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