Legal And Contractual Issues

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  • Legal And Contractual Issues

    1. 2. Frames 2002 Live Entertainment : The Big Ticket Key Legal Issues March 15, 2002 By Ameet Hariani , Partner
    2. 3. Outline of the Presentation <ul><li>Industry Overview </li></ul><ul><li>Legal and Contractual Issues </li></ul><ul><li>General Issues and Emerging trends </li></ul><ul><li>Recent Developments </li></ul>
    3. 4. Live Entertainment: An Industry Overview
    4. 5. Various Types of Live Events <ul><li>Corporate Events </li></ul><ul><ul><li>Product and brand launches </li></ul></ul><ul><ul><li>Conferences </li></ul></ul><ul><ul><li>Exhibitions </li></ul></ul><ul><ul><li>Corporate celebrations </li></ul></ul><ul><li>Live Entertainment </li></ul><ul><ul><li>Celebrity appearances </li></ul></ul><ul><ul><li>Music concerts </li></ul></ul><ul><ul><li>Variety entertainment shows </li></ul></ul><ul><ul><li>Fashion shows/beauty contests </li></ul></ul>
    5. 6. Various Types of Live Events <ul><li>Branded Events </li></ul><ul><ul><li>Promotion and management of Brands </li></ul></ul><ul><li>Televised Events </li></ul><ul><ul><li>Events specially created for television channels </li></ul></ul><ul><li>Sports Events </li></ul><ul><ul><li>Focussed around a sporting event </li></ul></ul><ul><li>Concept Events </li></ul><ul><ul><li>Concept conceived by Event Management Company </li></ul></ul><ul><li>Hybrid Events </li></ul><ul><ul><li>Mixture of two or more of the above </li></ul></ul>
    6. 7. Key Industry Players <ul><li>Event Management Company (“EMC”) </li></ul><ul><li>Corporate client </li></ul><ul><li>Sponsor </li></ul><ul><li>Celebrity/live entertainment star </li></ul><ul><li>Agents/ celebrity management companies </li></ul><ul><li>Advertising agencies (as either creative content creators or media buyers) </li></ul><ul><li>Performers (emcee, dancers, etc) </li></ul><ul><li>Equipment suppliers </li></ul><ul><li>Event location owners </li></ul><ul><li>Technical team and Stage crew </li></ul>
    7. 8. Size and Growth of Industry in India <ul><li>Size of Industry in 1991 – Rs 20 million </li></ul><ul><li>Size of Industry in 2001 – Rs 1.5 billion </li></ul><ul><li>Growth rate of Live Entertainment segment – 30% per annum </li></ul><ul><li>Projected growth to a size of Rs 5.6 billion in 2006 </li></ul><ul><li>Source: FICCI Report, Indian Entertainment Industry, 2002, prepared by Arthur Andersen </li></ul>
    8. 9. Revenue Streams <ul><li>Sponsorship receipts </li></ul><ul><li>Ticket sales </li></ul><ul><li>Advertising revenues </li></ul><ul><li>Licensing/assignment of IPRs – Television, Music, Video and Internet </li></ul><ul><li>Exploiting brands created </li></ul><ul><li>Merchandising </li></ul><ul><li>Product Endorsement by Celebrities and Stars </li></ul>
    9. 10. Legal and Contractual Issues
    10. 11. Key Legal Issues <ul><li>Leveraging and Exploiting IPRs created through live events </li></ul><ul><li>Ownership, licensing and assignment of rights relating to: </li></ul><ul><ul><li>Televised Rights </li></ul></ul><ul><ul><li>Audio & Music Rights </li></ul></ul><ul><ul><li>Video and VCD Rights </li></ul></ul><ul><ul><li>Internet Rights </li></ul></ul><ul><li>Ownership and licensing of Brands for Live Events </li></ul>
    11. 12. Key Legal Issues (contd.) <ul><li>Performers Rights and Moral Rights </li></ul><ul><li>Enforceability of Personal Contracts </li></ul><ul><li>Prevention of ‘boot-legging’ of performances and piracy </li></ul><ul><li>Regulatory approvals and permits </li></ul><ul><li>Insurance </li></ul>
    12. 13. Key Contractual Issues <ul><li>Clearly defined rights and obligations between the Parties </li></ul><ul><li>Ownership, assignment, licensing of intellectual property created </li></ul><ul><li>Defining territories for distribution of audio, video, music rights </li></ul><ul><li>Payment terms </li></ul><ul><li>Representation and warranties </li></ul><ul><li>Indemnities </li></ul>
    13. 14. Key Contractual Issues (contd.) <ul><li>Events of default to be defined </li></ul><ul><li>Penalty for delay/ default – but beware of statutory provisions!! </li></ul><ul><li>Remedies in case of default, failure or delay in performance </li></ul><ul><li>Non-compete – but beware of statutory provisions! </li></ul><ul><li>Termination triggers and consequences </li></ul>
    14. 15. Legal and Contractual Issues <ul><li>Issues relating to Celebrity/Star </li></ul><ul><li>Performers Rights over live performances </li></ul><ul><li>Moral Rights – right of attribution, right against false attribution, right to object to prejudicial alteration of broadcasts and recordings of performances </li></ul><ul><li>Non-compete and existing impediments on celebrities/stars </li></ul><ul><li>Formulating efficient tax structures for international artistes </li></ul>
    15. 16. Legal and Contractual Issues (contd.) <ul><li>Issues relating to EMC/Sponsor </li></ul><ul><li>Non-performance by celebrity/star </li></ul><ul><ul><li>Personal contracts – not assignable; enforceability of </li></ul></ul><ul><ul><li>Performance by representative, impossibility of performance due to illness, etc. </li></ul></ul><ul><ul><li>Liability as to damages for show cancellation, refund of tickets, etc </li></ul></ul><ul><li>Non-performance because of technical glitches </li></ul><ul><ul><li>Remedies open to EMC </li></ul></ul><ul><ul><li>Loss of reputation of EMC </li></ul></ul><ul><li>Delay in performance </li></ul>
    16. 17. Legal and Contractual Issues (contd.) <ul><li>Issues relating to EMC/Sponsor (contd.) </li></ul><ul><li>Controlling and leveraging rights over reproduction, commercial distribution, and broadcasting, including making available online </li></ul><ul><li>Licensing, merchandising, and exploiting brands created </li></ul>
    17. 18. General Issues and Emerging Trends
    18. 19. General Issues and Emerging Trends <ul><li>A. Structure of Industry </li></ul><ul><li>Small number of dominant large event management companies and greater number of smaller outfits </li></ul><ul><li>Non-corporate entities </li></ul><ul><li>Trends </li></ul><ul><li>Corporatisation as a business - could be encouraged by granting exemption from capital gains tax, for a limited period of time </li></ul><ul><li>Corporatisation offers advantages of limited liability and increased financing options </li></ul>
    19. 20. General Issues and Emerging Trends (contd.) <ul><li>B. Sources of Finance </li></ul><ul><li>Currently all entities are privately held, and privately funded </li></ul><ul><li>Most funding is through loans, privately raised or through sponsors </li></ul><ul><li>Since most players are not companies, there is no capital market history </li></ul><ul><li>Trends </li></ul><ul><li>Capital markets funding as an option </li></ul><ul><li>Securitization as a way to raise funds </li></ul>
    20. 21. <ul><li>C. Diversification </li></ul><ul><li>Global entertainment industry players are diversified conglomerates </li></ul><ul><li>Would mitigate risk associated with any one type of activity, e.g., films. Also enable companies to cross-promote their offerings across several delivery platforms </li></ul><ul><li>Trends </li></ul><ul><li>Mergers and acquisitions in the entertainment industry - leading to consolidation. Diversification of business leading to better hedging of risks </li></ul>General Issues and Emerging Trends (Contd.)
    21. 22. <ul><li>D. Expansion in infrastructure </li></ul><ul><li>Lack of adequate infrastructure for staging of events </li></ul><ul><li>Sophisticated lighting and special effects equipment required is hired from abroad. Presently imports are hampered by lengthy procedure for import of such equipment </li></ul><ul><li>Trends </li></ul><ul><li>Lobbying to the Government for improvement of infrastructure, and for streamlining of import procedure </li></ul><ul><li>Multiplexes having stage/arena for live entertainment </li></ul>General Issues and Emerging Trends (Contd.)
    22. 23. <ul><li>E. Reduction and rationalisation of entertainment tax </li></ul><ul><li>India has one of the highest levels of entertainment tax in comparison to other Asian economies </li></ul><ul><li>Entertainment, being a state subject, the level and nature of entertainment tax varies widely across states, from 0 to 130%* </li></ul><ul><li>Trends </li></ul><ul><li>Government should take concrete steps to rationalise the tax structure across states </li></ul><ul><li>*Source: FICCI Report, Indian Entertainment Industry, 2002, prepared by Arthur Andersen </li></ul>General Issues and Emerging Trends (Contd.)
    23. 24. <ul><li>F. Television rights, music rights and other revenue streams </li></ul><ul><li>Exploiting televisation of live events as an innovative way to wean away and retain TV viewership </li></ul><ul><li>Acquisition of music and audio rights in live entertainment events by music companies </li></ul><ul><li>Trends </li></ul><ul><li>Marketing and publicizing events a la films and innovative revenue streams like merchandising should be exploited. Globally, these are huge revenue generators, and this can be replicated in India </li></ul>General Issues and Emerging Trends (Contd.)
    24. 25. <ul><li>G. Emerging sources of content delivery </li></ul><ul><li>Rights in newer mediums like Internet-streaming emerging </li></ul><ul><li>With broadband reaching people’s homes, web-casting, pay-per-view and video-on-demand may become significant revenue sources </li></ul><ul><li>Convergence of technologies may integrate mediums as well </li></ul><ul><li>Trends </li></ul><ul><li>Alternative revenue streams and non-conventional sources of content delivery play role in order to be competitive </li></ul>General Issues and Emerging Trends (Contd.)
    25. 26. <ul><li>H. Globalization of entertainment market </li></ul><ul><li>Large portion of total revenues in most entertainment industry products comes from foreign and overseas markets </li></ul><ul><li>Entertainment delivered via the Internet or satellite can reach a global audience </li></ul><ul><li>Trends </li></ul><ul><li>Consider global audience as market – large Indian community overseas could be effectively targeted for all live entertainment events </li></ul>General Issues and Emerging Trends (Contd.)
    26. 27. <ul><li>I. Industry Forum </li></ul><ul><li>The Indian event management Industry did not have an industry forum or self-regulatory body, until very recently </li></ul><ul><li>Trends </li></ul><ul><li>Event Management Association of India established on November 7, 2001* </li></ul><ul><li>*Source: Press Information Bureau </li></ul>General Issues and Emerging Trends (Contd.)
    27. 28. <ul><li>Budget 2002 </li></ul><ul><li>Service tax has been made applicable to 11 new categories of services, including event management </li></ul><ul><li>Import of equipment for re-export purposes has been proposed on payment of customs duty depending on period of intended use </li></ul>Recent Developments
    28. 29. Mr Ameet Hariani, Partner [email_address] Ms Raksha Kothari raksha.kothari@ in.andersenlegal.com Tel No: (22) 216 03 00 Fax No: (22) 216 04 00

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