Coronavirus Spreads Through Hollywood’s Coffers

Jennifer Paley is an Attorney and Legal Writer based in Los Angeles.

Date 3.14.20

Tom Hanks and Rita Wilson are recovering in Australia while the entire cast and crew of Baz Luhrmann’s upcoming Elvis Presley project for Warner Bros. remain in isolation. Meanwhile, Disney’s $200 million dollar-budgeted production, “Mulan,” has just been pulled from the studio’s release calendar on the day of its London premiere. No surprise there, considering less than a day earlier, our President announced a European-wide travel ban that would preclude requisite promotion and marketing activities. MGM also pushed the release of its upcoming James Bond film, No Time to Die, and in the process lost approximately $40 million in advance, non-refundable add buys, make-goods, and the like. Similarly, Warner Bros. just halted its tentpole production of Batman for at least two weeks. Broadway has gone dark at least until April 12th. Major television networks are cancelling their annual live upfront presentations in New York amid the epidemic and turning to streamed content as a safe alternative. Television sporting events are being cancelled left and right. SXSW was cancelled. Movie theatres all over the world are temporarily closed. Industry estimates indicate a $2 billion loss from the shuttering of Asian movie theatres alone. And while far less publicized, hundreds of scripted and unscripted television productions have shut down “until further notice” as a precautionary measure. Halting and terminating productions and distributions is quite an expensive endeavor -- a decision that simply cannot be made off the cuff. Less content means less advertising dollars. Period.

Unfortunately, it seems as if the momentum is only picking up, and Hollywood will suffer greatly. To date, the global box office has already lost approximately $7 billion dollars. In the meantime, executives and their attorneys are carefully reviewing their insurance policies, looking for coverage during this black swan event. Regrettably, many policies specifically exclude loss and damage arising out of communicable diseases, among other things. Limited coverage, however, is sometimes available for losses incurred as a result of forced shutdowns. Expect to see some of these conversations play out publicly in the coming year.

In the meantime, all we can do is say a prayer that the collective efforts being made to quarantine and protect the health of our citizens will put an end to the spread of COVID-19 as fast as practically possible, as the significant and destructive impact that this virus has had so far has left us all, well, a bit humbled – financially and otherwise.

 

 

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