08 Dec 007: Partner Sky Moore – North Korea & the Trump Effect on Co-Pros
Today’s guest is Sky Moore – a partner for Greenberg Glusker who warns not to underestimate the geopolitical situation with North Korea and the Trump effect on US-Chinese co-productions (22:37).
He gives advice on what to do if Chinese currency stops flowing to Hollywood.
China Hollywood Greenlight Podcast – Episode 7
Schuyler (Sky) Moore Show Notes
Schuyler (Sky) Moore, Partner at Greenberg Glusker Fields Claman & Machtinger LLP
Youtube channel: Sky Moore Attorney http://bit.ly/2AklbIi
The Biz: The Basic Business, Legal, and Financial Aspects of the Film Industry
Taxation of the Entertainment Industry
What They Don’t Teach You in Law School
Caryn McCann: This is Caryn McCann, the host of the China Hollywood Greenlight podcast – a podcast about creating & distributing content for both Hollywood and China.
If you like the show, please go to ITUNES, subscribe and leave a rating so other people can find this podcast. The more we work together – the more opportunities will be out there for everyone.
Any links mentioned in the podcast can be found in the SHOW NOTES as well as a full transcript at ChinaHollywoodGreenlight.com/podcast and look for this episode which is #7
Before I introduce today’s guest – I’d like to start out with a motivational quote to encourage our listeners to continue on their path to achieving their own green light. And today’s quote is a Chinese proverb which is”
“The journey is the reward.”
Today’s guest is Sky Moore – a partner for Greenberg Glusker who is involved in major China-Hollywood deal making.
He has an explosive idea on the future of US-Chinese co-productions but also offers advice on what to do if Chinese currency stops flowing to Hollywood. Here is the interview.
Caryn McCann: Well today’s guest is Sky Moore who is a partner in the corporate entertainment department of Greenberg Glusker, practicing entertainment, corporate, and tax law. and he represents various entertainment professionals including producers, sales agents, foreign distributors, and financiers. He has handled some of the largest financing transactions in Hollywood including the Hunan Group’s slate financing for Lionsgate. He is the author of several books including The Biz: The Basic Business, Legal, and Financial Aspects of the Film Industry, and Taxation of the Entertainment Industry, plus the book What They Don’t Teach You in Law School.
Mr. Moore has been named (a) one of the top 100 entertainment lawyers by the Hollywood Reporter, as well as one of the top 25 entertainment lawyers by Variety, plus one of the top 100 lawyers in California by the Daily Journal and one of top 3 “Most Influential Lawyers” in media by the National Law Journal.
He was an adjunct professor at both the UCLA Law School and the UCLA Anderson School of Management teaching entertainment law and finance for many years. And on top of that, he has a great YouTube channel Sky Moore Attorney which he uses brief entertaining videos to teach the basic business side of the film industry.
Caryn McCann: Wow that’s fantastic. Well let’s start with – I know in the business no two days are the same. Tell us two or three main tasks you do on a quote typical day a typical day.
Sky Moore: A typical day, I’m just looking at my schedule today. I’ve got a seminar on China I’m doing actually at 12:30 for Digital Hollywood. And I have them I have a merger – I am selling a company for about $50 million dollars that will hopefully close in the next couple of days and so we have closing calls going on that.
And then I just sold The Irishman to Netflix which was the biggest sale – the biggest film that they’re going to produce. It’s going to be a very expensive, large budget film being shot, directed by Martin Scorsese, starring Bob De Niro, Al Pacino and Joe Pesci. And so, that was that was fun and we just finished that. And then I represent Chinese companies investing in Hollywood and buying rights and that’s on the agenda today to close a couple of films for one Chinese client. And I represent Morgan Freeman and his production company. And I represent Sophia Loren and her family on a number of – one of her sons is a director – Edoardo Ponti. And so, I just I’m working on that actually today. So, it’s kind of a wide range of things.
Caryn McCann: Well you mentioned just now that you’re working with Chinese companies buying some rights how do you find your business partners and how do you suggest the listeners find Chinese partners?
Sky Moore: They come to me through referrals so because I have the cross-border tax expertise I am often one way or another brought in on or the first call for transactions that are cross-border. So, for me, it’s typically referrals. I have gone to China and done the rounds where we’re you and I guess that the answer to the second question of how do you get clients or how do you get business partners – number one it’s Beijing is really where it’s happening.
Second is Shanghai but really Beijing. And it’s just connections so it’s you meet somebody and you ask for them to introduce you to other people and you get some ability and you close a transaction or two and show that you know what you’re doing. And then your kind of get accepted in the circle and you go out and drink with them although I don’t drink but I pretend.
But its networking is really the key because it’s in in China, in particular, it’s all about relationships and personal relationships. So, you just have to call your network like LinkedIn or something and find out who knows somebody and then just work it from there.
And then you have to really check reputations that’s also critical in China and so you have to figure out who you’re dealing with and ask around.
Caryn McCann: Well do follow-up questions on that. If you’re not – well, first of all, assuming you don’t have a lot of connections, when you go to China or if you advise someone in the audience to go to China – are you talking about – let’s say you’re not a lawyer – go to a film market?
Sky Moore: If you don’t have any other way, yes you would go to the Shanghai Film Festival or the Hong Kong Film Festival, the Beijing Film Festival and just start meeting people. And do everything, just go there and meet people if you have no other way in.
Caryn McCann: And following up on the reputation – that’s an excellent idea and of course you know due diligence is part of your job. There’s a lot of stuff in the trades you know a lot of press releases about people you know suddenly there’s all these film funds. How do you suggest the audience find out if someone’s real? If their reputation is real or if the money is real?
Sky Moore: You just have – well first of all if the money is in China and the theory is that they’re going to get it out of China, the only way that’s happening these days is if they’re buying rights for China distribution. So, if they’re purporting to invest in a film to get profits from worldwide or something like that like a co-production, that is likely not going to happen if the money is in China.
The only way that’s going to happen is if the money is outside of China. The only money coming out of China these days is if it’s for the acquisition of film rights that will be distributed within China. So, that’s comment one. And so, you have to make sure that the money is in Hong Kong or just somewhere out of China if the theory is they’re going to invest in Hollywood. And then even then you’ve got to really check reputations and you just start asking around. And then you know I now know who to ask. I can ask pretty quickly. You just have to ask around and figure out if they’re real or not.
Caryn McCann: Okay. That could be your next book – How to Find Chinese Partners. I’m sure you know people want to have smooth going but it doesn’t always work that way. If you could, well there’s always going to be obstacles on certain projects. Can you talk a little bit about an obstacle that you encountered on a past project and how did you overcome it and what did you learn?
Sky Moore: Many obstacles. One is obviously the language barrier and that’s actually can be a very significant obstacle because the Chinese often are proud of the fact that they speak English and often don’t bring a translator. And often their English is not as quite as good as one would hope. And so, the language barrier can be a very significant issue. So, one of one of the keys is a good translator with you and not rely on theirs.
And the second is there’s a vast cultural difference that is just remarkable in China it relies on trust and relationships and whereas, in the U.S., we rely on contracts and law. So, you have to get used to the fact that you have to get people that you trust and they have to trust you. And even after the contract is done, they don’t necessarily follow it because in their minds – it’s a living relationship and therefore things can change and the contract is really just kind of a handshake. And so, you really have to get used to that which is quite different.
And they often don’t view the United States as really on equal footing with China and therefore they’re more willing to make promises in the United States that they don’t keep because they don’t think the blowback will be as significant as if they don’t keep their promises in China. So, there’s a lot of often times and you can read it in the press, many times where there are deals that have supposedly been made but then they don’t honor them. And it’s really because you know we’re over there and therefore we’re across the ocean and it’s oh its different rules apply a little bit. So, you have to kind of be you have to be aware of that.
Caryn McCann: Well, how did you overcome it if a deal went bad?
Sky Moore: As the lawyer, what and in particularly if I’m representing the Chinese company, I have to try to explain why we’re shifting directions which is not always the easiest task. And if I’m on the on the U.S. side, I simply make sure that that’s not going to happen by making sure money is in escrow, making sure that we don’t start production until the cash is actually in the in the account. We just assume that we’re not going to get paid until when in fact we’ve got it locked down. So, you just you know you don’t make moves until you’re really protected.
Caryn McCann: Just a side question. I’ve read somewhere that if you do the contract in Hong Kong you have a better chance of fulfilling that contract. Where are these contracts signed? Not signed but—
Sky Moore: Not where signed, but governing law. We try to make the governing law, the jurisdiction in the U.S. But even then, when you do it do what you end up with a judgment in the U.S. but then you’ve got to go enforce it in China – unless they’ve got assets here. And that’s really impossible. So, the reality is that the contracts don’t mean much because they’re because they can’t be enforced as a practical matter unless they have assets here. So, you really just have to, I mean if you’re on the receiving side you just have to make sure that that cash is locked down somehow.
Caryn McCann: If it’s if that’s not an option, what would another option be? You just have a Chinese law firm partner and they do the contract?
Sky Moore: No because even if you have that doesn’t really get you anywhere even if you even if you’ve got jurisdiction. You’re just not going to win in a China Court, you’re just not. And so there is no practical enforcement mechanism other than what is it that you can do? Can you hold back delivery of the film? What is your leverage in a non-contractual setting? You just have to always think of it that way. It’s almost like there’s no contract. What is your leverage to make sure that the parties fulfill whatever their obligations are?
Caryn McCann: Okay. Well, speaking of challenging situations that lead to my next question – if you could magically solve two pain points what would they be?
Sky Moore: Pain?
Caryn McCann: Let me put it like this. If there was like something you’d like to solve this week what would that be?
Sky Moore: This week I would like to solve North Korea because I actually think that okay I’ll tell you why. Because I think that this relationship between China and the U.S. is going to pivot on whatever happens in North Korea. Yeah, I don’t think you can talk about China anymore without talking about North Korea because it’s that is going to be the immediate problem.
Caryn McCann: That’s an interesting answer. Thank you for that. Let me move, let me ask this what sort of future projects are your clients looking for – film, TV, genre, budget? And what do you think the Chinese studios are looking for?
Sky Moore: They’ve really turned inward right now and the markets been so big there – Wolf Warrior coming in and they like over like nine hundred million U.S. dollars. So, my clients are either doing Chinese productions in China and I’ve got U.S. clients that have gone to China.
If you’re in China – it’s a totally vibrant market. It’s what the U.S. was thirty years ago. It’s growing, it’s vibrant, there’s a lot happening. So, to the extent they’re doing anything in the U.S. it’s looking to acquire films that have worked – like franchise films that worked in the US, for example – that means that work in China.
I had a client that bought – there was a film called Escape Plan that worked very well in China. And so, I had a client that had bought the sequel equal rights to Escape Plan two and three. And then there was a film called Now You See Me and so they did the sequel to that. And so, you see a lot of acquisition of films that they think will work in China – particularly franchise films that the first one worked in China. So, you see a lot of that activity.
Caryn McCann: Is there a difference between your American clients – what they’re looking for and what the Chinese studios are looking for?
Sky Moore: Yes, U.S. companies are always just looking for money and Chinese companies are looking for content. So, you know that’s really the big difference.
Caryn McCann: And are the Chinese clients is there a particular, I mean you mentioned Now You See Me and Escape Plan. Everybody knows it’s about Wolf Warrior. Is it a lot of action movies they’re looking for? A certain budget range?
Sky Moore: Different budget range. Yes, action-adventure.
Caryn McCann: Okay great. And then what are you trying to accomplish this year? Is there another book planned and or something like that?
Sky Moore: We’re waiting to see how the – they’re having a big government meeting later in October to reappoint the new chairman or whatever the premier. whether Xi Jing Ping which we think it will happen. And the question is whether they loosen the currency restriction. So, everything turns on the currency restrictions. Right now, the currency has just shut down for money coming out from China to the U.S. And so really things have slowed down to a crawl and unless that gets opened up, it’s going to stay at a crawl except for activity going on in China. And again, I’ve got clients that have just gone to China and that that makes sense.
I actually think the currency restrictions are going to stay in place and therefore I just think it’ll be steady as we go. I’ll have more clients buying more film rights. I will have clients doing activities in China but I won’t be seeing the big slate financing that I did before. And I and I won’t be seeing cross-border M&A activity.
Caryn McCann: Okay well you are balancing a lot that leads me to my next question. Which is what skills or talents are essential to being effective at your job?
Caryn McCann: Okay well you are balancing a lot that leads me to my next question. Which is what skills or talents are essential to being effective at your job?
Sky Moore: At my job being of being a lawyer? aware yeah as opposed to logistics do you mean with all these–
Caryn McCann: You deal with these contracts that might not be enforceable – these very unusual circumstances that you deal with every day.
Sky Moore: A lot of it is -I’m good technically. One thing you need – you need to be technical because it’s cross-border and therefore there’s a lot of whether it’s securities or corporate or tax so you do – I have a broad knowledge base that helps in the transactions. But beyond that, you really need to know the – kind of bridge the cultural gap. To pick one example – Chinese clients view lawyers completely differently than clients in the U.S.
In China, lawyers are like secretaries. Because contracts are so not important, what happens is the principles negotiated on them themselves and then they turn over some piece of paper to the lawyer and the lawyer is basically supposed to type it up. And they completely treat them with disdain and it’s like you’re a secretary. And so, when they come to the U.S., they kind of bring that with them and they walk into a meeting and there’s the U.S. side has a bank of lawyers and the Chinese at first are walking in naked. And they get killed because they don’t have a lawyer.
So, you have to kind of educate them on the important – that lawyers in the U.S. negotiate the deals and really do the business side and are pivotal to the transaction. And you just need to be aware of that and then and you need to bridge the cultural divide. You need to know that they work off relationships and trust and you need to earn their trust.
When things get hot and heavy with the other side which happens all the time, it’s always miscommunication because of the language problem. And because they typically don’t bring translators or frankly sometimes not good ones, there often is miscommunication and things blow up. And so, I often have to call up the other side and mollify them and say that’s not what they meant, they didn’t intend that and life is beautiful and let’s move on and to try to get to a close.
To again bridge the cultural divide when people step on each other’s toes because it can go the other way too – that the U.S. side says something that the Chinese take is insulting even though it’s inadvertent. They can get very excited about that and so you have to explain – oh that’s it’s not what they meant. I act as – I call it the translator – but it’s really a cultural translation rather than language translation is actually a big part of what I do- is calling above both sides.
Caryn McCann: That’s a good way to put it.
Sky Moore: To try and get them to stay friends.
Caryn McCann: You have to be a diplomat it sounds like.
Sky Moore: You have to be a diplomat. You do. You have to be a diplomat. And you know there’s tempers and there are egos and you just have to kind of get through it and that’s part of it that’s a big part of the process.
Caryn McCann: Great. Well, this next question is a little bit tricky what question did I not ask you that I should have?
Sky Moore: Well I’ve alluded to it. But you really need to ask the currency issue. The key thing that’s happened since January is it just completely turned on its head. There were ten billion dollars of money that came from China to Hollywood in the last from 2014 – 2016. And then in ’17 it just shut off. And I mean shut off. So, everyone that had a contract breached it and no new deals are happening. And it’s all because of the currency restriction. And what’s happening is that and the and it’s important to know the reason behind that.
There’s a couple of things. One is that China wants the Chinese companies to invest in China. But another is absolutely the Trump effect. China absolutely wants to keep their powder dry to see what Trump does. Just to pick one example again North Korea, and I will tell you that the taps are turned off intentionally because they- it’s a loud message to the U.S. which is they were a big driver at least of a Hollywood economy for three years and that cap is off. And they’re there waiting to see what Trump does and I think people are underestimating the impact that that has. And I think people are totally underestimating the impact that North Korea will have. You cannot – if there is any military action in North Korea – you’re going to have a very unhappy China. And that’s very threat of it is making a very unhappy China. And there have been loud vociferous threats. You already have a very unhappy China. You can’t overlook that. You can’t just talk about China and the U.S. in a vacuum without really looking at the geopolitical implications of what’s happening. And it’s no I don’t see it lightening up for four years.
Caryn McCann: Well, let’s assume we don’t go to war- I hope. What would need to happen to mollify China do you think- that we want to work with China? That Trump wants to work with China? This is way off topic but I’m curious.
Sky Moore: No but it’s important. You would have to stop the chest thumping. You’d have to back off North Korea and you’d have to back off this all anti-China rhetoric and embrace them and treat them as equal partners trading partners like we do Europe although that’s become contentious too, remarkably. You have to embrace them as partners and not as not as the evil empire.
Caryn McCann: I could see where Trump needs to hire you too. They need your advice speaking of advice – this is my last question – what advice can you give those aspiring to tap into the Chinese market?
Sky Moore: I’d say go to China. Another important thing is people were all hoping that co-productions would work. and I will tell you that has been shut down. And it’s not just shut down because The Great Wall didn’t work. It shut down because again because of the Trump effect.
I just had a film tried to get through SARFT (China’s State Administration of Radio, Film, and Television) which is the China government approval agency for films. And they just hammered it because it was a U.S. co-production. I’ve been told that there’s an unofficial now policy that they’re not going to clear any more U.S. – China co-productions. So I had to – we had to shift to be making it German, making it a German China co-production.
So the first comment I would make is if you’ve got U.S. producers – make it a non-U.S. China co-pro. Make it a German, UK something – because they’re there now China is now focusing on Europe. that’s comment one.
And comment two is I would just go to China. I’ve got clients that are directing in China, producing in China. And the lot is happening in China and they want U.S. expertise. They’ll pay dearly for it. They like – they want to learn. So I would just say you know go to China.
Caryn McCann: These clients of yours that went to China, they just they obviously have a film that they’re going to shoot there. So they must have a Chinese partner before they can even go there.
Sky Moore: No. They went there and then they just started getting clients and productions going while they were there. They offer themselves as being able to offer whatever services that they do and there is a huge demand for it.
Caryn McCann: Okay well let’s – I hope to have whoever those people are on the podcast. But thank you for that advice – that’s fantastic. Now, in conclusion, could you tell us – like plug some projects, any social media handles or any website links you’d like to share?
Sky Moore: You are very kind and covered most of them. So, I’ve got a YouTube channel that if people search Sky Moore, Greenberg Glusker, they’ll find and it’s my course. And then I’ve got the book, of course, The Biz (The Biz: The Basic Business, Legal, and Financial Aspects of the Film Industry) that you mentioned. And I’m on LinkedIn and Twitter and whatever else is out there.
Caryn McCann: Okay. We’ll put that in the show notes. Great. Sky, thank you so much for this information. It’s been really useful and I just love the conversation. So thank you again for coming on the podcast.
Sky Moore: You are too kind. Thank you so much.
Caryn McCann: We’ll see you at the premiere.
Sky Moore: Thank you.
3 key points
- How do you know Chinese money is real? You’ve got to check your future partner’s reputation –and ask around to figure out if their money is real or not. Then the Chinese money needs to be held in an account outside of China.
- If you’re having a meeting with a Chinese partner – don’t rely on their translator – bring your own.
- Remember the US legal system isn’t on equal footing so promises made in the U.S. by Chinese partners may not be kept since according to Sky – some Chinese feel there won’t be much blowback back in China. So what can you do?
Can you hold back delivery of the film? Ask yourself – What is my leverage in a non-contractual setting?
- Sky’s explosive comment about the future of US-Chinese co-productions was startling, to say the least. He feels the taps have been turned off intentionally due to the Trump effect. What can you do? Get a European producer on your team. Make it a German-China co-pro or a UK- China co-pro.
- If the currency restrictions don’t lift – in my opinion – if you’re a writer or producer – try to film your script in China.
Now, as far as for the episodic side of this podcast I’ll tell you about my week on my journey to getting my own green light for my film and TV projects.
- I rewrote my action-thriller to be shot in South Korea now to be shot in China. Also, the Chinese version is done so I can start sending the script out to Americans as well as Chinese producers.
- I contacted Pinewood Malaysia regarding a script of mine to be shot in Malaysia and will follow up next week.
- Based on Sky’s interview about the future of US-China co-pros – I’m rewriting a script of mine that can be either a China-German co-pro or a China-Canadian co-pro. As you can see – I am using my guests’
I’m also looking for more guests for my podcast. So spread the word. And if you’d like to join the podcast or would like to recommend a guest – send me an email at firstname.lastname@example.org
Thank you for listening to my podcast.
So thank you again for listening. To show your support – go to iTunes, subscribe and leave a rating so other people can find this podcast. The more we work together – the more opportunities will be out there for everyone.
And I’ll see you at the premiere. Bye! Yī huǐ jiàn! 一会见!