Spike Lee Wins €32 M Judgment vs French Media Giant TF1; Hidden Risks of Financing Auteur Filmmakers

On June 21 of this year, a French court awarded Spike Lee and associated plaintiffs a judgment against French media giant TF1 in the amount of €32 million which, at current conversion rates, is approximately US $43 million. The Court ruled that TF1 had wrongfully rejected delivery of Lee’s film Miracle At St. Anna (hereafter, Miracle), failed to pay Lee the minimum guarantee in the amount of US $11 million, and refused to distribute the picture in TF1’s territory, which was worldwide outside of North America and Italy. Shortly after the decision, the parties reportedly settled.

Auteur-Specific Considerations

This Client Alert does not focus on the measure of damages; specifically, how the French court calculated US $43 million of damages on an unpaid minimum guarantee of US $11 million. Rather, this Alert focuses on auteur-specific considerations that the Court did not directly address.[1].

For purposes of this Alert, an auteur is a final cut filmmaker whose appeal, both to the trade and the public, depends more on his or her “brand” (think of Quentin Tarantino) than on star casting or story material. Examples of filmmakers who are now or at one time have been regarded as auteurs include Martin Scorsese, Danny Boyle, Clint Eastwood, Woody Allen, Oliver Stone, the Coen Brothers, M. Night Shyamalan and, of course, Spike Lee. All other things being equal, a film project by an auteur filmmaker can more readily be pre-sold into the international market than a project by a filmmaker of non-auteur stature.

I had no involvement in the Spike Lee case, but at the start of my career, I was part of the team that represented the financier / distributor of The Sicilian, a prequel to The Godfather movies, in a high profile dispute with director Michael Cimino regarding a non-conforming cut. Cimino, of course, is the auteur of such iconic films as highly regarded The Deer Hunter as well as the disastrous Heaven’s Gate. I have also represented financier / distributors in contentious situations with Robert Altman and other auteur filmmakers.

Background of The Spike Lee Case

Pursuant to a 2007 deal memo, Lee pre-sold to TF1, a major French media company, worldwide distribution and sales agency rights to Miracle, excluding the U.S., Canada and Italy. The US $11 million minimum guarantee was to be payable 5% on signing and 95% on completion of delivery in accordance with picture specifications. Key specifications for Miracle included that it would be 95 to 120 minutes in length and based on an approved screenplay.

In later March 2008, Lee screened a three hour cut for the financiers. Shortly thereafter, having made requested changes, Lee screened a new version for the financiers, which ran two hours 35 minutes. (Hereafter, picture lengths will be designated in the form 2h 35m.)

In late September 2008, the Walt Disney Company theatrically released a 2h 40m version of Miracle in North America, to extremely disappointing box office results. In early December 2008, Spike Lee’s company formally demanded that TF1 pay the minimum guarantee for the TF1 territory. The following day, TF1 formally rejected delivery of the picture and refused to pay the minimum guarantee, on the grounds that the 2h 35m version that Lee delivered exceeded the contractual maximum, and that an alternate, 1h 56m version that Lee also delivered, while below the contractually stipulated maximum of 120 minutes, did not sufficiently conform to the approved screenplay.

The Court’s Decision

In its decision, the French court held that Lee’s 1h 56m version did conform and that, in any event, TF1, by its conduct, had waived its right to object to the 2h 35m version. The conduct cited by the Court was that, between March and mid-July, 2008, TF1 did not object to the length of the picture; TF1 cooperated in the screening of the long version at the Deauville and Toronto Film Festivals as well as the Paris Cinematheque; and that TF1 had commenced dubbing and subtitling the long version of the picture for exhibition in its territories.

Moreover, the Court took issue with a statement in a mid-July letter TF1 sent to Lee, that the company was “surprised to discover that the film, which was supposed to run no more than 120 minutes, instead ran 145 minutes.” The Court noted that since March of that year, TF1 had been aware of the film’s length. Finally, the Court rejected TF1’s position that the company could elect to use either the short or long version of the picture, depending on the reaction of international distributors.

Curiously, however, the Court did not address how Lee came to produce and deliver a 2h 35m version – 35 minutes longer than the contractual maximum, and a full one hour longer than the contractual minimum. Producing and delivering a 2h 35m picture is, in significant ways, different than producing a 95 to 120 minute picture.

Auteur Leanings

While a director’s initial cut is almost always longer than the final version, auteur directors sometimes tend to regard a maximum length as, rather, a minimum. In this connection, one has to wonder whether Spike Lee ever really wanted to make a picture of 95 to 120 minutes in length. The subject matter of Miracle – the heroism of a group of African-American soldiers behind enemy lines during World War II – is epic, and when auteurs take on epic projects, the length can be, well, epic . . . For example, Lee’s masterful Malcolm X (1992), perhaps his best known picture, runs 3h 22m.

Dilemma of Non-Conforming Delivery

When an auteur delivers an overlong cut, the financier / distributor may face a number of dilemmas and considerations. First, the overlong version may present marketing challenges which might not have been present in a shorter version. Second, the picture may face resistance from theater chains because of the fewer showings per evening that can be scheduled. Third, the filmmaker may be correct that, artistically, the extra length is not a vice but a virtue. After all, there is a reason that auteurs are auteurs. Fourth, if the filmmaker is willing to recut to length, the distributor may be willing to release on DVD both the conforming and the filmmaker’s preferred versions. Fifth, the distributor may not want to appear to the larger creative community to be unfriendly to filmmakers. Sixth, a distributor may prefer to deal with the subject of length on an interpersonal and creative basis, rather than a legal and confrontational one. Seventh, the distributor may want to test screen a non-conforming cut to opinion maker and general audiences, and may be willing to allow a festival screening out of deference to the director. Eighth, it is essential, from a marketing perspective, that the director actively supports the final version. After all, without the auteur, you don’t have an auteur film. Ninth, if the distributor loses on its claim that the filmmaker has delivered a non-conforming cut, the challenge may taint the distributor’s subsequent release of the picture. Tenth, a subdistributor who made a pre-buy may reject delivery of the non-conforming cut for the same reasons that the distributor did; and even if the auteur is ultimately held to have properly delivered to the distributor, a sub-distributor isn’t necessarily bound by the prior finding, resulting in a possible whipsaw.

How Do You “Do the Right Thing”?

What does the Spike Lee decision mean for financier / distributors in their dealings with auteur filmmakers? Distributors should include a provision in their filmmaker agreements to the effect that picture specifications and delivery requirements may only be changed via an unequivocal writing signed by a designated senior executive of the company, and not by the distributor’s actions alone, such as test screening a non-conforming version. Such a clause, even if not fully bullet proof, may make it more difficult for the filmmaker to claim that the distributor waived non-conformity. Moreover, despite considerations to the contrary, a distributor who receives a non-conforming cut, or successive non-conforming cuts, should promptly notify the filmmaker both that it has not accepted the picture and that it will not be deemed to accept the picture by anything less than an authorized writing. Although this may seem a harsh path, as the Spike Lee case shows, the alternative can be costly.

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Ezra Doner is an entertainment and copyright lawyer who has represented clients in the filmed entertainment sector, both as an in-house business and legal executive and as a lawyer in private practice, for more than 25 years.

1. Disclaimer: The Court’s decision is in French. I relied on an unofficial English translation.