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Morning Coffee – 16 March 2020

Here are a few stories to read this Monday morning.

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Disgusting Dude March 16, 2020 um 2:56 pm

KKR isn’t quite right on the S&S rights "trove".
S&S controls whatever rights they extort from dreamers but tbey down own tgem outright.
So Paramount and CBS studiis are still obliged to license any interesting property at market rates because there are laws covering self-dealing.
(Remember the Harlequin class action lawsuit?)
When corporate assets are licensed across conglomerate units the bookkeeping has to be meticulous. Not, they don’t have to run an auction, so there are *some* savings but if the next billion dollar blockbuster comes from a book licensed from S&S at significantly less than market value, the case will end up in court and cost more than a fair deal would’ve. Courts really don’t like self-dealing.

A second issue is ViacomCBS needs cash *now*, not in five or ten years when those S&S properties might make it thriugh development hell. If at all. Five or ten years from now, ViacomCBS itself may not be around. They may get bought out, just for their video archives, in less than two years.

They need big cash and S&S is barely profitable. Plus the market for political memoirs is drying up. So without the influence peddling there is little reason for ViacomCBS to tie a lot of value in a non-core asset when tbey can monetize it in one fell swoop. Assuming anybody this side of Hachette wants it. Not a certainty.

Ultimately it’s about big cash now vs trickles of cash over a decade or more.

Darryl March 16, 2020 um 11:51 pm

KKR is correct. If an old contract gives S&S movie rights, whether outright or pursuant to a license. S&S can indeed sell or license those rights. They must of course abide by the original contract terms. As KKR, who is familiar with these contracts, writes:

"S&S’s contracts are relatively draconian. Almost all of the contracts S&S had its authors sign in the past twenty years license most of the rights in the book, sometimes on a non-exclusive basis, sometimes on a right of first refusal basis.

In other words, the books aren’t video based, but they could be. Easily. They could be the basis for all kinds of visual properties, with only a tiny cash outlay—and given how dumb writers can be and how awful many of the S&S contracts are—maybe no cash outlay at all."

"Self-dealing" may or many not become relevant to a particular transaction, but is not the root of the problem. The root of the problem is the original terrible contracts. Even if such a contract provides for, say, a 15% royalty on such rights, S&S would keep 85% (or outlay only 15%). Not bad when an author probably didn’t even realise what they were signing away. ViacomCBS may, in the future, have to pay full price for rights they could have had for little or nothing had they retained S&S.

As for needing cash now? It is a legitimate business decision whether to sell. But, like KKR, I suspect that they do not appreciate the true value of what is being sold. The not video based comment would seem to indicate this clearly.

Allen F March 17, 2020 um 2:49 am

By their survey me mum should be a writer – she loves ebooks from the library. 😉

Intimidated authors won’t have to worry about book fairs and other public events for the next little bit as most are being cancelled until a little bug dies down – or at least the craziness caused by it …

Steve H. March 17, 2020 um 8:40 am

Story in NY Times …The World of Books Braces for a Newly Ominous Future…

Peter Winkler March 17, 2020 um 6:52 pm

Standard contracts split subsidiary rights, including film/TV rights, 50/50, unless the author is a best selling writer or a celebrity.

Gordon Horne March 18, 2020 um 5:09 pm

The LitHub article on the survey showing ebook readers are more likely to be writers and do a bunch of other impressive sounding cultural stuff. Correlation/causation. Heavy readers are more likely to do all those things. Being a heavy reader is one of those things, not the root cause. Heavy readers are more likely to read ebooks.

I’d guess that people who read ebooks are also more likely to read more than the average number of print books and more likely to own more than the average number of print books. They’re all traits of being a heavy reader.

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