Dealmaking December: Entertainment, Media, and Sports Review

Photo courtesy of the Associated Press | Patrick Sison/AP
Photo courtesy of the Associated Press | Patrick Sison/AP

The holiday season normally slows things down, but not in 2020. 

Disney received some well-deserved press on its successful launch and the subscriber numbers related to streaming platform Disney+.  However, questions remain about how the Hulu platform, ESPN+, and ABC will integrate sports content.  Disney also seems content with releasing some films on the direct-to-consumer platform with others through the theatrical window.

Disney signed a new sports rights package with the Southeastern Conference (SEC) and they are in a battle with FOX, NBC, Amazon, and potentially others for National Football League (NFL) packages that are set to expire.  The SEC package is a winning situation for Disney based on the SEC’s successful football programs and past viewership numbers.  Disney will look to keep the theatrical window open for its tentpole films as opposed to the Warner Bros. strategy, but pressure will mount if theaters stay closed.  Disney has the platforms to succeed if a strategy pivot is needed. 

Speaking of streaming, it seems that pirating of content is much like the old adage of criminals always being ahead of the law enforcement curve.  Innovation is important in any industry and of course in protecting content from those who do not want to pay for it, YouTube has a new problem on its hand.  As technology has developed, so have the ways in streaming and copying content.  One remaining problem going into 2021 and beyond is the idea of platform liability.  A balance in legislation should help solve the issue by providing an outlet for profit and responsibility. 

As to platform liability, much like Google, social media giant Facebook now finds itself in hot water with the federal government and specifically the Justice Department.  Antitrust litigation has been filed against Facebook alleging anticompetitive activities.  Lawyers with the Justice Department have argued that Facebook’s purchase of communication platform WhatsApp and picture/video focused social media network and platform Instagram decreased competition and stomped out others by size and tactic.  The difference between the Google litigation and the aforementioned is that parent company Alphabet, Inc. controls the search of information to the point that its search engine namesake is in danger of becoming a genericized trademark (when is the last time a consumer said “internet search it” or “search the internet” versus “Google it” or “Googled it”, thus becoming a verb and dominating the category for a product).  Liability and integrity will continue to be a major focus of consumer concern.  Whether the Justice Department and the United States Congress take up that concern is yet to be seen.  However, the antitrust litigation is a step down that path.      

Sticking with litigation, the Writers Guild of America (WGA) and the remaining two major talent agencies (Creative Artists Agency (CAA) and William Morris Endeavor (WME)) continue their fight over packaging fees and self-dealing with the union.  Many if not all of the big, medium, and smaller agencies have signed on with WGA with news rules in-place protecting against packaging and alleged self-dealing entertainment production companies owned by the agencies.  From a American jurisprudence standpoint, the judge in the case has three options: (1) decide the case after a trial, (2) recommend and sometimes require mediation, or (3) dismiss the case under another legal theory (mootness, etc.).  In a year of sports betting growth, the best gamble might be mediation short of a trial as there are still material issues of fact at stake (not to mention the parties are free to make or not make a deal outside of court, which cannot be forced by a judge). 

Lastly, with sports, in a year like no other there is an interesting twist as the year of 2020 comes to a close.  Cable and satellite companies will be paying their customers at least $1 billion in refunds for games never played, while Major League Baseball (MLB) is suing its insurers for unpaid payouts for losses despite allegedly purchasing such insurance to cover against future loss.  Others leagues are likely in a similar dilemma.  Where Wimbledon is getting paid $141 million from its insurance carrier for cancelled or pared-down sporting events, asking for billions is a larger ask and of course the contract language of each policy will matter too.   

Dealmaking in December circa 2020 brings a new meaning to end-of-year. 

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