
  • Grading Options: Numerical Only
  • Schedule: M/W 10:00 am - 11:50 am
  • Exam: In-class exam
  • Writing Requirement: No
  • Skills/Experiential Unit Requirement: yes