Brave New World

Streaming has replaced theatrical but what will replace streaming? Schuyler Moore on the state of film financing

Published in 2023 Southern California Super Lawyers magazine

By Erik Lundegaard on January 11, 2023


Last September we caught up with entertainment lawyer Schuyler Moore, the subject of the 2010 feature “A Bit of a Rebel with a Bit of a Cause,” to talk over the last two decades of the industry.

How has entertainment law changed in the last 20 years?

It’s completely moved from a theatrical model to a streaming model. And that has completely changed film financing.

In what way?

We used to do pre-sales and go to all the film markets—Cannes, Toronto, Venice, etc.—and you’d sell territory by territory. You’d wander around the world, sell your film, pre-sell it on a territory-by-territory basis, come home with a bunch of contracts, go to the bank, and say, “Dear bank, loan me against this.” And they’d go, “Please go get a completion guarantee.” So then you’d get a completion guarantee, go back to the bank, and the bank would hopefully loan you the money to make the film. And then you sell it on a territory-by-territory basis and get what’s called minimum guarantees. And that pays off the bank and everybody’s happy.

That is just completely gone. These days, you’re selling to the streamers. Literally. It’s a one-stop shop.

There’s no back-end anymore. You used to negotiate forever the back-end. That’s completely gone. The only thing you negotiate now is the fixed price on the sale and how much garbage you can throw into the budget and pretend that it’s a cost of the film so you can do a markup on it.

The studios are on their knees. It used to be the studios controlled distribution, and they were king. You’d go to them on your knees, and you’d beg for them to pick up your film and give you a decent deal. And now, studios, I love it, they’re on their knees, because most of them are now just selling to the other streamers. Sony, just to pick one example, has become kind of a production house for the streamers. Because theatrical is dead, and they don’t have their own streaming service, so everyone else is scrambling. Disney has pulled it off. Paramount is struggling to do it.

You’re talking about individual streaming platforms, right?

A studio is either going to have their own streaming platform where they become the 800-pound gorilla like Disney, or they’re toast. In a couple of years, I think it’s going to boil down to only a few streamers.

It’s going to be Netflix, Disney, Amazon, maybe Apple if they can get their act together, and the rest will be gone because consumers can’t pay for five or six streaming subscription services.

So it’ll whittle down. Those that don’t survive, that don’t have enough content to make it a viable proposition, will have to just be production companies for the streamers. Which puts them in a very weak position. Which I love because I hate the studios.

But do you like the streaming companies?

No, I hate everything.

Moore with his wife in China about six years ago. “When China was still investing in Hollywood,” he adds.

Can you sell to streamers in other countries?

No. Streamers almost without exception say, “We want a worldwide deal.” And indeed, if you have made sales to other countries, they make you unwind it because they want worldwide.

When we talked for the 2010 issue, you mentioned visiting India, and an upcoming trip to China, because you saw China growing in the film industry. So those kinds of trips aren’t necessary anymore?

I represented a lot of Chinese companies on that wave. Because I do cross-border tax, I get dragged in on almost every cross-border investment. So I did a lot of the Chinese investment. And I predicted at the time that all China wanted was expertise so that they could go back and make their own and compete with America—which is exactly what happened. They’ve pulled up the ladder and gone home and are making very successful Chinese films. In a perfect world, their films travel, but they don’t need it and they don’t care. They’ve basically stopped American films from being released in China with very limited exceptions.

India got burned completely. They were investing in Hollywood, which is a huge mistake because most films lose money, and they certainly lost money. That whole party is over. The whole foreign party, absolutely gone.

Is most of what you do film finance?

I’m a weirdo. I do a lot of mergers and acquisitions now because film companies are still getting sold and bought. And I do a lot of film financing, which is now really selling to the streamers. I have clients trying to form a new U.S. studio. I have companies that produce a lot, so I do all the development—putting together the partnerships, financing, everything.

A client is trying to finance a new U.S. studio?

Yeah, go figure. I have a client trying to create a U.S. theatric distribution company. And I told him that I wanted to name it Triassic Studios, because it was so out of the dinosaur era. But yes.

Speaking of dinosaurs: When we talked in 2009, you compared the battle between Blu-ray and HD to dinosaurs battling.

That sure was correct.

What are the dinosaurs today?

You want to talk dinosaurs? The whole theatrical distribution model is just over. Other than for big-budget films, of course—Top Gun and Star Wars and that stuff, those will still play in the theaters—but anything else, if people are battling around with theatrical distribution, it’s completely over.

To some extent, even streamers are soon going to be dinosaurs because what’s going to happen is two things. One is virtual reality—in all its forms, not just the metaverse, but location based. All different kinds of virtual reality are going to replace streaming because it’s such a compelling experience if done right.

The other thing is artificial intelligence. People are already creating short films with artificial intelligence. They can go all the way from writing the script, creating the music, creating choreography, creating the characters—from beginning to end. If you search “artificial intelligence films” on YouTube, you’ll see some amazing, amazing content. That’ll turn the industry upside down. That’s going to be the brave new world.

What does it look like? Not having seen any of it.

It’ll blow your mind. First of all, you can do deep fakes now; those are usually created by artificial intelligence. They can create characters to the T—Tom Cruise—where you cannot tell that it’s not the
real person talking, walking, doing the whole thing.

You can see dancing, music. And artificial intelligence won a European Music Award last year. That’s the new horizon but people don’t see it yet because they think it’s ridiculous. They think people are so special, but they’re not.

But there’s going to be a ton of lawsuits, right? Particularly if anything begins to make money.

And who gets sued? Who’s the who? By definition, what artificial intelligence is doing is taking other content and meshing it and mushing it and doing crazy things. So by definition, there’s built-in copyright infringement or right of publicity infringement, because you’re taking faces. And the question is who gets sued? And who qualifies for the copyright protection? There were recently cases that denied patent eligibility when a patent was created by AI. And there are some cases now that said, “You can’t patent it in the name of the computer. There has to be ‘an author.’” So it’ll be the same issue for copyright. Who is the author?

It raises a lot of fascinating questions for sure.

In our 2010 article, we talked about how your workday begins. “Around 7:30, he arrives at the office, reads the newspaper and the trades, and goes online for financial blogs.”

Boy, that world has changed. First of all, I am completely and utterly working from home. I never go into the office. And it’s the best thing that’s ever happened to me. It started with COVID: Why I am going into the office? Fighting through traffic, and back and forth, you waste a couple of hours. What the hell?

My hours have shifted completely. I work really late at night and get up really late. I still go through the trades. It’s all online. And then they have summaries of cases and rulings, and I go through everything. I go through corporate, patent, copyright, trademark, tax. I’ve got a whole series of things that I just plow through in the morning: Bloomberg, B&A, tax summaries, case summaries. I roll through it and if I see a case that I think is important, I’ll go pull the case or the ruling or the reg or whatever, but it’s just a quick way to go through everything. It’s much more efficient than it used to be.

Then you do the normal lunacy of catching up with work. And everything is on Zoom. It’s great. Why travel? Every now and then I hear someone saying, “I’m going to go meet somebody,” and I go, “Really? You’re going to get on a plane?”

What was the reception when we did the feature on you in 2010?

Unbelievable. That was the best piece anyone has ever done about me, and I deeply, deeply appreciate the effort that went into it. Every now and then I would send it to somebody. A potential client would say, “What’s your background?” and I’d say, “Tell you what, here’s an article.” 

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