The_Hollywood_Reporter__February_07_2018

MORALS; SEXUAL HARASSMENT; DISCRIMINATION. In the event
Distributor becomes aware of a violation or alleged
violation of Distributor’s policy by any key individual
whether or not such violations occurred prior
to, during or after such services were provided, or
Distributor becomes aware that a Key Element has committed
or has been charged with an act considered under
state or federal laws to be a felony or crime of moral
turpitude, then Distributor shall have the right to:
(i) cease distribution of the Picture; (ii) delete any
credit given to such Key Element in connection with
the Picture and/or (iii) modify, edit and/or reshoot
the Picture to the extent necessary to remove the Key
Element from the Picture.
One film distributor recently began adding this “morality clause” language to its contracts.
Sony film. Spacey did not have a
morality clause in his contracts,
according to sources, and was
paid for the entire final season
of House of Cards — even though
he won’t appear in any of the
episodes — and for All the Money
in the World.
Lawyer Schuyler Moore has
begun to add a morality clause to
contracts in an effort to protect
his distributor clients from being
saddled with the next #MeTootainted
film. “Any distributor
can say, ‘I’m not picking up this
film if somebody involved in the
film has some charge like that.’
Absolutely. I’m doing it, and
[these clauses] are enforceable,”
says the Greenberg Glusker partner.
“And it’s just a question of
drafting it in a way that works.”
As such, there’s a new version
of liability affecting Hollywood,
and studios and buyers are
scrambling to figure out how to
handle it. Naturally, talent reps
are balking.
“I’m all for [#MeToo]. I totally
support it. But I think [broad
morality clauses] create a bad
precedent,” says attorney Linda
Lichter. “It’s one thing to say
someone is a criminal. It’s another
thing to say someone has been
accused by someone and you can
fire them and not pay them.”
Others claim studios and buyers
are hypocritical if they are
unwilling to include a morality
clause covering their own executives.
Directors and talent endure
economic hardship when their
films are bought by a company
whose top execs, like Weinstein,
become synonymous with sexual
What Does Sony’s New CEO Have Planned?
Spider-Man: Homecoming (left) and Jumanji
ignominy. On the flip side, Fox
Searchlight lost millions on the
release of The Birth of a Nation
after revelations that star-filmmaker
Nate Parker had stood trial
for rape when he was a college
student (Parker was acquitted)
and that his accuser later took
her own life.
In the post-Weinstein landscape,
a number of distributors
have been left in vulnerable
positions. YouTube Red dropped
Morgan Spurlock’s Super Size
Me 2: Holy Chicken! following the
filmmaker’s admission of sexual
misconduct, but
not before paying
$3.5 million that
sources say it likely
Moore won’t get back.
The Orchard dodged
a bullet when its $5 million
acquisition of Louis C.K.’s I Love
You, Daddy became unreleasable
after a wave of harassment
accusations were leveled at the
comedian. Though C.K. was not
legally obliged to take back the
film, he wrote The Orchard a
check to reimburse the company
for what it had paid toward the
film’s release.
Kenichiro Yoshida may not offload the film studio (just yet), say analysts BY GAVIN J. BLAIR
Will Sony’s incoming CEO finally cut the cord Feb. 2, Yoshida identified movie production,
on Hollywood? On Feb. 1, the conglomerate
said top exec Kaz Hirai, 57, would hand over must be “very careful” with because of large
along with semiconductors, as areas the company
the reins to CFO Kenichiro Yoshida, 58, on April 1. investments required. (And on Feb. 6, worldwide
The move ignited new speculation that Sony’s networks president Andy Kaplan, home entertainment
chief Man Jit Singh and president/CMO
entertainment assets could end up auctioned.
Hirai has been a passionate advocate for Sony Sheraton Kalouria exited in a restructuring.)
Pictures Entertainment, while Yoshida, a veteran Damian Thong, Sony analyst at Macquarie
of corporate strategy who joined Sony in 1983, Capital in Tokyo, notes that “SPE is not a monolithic
movie business” but includes a studio,
not as much. But despite Yoshida’s reputation for
paring underperforming units, many Sony watchers
say he’s unlikely to unload SPE right away. “I
postproduction facilities and cable channels. “One
credit [Yoshida] with a big part of the turnaround
of the past few years,” says Eric Jackson of EMJ
Capital, which owns Sony stock. “He’s forced transparency
on the different business units.”
Yoshida and Hirai led Sony from huge losses to
forecasting a record $6.6 billion profit for 2017 with
such film hits as Jumanji ($857 million globally)
and Spider-Man: Homecoming ($880 million). On
The Report
Behind the Headlines
“Everyone is trying to cover
their asses as much as possible,”
says one distribution exec whose
company recently began adding
morality clauses to its contracts.
One producer insists that
restrictive clauses will spark an
inability to finance movies.
“If there is anything downstream
that impedes the ability of a financier
to recoup his investment, the
financier will not invest,” says this
producer, adding that bond companies
do not currently address
the potential of a key figure negatively
impacting a film because
of a sex scandal. Film Finances
Inc., the top bond completion
company working in Hollywood,
declined to comment.
“There’s definitely an opportunity
for a company to come
up with some sort of sex abuse
insurance,” says the producer.
That’s a point echoed by Lichter.
“The studios should start thinking
about whether there’s some
kind of insurance for this type of
thing,” she says. “This is a whole
new territory.”
Lacey Rose contributed to
this report.
Hirai (left), the president and CEO of Sony Corp. since 2012,
will be succeeded in April by Yoshida, now the company’s CFO.
reason Sony has remained relevant is an understanding
that electronics is linked to content,”
he adds. But in this era of M&A, Jackson thinks
Sony should consider expanding its entertainment
assets, perhaps by acquiring Lionsgate or MGM: “I
would guess it’s more likely they sell their mobile
phone and financial services units rather than their
pictures unit.” But one Tokyo-based Sony analyst
says a creative deal could lead to a sale: “If they can
form some kind of alliance and sell maybe 30 to
40 percent of SPE, then that is a possibility.”
YOSHIDA: KAZUHIRO NOGI/AFP/GETTY IMAGES. SPIDER-MAN: CHUCK ZLOTNICK/SONY PICTURES ENTERTAINMENT. JUMANJI: FRANK MASI/SONY PICTURES ENTERTAINMENT. MOORE: COURTESY OF SUBJECT.
THE HOLLYWOOD REPORTER
12
FEBRUARY 7, 2018