If your cookware company was about to release a print campaign with Mario Batali’s face plastered all over it, the day after he issued his infamous cinnamon roll apology for sexual misconduct, there could be a big problem.
Companies may have substantial funds and resources invested in projects or campaigns that must be shelved and/or replaced.
Harvey Weinstein, Matt Lauer, Garrison Keillor, Mario Batali, Charlie Rose, Russell Simmons, Kevin Spacey. Unfortunately this is only a fraction of a list of celebrities who recently seemed to be on top of their respective worlds until allegations sent their likeability and brand values in to a nosedive.
I’m not here to discuss the merits and details of these instances, and certainly don’t intend to reduce the impact to victims of horrendous actions into a marketing discussion. However, at the end of the day there are business consequences to media creators, brands, and advertisers when talent or endorsers go through an incident that destroys their market value in an instant.
Talent and endorsement agreements commonly account for damaging allegations (and worse) with language known as “morals clauses.” These clauses allow termination of agreements with talent for scandalous or unsavory actions, including those of “Moral Terpitude,” which is defined as “an act or behavior that gravely violates the sentiment or accepted standard of the community.” Often these clauses are very broad, and allow discretion for the producer to decide when actions are offensive enough to warrant termination under a morals clause.
Below is a typical morals clause:
If Artist does anything that is or will be an offense involving moral turpitude under federal, state or local laws or which may bring Company or Artist into public disrepute, contempt, scandal, or ridicule, or which insults or offends the community or any substantial organized group thereof, then Company will have the right at its option to terminate this Agreement by written notice to Artist.
Kevin Spacey was famously replaced in All The Money In The World after his indiscretions came to light. It’s hard to fathom how many marketing campaigns had to be scrapped or overhauled in the past several months of fallout from the Harvey Weinstein allegations and resulting #Metoo movement. While morals clauses provide some protection in allowing companies to terminate talent without further payment, companies may need to get more creative to recover costs from lost content. Some may try to find a way to hold offenders liable for lost costs through indemnity obligations or consequential damages.
On the other hand, some companies end up with a positive PR and marketing result from the goodwill associated with terminating talent agreements in response to bad behavior. All The Money In The World surely got increased press coverage because of the reshoots to replace Kevin Spacey with Christopher Plummer, and the additional controversy over fee differences for Mark Wahlberg and Michelle Williams. I’m sure the film’s marketing people weren’t devastated by the unexpected bonus press coverage leading up to awards season, and in a sense this might have mitigated the losses from re-shoots and rebranding.
At times, brands go to great lengths to demonstrate their commitment to causes by terminating partnerships, programs, and talent relationships. In recent weeks, Dick’s Sporting Goods stopped selling assault style weapons, and many companies have terminated relationships with the NRA in the wake of public backlash to school shootings. Nike in the past terminated an endorsement deal with Manny Pacquiao for homophobic remarks, and it is not uncommon to see lists of advertisers who drop their ad-buys for programs that are known to have a political slant in one direction. While the primary motivator for these decisions is probably the morals and beliefs of company leaders, there is surely consideration given to the market benefit of consumer reactions and press coverage.
In the age of social media, many celebrities seem more outspoken about social issues, in part because their opinions are easily distributed to the world. Entertainers, athletes and other public personalities no longer need the press to spread their messages, and their voices can become hugely influential. It was recently reported that a tweet from Kylie Jenner was responsible for a $1.3 Billion loss in value to Snapchat.
Personal brands are the basis for many celebrity careers, and they need protection as well. It might be wise for some celebrities to negotiate for reverse morals clauses. A reverse morals clause would allow talent to terminate an agreement if the producer or Company engages in activity that is damaging to the reputation of the talent. For example, if Beats Audio suddenly came out against any kneeling during the national anthem, how could Colin Kaepernick continue to endorse their products? If Ashley Judd signed a multi-picture deal and then discovered that the studio head was accused of harassment and assault, should she be able to terminate the deal without penalty? Many celebrities build their brands based on political and policy positions, and the impact if a partner came out against or contrary to their position could do more damage to their following than the compensation in the agreements.
The wave of change to talent agreements, will likely include discussions about “inclusion riders,” brought to light in Frances McDormand’s Best Actress speech at the Oscars. Inclusion Riders presumably would require producers to include a certain number or percentage of women or minorities in their projects. It remains to be seen how successful talent will be in negotiating for, or more importantly enforcing these riders. Parties on both sides of talent transactions might also consider expanding their definitions in morals clauses to include certain political activity as well, in this political climate of inflamed rhetoric and political boycotts. It is clear that the entertainment industry is feeling the impact of recent sexual assault and harassment revelations, and talent agreements will likely see an overhaul as a consequence. Critics may argue that the first amendment protects the rights of all companies and individuals to voice their opinions, but that has no bearing on the terms of their talent contracts.
Jed Enlow is a Chicago-based entertainment attorney who helps clients navigate the evolving issue of content creation and ownership, finding practical solutions to their content issues. A former partner at Leavens, Strand & Glover, his current clients include the Pickler & Ben show, where he is production attorney, and his previous experience includes work for Steve Harvey and The Oprah Winfrey Show.