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Hollywood turns to K Street for help during pandemic

Hollywood turns to K Street for help during pandemic
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Independent producers behind some of the country’s most popular movies and TV shows are turning to K Street for the first time as the coronavirus pandemic threatens to reshape the entertainment industry.

Smaller production companies such as MRC, which was behind the blockbuster film “Knives Out” and the Netflix series “Ozark,” have banded together to form the American Coalition for Independent Content Producers (ACICP). They’re seeking financial relief from Congress like the kind extended to other major industries.

Members of the new group are fighting for survival at a time when Hollywood titans like Disney, Paramount, Sony, Universal and Warner Brothers — all represented by the powerful Motion Picture Association lobby — are better positioned to weather the coronavirus recession and potentially emerge even stronger with fewer competitors.

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While the pandemic has delayed production for both big and small studios, independent companies say they desperately need Congress to pass a coronavirus relief package that has been stalled for months. Movie giants, meanwhile, have more of a financial cushion with their access to capital markets.

Studios of all sizes are faced with added costs to safely resume filming, ranging anywhere from millions to tens of millions of dollars depending on the size of the production.

“On the amount spent to get production started again, the numbers are jaw dropping,” said Scott Tenley, chief business officer at MRC.

The ACICP, which includes more than two dozen content production companies, distributors and sales agents, has hired Akin Gump to lobby on its behalf.

While some in the coalition have hired state-level lobbyists before, working with federal lobbyists in Washington is new territory for companies like A24 Films, which was behind movies such as “Uncut Gems” and “Moonlight,” and Village Roadshow Entertainment Group USA Inc., the company involved in “The Matrix” and “Happy Feet.”

The coalition’s overall goal is to secure a federal guarantee that covers the risk of COVID-19-related losses for productions in order for independent production studios to get back to work. Without government aid, some members argue, they won’t survive the pandemic because they won’t be able to cover the costs of enhanced safety measures.

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“We need a temporary bridge where the federal government steps in and creates a short-term program to insure potential COVID-related losses for independent television and film productions to actually get things going in terms of the whole life blood of the industry — getting back on set,” said Arshi Siddiqui, a partner at Akin Gump.

ACICP is calling on Congress to provide coverage that includes claims related to COVID-19 and all communicable diseases.

Under current insurance plans, insurers cover spending if a production is abandoned or delayed due to an actor’s illness, injury or death. The coalition argues that, without a temporary federal program guaranteeing coronavirus-related risk, productions will be stalled due to challenges to securing financing even if they take COVID-19 precautions.

Dozens of movie release dates have been delayed due to the pandemic, including “Avatar 2,” “Godzilla vs. Kong” and “Top Gun: Maverick.” Production of “The Batman” was halted last month after actor Robert Pattinson tested positive for the coronavirus.

The film and television industry collectively has lost more than $30 billion since the pandemic began, with a 58 percent drop-off in pilot orders, according to a recent letter the ACICP sent to congressional leadership.

Those declines come at a time when more Americans are expected to spend increased time at home, both because of winter and because of coronavirus concerns.

The ACICP notes that other countries have provided government backstops that help producers during the pandemic.

“I do think what’s challenging is this is a business that is ultimately pretty portable. We saw a national response from the U.K., in Australia, in France even, where they tend to protect culture and provide backstops. In the U.S., it was simply impossible for us to get insurance coverage that includes COVID,” Tenley said.

The United Kingdom created a $650 million fund for producers to receive compensation for costs caused by delays due to the coronavirus. Australia and France have created similar funds for producers, at $25 million and $60 million, respectively.

The coalition is also requesting federal tax credits to support companies with testing, personal protective equipment and increased disinfection measures in order for productions to restart. Adhering to such safety measures can add as much as 20 percent to the total cost of a production, the group argues.

The Motion Picture Association applauded the passage of the record $2.2 trillion CARES Act in March for the relief it provided to independent contractors, freelancers and small businesses.

But ACICP argues the legislation wasn’t enough. While some production industry companies qualified for small-business loans through the Paycheck Protection Program, many independent companies didn’t meet the criteria.

The $3.4 trillion House-passed HEROES Act, which has not been taken up by the GOP-controlled Senate, included $135 million in funding for the arts, but the relief proposals being negotiated on Capitol Hill do not include industry-specific provisions for film and TV production companies.

The ACICP argues that adding such a provision could gain bipartisan support since producers work in both red and blue states.

“These productions and the jobs they create are the type of things that communities want and need right now,” Siddiqui said.

—Updated at 12:06 p.m.