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Course Descriptions

Course Descriptions

Deal Strategies in Business and Entertainment Law (Spring 2019)

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

Course Description

            This is an upper division “specialized transactional skills” course that qualifies as part of the approved curriculum for students seeking a Business Law Certificate and the Media and Entertainment Law Certificate offered by the Law School. The course has been designed specifically for JD, JD/MBA and MBA students who are interested in pursuing leadership roles and professional transactional careers as an executive, lawyer or other adviser in the general corporate or business environment, as well as the entertainment, sports and digital media worlds. The instructor is a veteran entertainment attorney, studio chief executive, investment banker and media consultant with extensive practical experience in the entertainment and media industry. (See Professor Levine’s biography below)

            Using the motion picture business as a proxy for any general business or media content producer, financier and/or distributor, this course will examine the deal making strategies, legal and business issues, and the skills of structuring, negotiating and drafting various types of document, including executive and talent employment contracts, rights acquisitions, financing, production, distribution agreements and other important deals in the entertainment and media industry. 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 general business involving the creation, financing, distribution, marketing, or sale a product or service, in any other business; the basic market and planning considerations and customary practices of the traditional motion picture business may appear to be different, but all of the basic legal and business issues, skills and principles presented in this course can easily be applied to any corporate or general business environment.

            Specifically, this “hands on” course 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. To do so, students will work with a running hypothetical that progressively covers the critical operations of a major studio/distributor and an independent production company in connection with the development, production, distribution and exploitation of motion pictures for worldwide distribution; students will also 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. 

 Students will be exposed to the strategy of structuring, reviewing, drafting and negotiation of deals at the deal stage (through letters of intent, deal memos and term sheets) as well as formal agreements documenting such transactions examined from all sides of each relationship and corporate operation; and, 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 the players in the hypothetical deals discussed in this course.

            This course 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 some Contract Drafting & Negotiation courses, this course will provide the student with a realistic view of the professional activities and skills of a lawyer, business executive or deal maker acting on behalf of an individual client or company in managing the creation of a strategy for structuring, negotiating and documenting selected transactions examined in this course.

Enrollment:

            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.

Office Hours:         

            Professor Levine will be available for individual student conferences in his office to review questions regarding the Course Material, a student’s class participation, drafting skills, the Exercises or any other related subject. To schedule an appointment with Professor Levine, students should email Professor Levine at alevine@law.usc.edu. Students should note that Professor Levine 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.

Class Meetings:

           This class will meet twice a week for 3 units of credit for a numerical grade only; this course qualifies as an experiential “skills” course under Law School and ABA requirements. Generally, class sessions will be held from 10:00 AM to 11:50 AM on Mondays and Wednesdays, except class will not meet on 1/21/19 or 2/18/19, during the period of 3/11/19 through 4/2/19; class will meet on 2/19/19, and the last class will be on 4/15/19. 

Course Materials:           

            All assigned reading will be from a Course Reader (including the 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 CopyVision at the Law School before the first class session. Additional handouts, slides and other materials may be distributed and posted on Blackboard during the semester (all of the foregoing materials “Course Materials” herein.) The Course Materials 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 (“Exercises”) 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 the subject matter in greater depth. The financial information and calculations included in the Course Materials is intended to give students exposure to the type and form of such financial information and calculation that are commonly used in many of the transactions to be discussed in class and to illustrate what professionals are using in the preparation and analysis of the transactions covered in this course. Students will be advised when a basic understanding of the structure and purpose of such information and projections is expected.

Reading Assignments:

            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 the Exercises) will be taken from the general Topic Outline below. Students will not be responsible for knowing all of the specifics of every document or other material that is not reviewed in class unless specifically assigned to review the same as part of a reading or an Exercise. 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.

Written Exercises; Final Exam & Grading:

            Students will be assigned several short written 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 (20%), and (ii) the final exam (80%).

            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, unexcused 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.         

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 and the contract review process:“How do you review a contract?”
“Organize Your Thoughts Before You Begin”
Suggested approaches“The Art of Negotiation”
Review of Glossary of Terms & Phrases
Organization of Formal Agreements
Review examples of Standard Contract (Boilerplate) ProvisionsStructure, review and negotiate a typical Studio Executive Employment Agreement
Review of the Doctrine of Mitigation
Other related TopicsCross-Collateralization
Portfolio EffectBackground Reading on the Motion Picture 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
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 and Others

Acquisition of Literary Material

Review Author’s Deal Memo

Formal Literary (Option and) Purchase Agreements

Options, Rights of First Negotiation, First and Last Refusal

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, strategies and structures of agreements for financing studio content and independent films

Formal Co-Financing Agreement & Illustration
Formal Co-Production Agreement & Illustration

Formal Negative Pick-Up Agreement & Illustration

Completion Guaranty 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
Discussion of chain-of-title clearances; delivery requirements; laboratory agreements, payroll services; and visual effects

Marketing & Distribution of Pictures

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

Backend 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

The Instructor:

          Professor Levine joined the faculty of the USC Gould School of Law in the fall of 2013 following his development of this “skills” course and his Fall Business Planning Course described above; each year since then, Professor Levine has brought his uniquely broad experience of more than four decades in the entertainment, communications and convergent media industries as an entertainment, tax and corporate attorney, studio chief executive, investment banker, and financial and media consultant to law and business students enrolled in such courses.

            Before joining the Law School faculty, Professor Levine Professor Levine was the managing partner of Canon Media Partners (“CMP”) that provided a wide range of operational business, financial and strategic advice and counsel to clients in all aspects of the entertainment and media industries. Founded in January of 2010, CMP was the former J.P. Morgan Entertainment Advisors (“EA”), which was formed as a unit of J.P. Morgan Chase & Co. in 2007. CMP and EA focused on assisting clients in the development and structuring of all forms of business strategies and models and the selection of, and ongoing advice to, management, the assembling of management teams to operate new or existing businesses, the creation of new industry initiatives, and the launching of new media businesses.

            Professor Levine is also the former President and Chief Operating Officer of Sony Pictures Entertainment Inc. (“SPE”) having joined SPE in that role when Sony purchased Columbia Pictures Entertainment, Inc. in 1989. While at SPE, Professor Levine was responsible for all aspects of SPE’s business and corporate operations, which included the motion picture, television, home video, merchandising, exhibition, studio facilities, corporate development, community relations, corporate affairs, legal, finance, human resources and administrative activities of the company worldwide.

            As an attorney, Professor Levine was counsel to the law firm of Ziffren, Brittenham, LLP, and a senior partner in the law firm of Armstrong, Hirsch & Levine; during his legal and consulting practices consisted of representing individuals and companies in all aspects of the entertainment and media business, including public and private media entities, independent production and distribution companies, recording and music publishing companies, theatre chains, actors, directors, writers, producer, playwrights, music artists, athletes, executives, agents and managers.

            Professor Levine holds a BS degree in Business Administration and a JD in Law from USC. He is a member of the Academy of Motion Picture Arts & Sciences, Academy of Television Arts & Sciences, the State Bar of California and has served on the Boards of Directors of DreamWorks Studios, Castle Rock Entertainment, and a variety of other civic, charitable and education boards and committees, including the Board of Governors of Cedars-Sinai Medical Center in Los Angeles, the Boards of Councilors of the USC School of Cinematic Arts and USC Gould Law School, the Boards of Directors of the USC Associates, the Roundtable of the Museum of Radio & Television, and the Frank Sinatra Foundation. He has also lectured at numerous entertainment and media conferences, including presentations at the Harvard Business School, Howard University, UCLA and USC.

            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: 3
  • 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
  • Participation: Required and graded