The Art of Selling Difficult Content: The Studios’ Side (Continued From Page 34) 36 VideoAge asked veteran Hollywood studio executive Tony Friscia to explain ways to sell (license) difficult content (product) from the Hollywood studios’ point of view. According to Friscia there are three main ways to sell unwanted product: “Block Booking/Blind Bidding, Library Product, and Locomotive/Franchises.” He then explained: “In Block Booking, studios would license multiple films to theaters as one package. They would license their ‘A’ class and ‘B’ class feature films with top stars to theaters, with the requirement that the same theater also license the studios’ ‘C’ class and ‘D’ class feature films. In many cases, the theaters would have to license undesirable films that they knew almost nothing about. The theaters would agree to these terms in order to get access to the more popular movies. This practice was outlawed in the famous 1948 Supreme Court decision The United States vs. Paramount Pictures, Inc. et al. (aka The Paramount Decree).” Friscia proceeded in reviewing library product: “When studios (the licensors) license their first-run television shows and feature films to TV broadcasters (the licensees) through output deals, they usually require the licensee to also include in the license agreement a large number of ‘Library Product.’ Library Product may include older television series as well as older feature films. As an example, in a three-year output deal, with the studio’s right to extend the agreement another two years, the studio will require the licensee to license 75 library feature films designated by the studio. If the agreement is extended another two years the licensee is required to license another 75 library feature films to be selected by the licensee from a list made available by the studio. In addition to the library feature films, the licensee will also be required to license several hundred hours of library television series in a similar manner. In some cases, the licensee may not even air the Library Product before the license period expires (as they are not required to air the product).” In the case of Locomotive/Franchises, Friscia said that this concept “is similar to Block Booking,” reviewed above. “In many TV license agreements (both domestic and foreign syndication packages) where studios include their ‘A’ list and ‘Franchise’ (Locomotive) content, the studios will also include several lesser rated and desired feature films and/or television series. “This has been the subject of many complaints and notable lawsuits over the past several years. The studios receive the license fees from licensing the lesser product that they could never license alone, and in many cases allocate lower license fees to the ‘A’ and ‘Franchise’ (Locomotive) product. Some studios have even gone so far and ‘straight-lined’ the packages. This is where all content licensed in a package receives the same license fee allocation regardless of the ratings, quality, popularity, and financial success of the content. This practice significantly reduces the participations payable to the ‘A’ list and ‘Franchise’ participants. Hence, the endless lawsuits. This has given rise to the ‘Comparative Value’ concept, where allocations are assigned on a title-bytitle basis based on the true or real value of the content. “A few ‘A List’ producers and directors have required that their first-run feature films be licensed alone, not with other content in any license agreement. Some studios will assign a lesser number of runs in the packages to the Locomotive content. For example, if most of the content in a package is licensed for four runs over four years, the Locomotive may be licensed for only two runs. This practice enables the studio to place the Locomotive back in its ‘Availability’ list sooner and license it again sooner in another package with lesser content. “Since the earliest days of the motion picture industry ‘Block Booking’ increasingly became the standard industry practice in Hollywood. The positions of the studio moguls were simple, - if the theater owners wanted to get the ‘good stuff,’ they had to take the ‘bad stuff.’” Friscia concluded: “With vertical integration, whereby the studios are acquiring their own distribution channels, including broadcast networks, cable channels, and television syndication stations, come allegations by actors and producers that their films and television series are being sold at below-market prices to the affiliated entities. This self-dealing results in revenues — which would otherwise be shared with the actors and producers that remain within the studio’s empire — in the form of cost savings and increased profits. Legal challenges by participants accuse studios of failing to maximize the value of TV series and movies by agreeing to cut-rate licensing deals at below market rates with affiliated entities, rather than shopping and selling to the highest bidder.” Los Angeles-based studio veteran Tony Friscia has had executive positions at eight studios, including 20th Century Fox, Warner Bros., and Columbia Pictures. Since the earliest days of the motion picture industry ‘Block Booking’ increasingly became the standard industry practice in Hollywood. VIDEOAGE October 2024 Distribution Challenges
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