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Party Relationships Make ADR Suited to Entertainment Cases

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Party Relationships Make ADR Suited to Entertainment Cases

Source: Los Angeles Daily Journal (Focus)
Date: April 17, 2003
To understand the entertainment industry's approach to dispute resolution, one first must understand the somewhat unique aspects of the industry and its universe.

As consolidation has swept the entertainment industry, its members have become more a part of corporate America. Thus, alternative dispute resolution has gained increased acceptance and, in many instances, is preferred to litigation.

The entertainment business is unique largely because people in the business believe that it is unique. They feel that only those in the business really understand how it works. Because of this, they feel the need to control, if at all possible, the outcome of any dispute.

Add to this a nearly pathological penchant for confidentiality, coupled with the need to preserve industry relationships, and one has a recipe for mediation. To most clients, the importance of preserving the relationship is almost on par with winning and often plays a significant role in fashioning a settlement.

In mediation, confidentiality is built into the process and control is implicit. One of the reasons why mediation of entertainment disputes is effective is the way that the industry is structured. In this era of unprecedented consolidation, the industry is comprised of six "studios." They are vertically integrated and interdependent by virtue of necessary alliances. They occupy, due to their size and what they control, the center of the universe.

Other members of this universe include cable companies such as Comcast, talent (both creative and executive), talent agencies, various guilds, advertising agencies, international markets, etc.

For any attorney representing one of the parties and for the mediator, it is necessary to understand that in this universe, no party is an island and no party or individual can stand alone.

For example, the Disney Co. owns several important cable services such as ESPN. AOL Time Warner owns many of the cable systems that provide carriage. Several years ago, the two became embroiled in a dispute involving how much money Warner Cable had to pay for certain cable services.

Warner Cable reacted by dropping several services from their New York systems. Disney marched to Washington, D.C., and began to lobby against the proposed acquisition of Time Warner by AOL. Warner and Disney quickly resolved their differences.

Similarity, Warner Bros. annually produces a major slate of movies, all of which are exploited in DVD and home video. Viacom owns Blockbuster, the largest DVD/Home Video distributor in the business.

The same ground rules apply where one of the parties is an individual, particularly if he or she is "creative talent." Content is the currency of the entertainment industry realm. A studio without the continued creation or acquisition of new content is nothing more than real estate. New technologies without content are merely inventions in search of purpose.

If one digs deep enough, one will discover that every dispute is somehow related to content, whether it is in its creation, transmission, distribution or exhibition/exploitation. Generally speaking, there are a limited number of places where talent can ply their trade. On the other side of the coin, talent is not fungible. Although there are certainly many actors, writers, directors and producers, each is unique unto themselves.

Accordingly, neither the talent nor the studio wants to risk alienating the other. Hence, they strongly are motivated to resolve a dispute in a fashion that preserves the relationship. This resolve is well-grounded in a healthy combination of need and fear and lends truth to the axiom: "I will never do business with that person unless he has something I want."

To maximize the potential for settlement, both the attorneys and the mediator must understand the relationship between the parties beyond the four-corners of the dispute, grasping the interdependence and interrelationships between the parties and the levers available for resolution. This serves to expand the distributive pie and pave the road to a creative settlement.

Perhaps no other industry has been as profoundly affected by consolidation and the new economic models necessary to sustain corporate survival, along with the advent of new technologies, as has the entertainment industry.

This novel distinction has generated a host of new issues that will keep attorneys quite busy. Ownership of the means of distribution by studios has spawned lawsuits based on alleged practices of self-dealing. One outgrowth of the new economic model has been the repurposing of content, which has created its own set of issues. If this is not enough, new technologies have generated uses for content that never were anticipated, leading to the predictable legal consequences.

In order to settle a dispute and at the same time preserve a relationship, whether it is corporate or individual, the parties need a strong element of control. Mediation guarantees that the parties will be the lead players in their story and determine how it will end.

At the outset, the parties will select the administering institution and the neutral. If the parties do not have a mediator in mind, a case manager can be very helpful in terms of suggesting which neutrals have a complementary skill set and experience.

The parties then have the ability to set their own ground rules. Each side can determine whether experts will be used and what information will be shared or remain confidential.
Mediation can be used effectively to end a dispute before it begins. Also, mediation allows the parties to fashion a settlement that is as creative as the participants' imaginations. In entertainment, there is always something that someone wants or needs that is not part of the dispute or visibly on the table.

Everything is always in play. Settlements, may range from stand-still agreements having nothing to do with the issues at hand to a number of hours on the company plane.

The trick is to be aware of the panoply of levers available and how and when to use them. Mediation is the only forum that provides the parties with the requisite control to determine what their settlement will include and what form it will take.

The simple truth is that at the end of the day, all disputes get resolved. The only question is by whom--whether by a judge, jury, arbitrator or the parties themselves. In entertainment disputes in particular, the parties more frequently will opt for settling the dispute themselves, with the gentle guidance of their chosen mediator.

Richard S. Reisberg, Esq. is a neutral with JAMS. He has held senior management positions with various entertainment companies, including Trimark Holdings Inc., Reeves Entertainment Group, MGM/United Artists Television and Viacom.

Copyright 2003 Daily Journal Corporation. Reprinted with permission.