23 So Its Settled (1/2)
”What? Do my ears deceive me? Yang, you made it?” Zachary was shocked, incredulous, and skeptical of the good fortune that had befallen them. ”Are you kidding me? Are you sure this is not a joke? Does it mean I'm going to become the male lead of a published movie soon?”
”Wow, dude. See, I told you you'd make it! I knew you wouldn't let me down!” Joshua capered and cheered, his face brimming with joy. ”My DV camcorder is going to shoot up in value. Movie fans will surely fight tooth and nail for it!”
”Oh, my God… the gracious Lord has answered my prayers!” Upon hearing the good news, Jessica jumped for joy and screamed with excitement. Crowed, delighted, and hyperbolic, she said, ”God, this is great! Yang, is this true? Please tell me this is all true!”
After making his first phone call to Rachel and relaying the good news to her, Wang Yang did the same to all his other close friends. He wanted everyone to share in his joy. Of course, Zachary, Jessica, and the rest of the gang were extremely happy and excited for him. The only exception was Harry George. Upon receiving the phone call and hearing the news, he was so agitated that he blurted out, ”Dog sh*t! I can't believe it!” before hanging up abruptly.
That night, Wang Yang stayed at a motel nearby a beach in Santa Monica. Though he'd been laying on the bed for hours, he couldn't fall asleep. A lingering sense of delight and gratification was keeping his eyes open. So, he decided to get off the bed, grab a chair, and sit on the balcony. At night, the beach seemed calmer than usual. As he listened to the roar of the surf, muted at a distance, rising and falling in waves; and watched the black sea from afar with the moon hanging still above it, a feeling of serenity came over him. Slowly, his mind settled down.
On the following day, Wang Yang returned to the main office of Lionsgate Films. The order of the day, of course, was to negotiate with Lionsgate on the terms of the publication contract.
”Good day, Mr. Wang.” A ravishing Caucasian receptionist by the name of Ms. Jennifer greeted Wang Yang with a shining smile. From her demeanor, which was much warmer than the day prior, he could tell that she'd gotten wind of the company's decision to acquire his film. She said smilingly, ”Mr. Oldenburg came here very early today, Mr. Wang. Looks like he's very keen to see you again. Please, come with me.”
”Oh, okay.” Wang Yang trailed after Jennifer into Tom Oldenburg's office.
The office door was open. Jennifer gave it a few knocks. Tom Oldenburg, who was pouring over work on his desk, turned to look at them and smiled. ”Hi, please come in!” He watched as Wang Yang marched into his office. Then, he asked interestedly, ”Young man, did you sleep well last night?”
Wang Yang seated himself in a chair in front of the office desk. Smiling and shaking his head, he said, ”No sir, I didn't sleep very well.” He rolled his eyes and continued in a self-deprecating tone, ”I'm just so stoked about all of this. I can't help but think about this project whenever I close my eyes. Is this it? Is it really happening? Man, I couldn't sleep at all!” He said with a smile, ”You know, I was so afraid that this was all just a dream. I was worried that if I fell asleep, everything would be gone when I woke up.”
Knowing the feeling all too well, Tom Oldenburg smiled empathetically. He said to Wang Yang with a wink, ”Young man, this is no dream! And here's another piece of good news: our Chief Executive Officer, Mr. Beeks, has agreed to let the company publish your film.”
”Wow! This is wonderful news, indeed. Thank you, Mr. Oldenburg!” Wang Yang celebrated furtively by clenching his fists. A radiant smile overtook his face. Finally, another load had been taken off his mind. At that point, his partnership with Lionsgate Films had become a foregone conclusion.
”From now on, I'll be seeing this deal through,” Tom said with a pleasant smile. As the Vice President of Acquisition, it was only natural that he undertook the task of negotiating the deal with Wang Yang. He produced a contract, slid it across the desk to Wang Yang, and said, ”Here's our proposal. Please have a look.”
Wang Yang nodded, took the contract from the desk, and read its contents with great care and detail. The contract stipulated that the publishing rights to Paranormal Activity in North America and overseas, the VCD and DVD publishing rights, as well as the television rights, shall be transferred to Lionsgate Films, and held by the company in perpetuity. Since both parties had agreed on a profit-sharing model, Lionsgate Films wasn't required to pay any acquisition fees as far as compensation was concerned.
The contract also laid out the profit-sharing ratio in black and white. Wang Yang would receive a 10 percent dividend if the pre-tax box office gross for the North American region were less than a million dollars; 20 percent if it were more than five million; 30 percent if it were more than 10 million; 40 percent if it were more than 50 million; and 50 percent if it were more than 100 million. In the event that the film would be unable to turn a profit and suffered a loss, Wang Yang would only receive a five percent dividend.
The profit-sharing scheme was exactly as Wang Yang had envisioned yesterday. The only difference was the addition of the clause that accounted for losses.
The same profit-sharing ratio applied to overseas regions. However, Lionsgate Films didn't propose the same scheme for other projects such as VCD, DVD, and videotape rentals as it did for box office sales. Instead, they offered Wang Yang a flat dividend of 10 percent, regardless of how much money would be made from those projects.
Wang Yang had a vague feeling of why such an arrangement was made. He supposed Lionsgate Films had a dim view of the movie's future at the box office and decided it might be more successful on the DVD market. That came as no surprise. After all, history had seen movies that had flopped in the cinemas only to gain a cult-like following in the DVD market. Perhaps his was such a movie. Perhaps his movie was not meant to be viewed on a big screen in the confines of a cinema, but instead, enjoyed on the screens of computers and televisions in people's homes.
But it wasn't the profit-sharing scheme of the DVD that raised Wang Yang's eyebrows. It was the fact that he'd overlooked a crucial detail the day before: his dividend would be calculated on a regional basis, specifically the North America region and the overseas region. This made it much harder for him to obtain a 50 percent dividend. To put things into perspective, The Blair Witch Project, which would be the first DV movie to reach the silver screen, would gross over 200 million at the box office, with North America and the rest of the world each comprising half of the total amount. But after the theatre lines had taken their cut, neither the North American nor the overseas region would amount to a pre-tax box office gross of 100 million. Needless to say, Wang Yang's prospects of getting his 50 percent were slim.
”Would it be possible to revise the contract such that the dividend is based on the worldwide pre-tax box office gross?” said Wang Yang with a quick, diffident glance at Tom, knowing full well he'd never agree to his outrageous demand.
He was right. Shrugging, dismissing the very idea, Tom Oldenburg said, ”I'm afraid I can't do that. As you may know, the system for measuring box office gross is drastically different in North America than it is in the rest of the world, not to mention the discrepancies in timing. No, splitting the profits would be very tricky.” Illustrating his point with an example, he said, ”For example, after a movie is released in North America, it may take another six months or even a year before it is released overseas. Does that mean we should wait for a year before we decide how to split our profits?”
Wang Yang relented with a nod. He understood Tom was telling the truth, so he decided not to press the matter any further.
Leaning back in his chair, Tom said, ”Yang, don't worry. We'll only consider releasing your movie overseas if it does well in North America.” He threw up his hands, one of which was twiddling a pen, and said, ”In other words, if this movie ever goes international, you'd have already made 20 percent, which is a considerable sum.”
”Yeah, I know.” Wang Yang gave a smile and went back to reading the contract. Once finished, he lifted his head and said bluntly, ”Make it 20 percent for the DVD.” Tom shook his head. ”I can give you 15 percent, tops. Company's policy.” Wang Yang considered for a while then nodded. He knew he had to let up. Sitting across Lionsgate at the bargaining table without any chips, he was clearly at a disadvantage. Making demands was difficult as it was; getting Oldenburg to agree to them was nigh impossible.
After agreeing upon the DVD's profit-sharing ratio, Wang Yang made another request. ”I'd like to retain the rights to the sequels, as well as all the other copyrights.”
Tom happily accepted his terms. ”Okay. You may retain those rights.” The fact was, except in a buyout, those rights ought to have belonged to the filmmaker anyway. Lionsgate Films had no intention of taking such a small advantage in the first place. Besides, a movie had to reach a certain level of commercial success before a sequel was considered, and they just didn't think Paranormal Activity had the right ingredients for it. Smilingly, Tom added, ”However, our company will have priority to those rights.”
”Of course.” Rejoicing internally, Wang Yang nodded his head. At least Lionsgate Films would have to pay him a fee if they wanted to produce Paranormal Activity 2, Paranormal Activity 3, or any other sequels. A small, but perfectly acceptable consolation. Reaching out across the table for a handshake, he said to Tom Oldenburg, ”Sir, in that case, I have no other concerns.”
Putting down his fountain pen, Tom reached out his hand to shake Wang Yang's. ”I look forward to working with you, young man,” he said with a glowing smile.
”Likewise!” said Wang Yang, sending back his smile.
Although both parties had more or less come to an understanding of every detail, the actual signing of the contract would have to wait. The two had decided to make their pact in two days' time, which allowed time for Wang Yang to seek professional legal advice. He rushed off back to Los Angeles with the redlined copy of the contract. He was planning to visit a law firm and let a pair of trained eyes look over his agreement. After all, Wang Yang had no formal education in law and was uninitiated in its intricacies and loopholes. It paid for him to be cautious.
And it was especially important for someone like him, who wasn't represented by a talent agency, to be cautious. Because if anything went awry, no one would be able to stand up for him.
But what's the worst that could happen? The follow-up reports on The Blair Witch Project provided a clue. In an unexpected turn of events following the film's phenomenal 200-million-dollar box office gross, Artisan Entertainment had decided to violate its agreement by withholding dividends—a pre-agreed share of 20 percent—from its three young filmmakers. As anyone in their shoes would have done, the trio of young filmmakers took the company to court. The lawsuit was long and bitter. Fortunately, after two years of hard-fought battles, they'd finally claimed what was rightfully theirs.
Though he didn't foresee Lionsgate committing such scandalous deeds, Wang Yang thought it would be better to be safe than sorry, especially when it came to money.
Wang Yang spent the night in his own apartment getting some well-deserved sleep. The next day, he brought his contract to a law firm called Trust Law Group. It was a medium-sized legal consultancy that Jessica had recommended to him. Not only did it have an impeccable reputation, but it was also well-versed in the legalities of the film industry. Incidentally, it also served as the legal counsel for Jessica's father's real estate company.
The lawyer whom Wang Yang consulted was a man in his thirties. His name was Hebel Carl. At an hourly rate of 200 dollars, he was considered moderately expensive. Hebel Carl took the contract from Wang Yang and read it several times with great intent. Then with a reassuring smile, he said to Wang Yang, ”Mr. Wang, there doesn't seem to be any issues with this contract. You may sign on the dotted line without any worries. If the other party ever decides to withhold your dividend, they would stand no chance against you in the court of law.”
”Oh, thank God.” Immediately upon hearing that, Wang Yang heaved a sigh of relief. It seemed Lionsgate Films did not fail to live up to its reputation.
Then, a few words of advice from Hebel Carl to Wang Yang. As the sole owner of the film's copyrights, Wang Yang wasn't legally required to set up and register a film company. Instead, he should sign the contract with Lionsgate as an individual. By having the proceeds from his movie taxed as personal income, he could avoid paying the exorbitant taxes associated with business ownership.
Feeling assured, Wang Yang walked out of Trust Law Group. Although the consultation had cost him 300 dollars and left him with barely enough money to take a bus, he thought it was money well spent. God forbid he be cheated out of his dividend and left without recourse against Lionsgate Films due to an obscure provision in the contract or some arcane loophole in the legal system.