Legal Services Technology, Media and Communications Group

Frames 2002

Live Entertainment :The Big Ticket

Key Legal Issues

March 15, 2002

By Ameet Hariani, Partner

© 2002 Andersen Legal India All rights reserved. 3

Outline of the Presentation

• Industry Overview

• Legal and Contractual Issues

• General Issues and Emerging trends

• Recent Developments

Live Entertainment: An Industry Overview

© 2002 Andersen Legal India All rights reserved. 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. 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. 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

© 2002 Andersen Legal India All rights reserved. 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. 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

Legal and Contractual Issues

© 2002 Andersen Legal India All rights reserved. 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. 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. 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. 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. 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. 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

© 2002 Andersen Legal India All rights reserved. 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

General Issues and Emerging Trends

© 2002 Andersen Legal India All rights reserved. 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

© 2002 Andersen Legal India All rights reserved. 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

© 2002 Andersen Legal India All rights reserved. 21

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

General Issues and Emerging Trends (Contd.)

© 2002 Andersen Legal India All rights reserved. 22

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

General Issues and Emerging Trends (Contd.)

© 2002 Andersen Legal India All rights reserved. 23

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

General Issues and Emerging Trends (Contd.)

© 2002 Andersen Legal India All rights reserved. 24

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

General Issues and Emerging Trends (Contd.)

© 2002 Andersen Legal India All rights reserved. 25

G. Emerging sources of content delivery

• Rights in newer mediums like Internet-streaming emerging

• With broadband reaching people’s homes, web-casting, pay-

per-view 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

General Issues and Emerging Trends (Contd.)

© 2002 Andersen Legal India All rights reserved. 26

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

General Issues and Emerging Trends (Contd.)

© 2002 Andersen Legal India All rights reserved. 27

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

General Issues and Emerging Trends (Contd.)

© 2002 Andersen Legal India All rights reserved. 28

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

Recent Developments

Legal Services Technology, Media and Communications Group

Mr Ameet Hariani, Partnerameet.hariani@in.andersenlegal.com

Ms Raksha Kothari raksha.kothari@in.andersenlegal.com

Tel No: (22) 216 03 00Fax No: (22) 216 04 00