How do you protect a huge entertainment brand? Ask HBO Europe GC Gordon Finlayson
Think of some of television’s biggest recent hits: The Sopranos, The Wire, Sex and the City, True Blood and now Game of Thrones. All have topped the ratings while garnering accolades and industry prizes. And the name behind all of them is US company Home Box Office (HBO).
But there is more to HBO than big US success stories. The company has a number of subsidiaries around the world including, in Central and Eastern Europe (CEE), HBO Europe. Spun out of a joint venture three years ago, HBO Europe delivers programmes to viewers in 14 countries including the Czech Republic, Poland and Romania. More recently, it has begun producing its own content.
Gordon Finlayson joined HBO Europe in late 2011, moving to the company’s headquarters in Budapest from Dubai where he was head of legal for Dubai-based Orbit Showtime Network. The general counsel role was created following the joint venture buyout and sees Finlayson lead a team of 11 lawyers and one administrative assistant.
His broad remit includes compliance, on which he reports to the head of compliance at parent company HBO US, and HR, where the head of HR reports directly to him.
Finlayson’s in-tray includes demands for extensive legal advice across a wide range of issues. For one thing, HBO Europe’s entry into production of original content led him to appoint a lawyer dedicated to production issues.
“Original production work has a high volume of paperwork and involves significant challenges when negotiating for rights acquisitions, entering into talent or production agreements and managing financing, tax rebates and subsidies,” Finlayson says.
The lawyer is understandably enthusiastic about the programmes HBO Europe is producing. A good example of the sort of show the company wants to make is its recent Czech production Burning Bush, which dramatises the true story of student Jan Palach, who self-immolated in protest against the Communist government in 1969.
The show is directed by Polish director Agnieszka Holland and, says Finlayson, demonstrates some of the legal issues arising from making television drama.
“From a legal perspective there’s a significant volume of work in terms of managing the acquisition of rights and the clearances, or working with production companies to make sure they’re acting in accordance with international standards,” he says. “Original production is also an area where we need to be careful from a compliance perspective. We also have challenges in terms of sensitivities around the characters we represent.”
The legal team also gets involved in negotiations over the commercial terms and rights of screenplays, books and other options involved with original productions. When productions may be screened in several jurisdictions, there are subtle differences involved and Finlayson must be conversant with copyright laws in the jurisdictions in which HBO Europe operates, as well as with EU and US regulations.
“The challenges come from the nuances of how they’re adapted in different jurisdictions,” he says. “The Anglo-American system of copyright protection is in many ways less nuanced than the civil law system.”
The copyright stuff
For media companies, copyright increasingly involves a fight against piracy.
This is a major issue for television companies, film producers and music producers, and there have already been significant pieces of litigation, notably in the English courts, where rights owners have taken internet service providers to court seeking to obtain details of the individuals suspected of accessing pirated material online.
HBO in the US has been reported recently as taking a surprisingly soft approach to piracy issues after it was revealed that Game of Thrones is the most-pirated series in history. Some media outlets said more than a million people, mostly in the US, UK and Australia, had
illegally downloaded the first episode of the show’s third season.
Finlayson, who confesses to being a bit of a Game of Thrones fan (the dwarf Tyrion Lannister, played by Peter Dinklage, is his favourite character, but he also says he likes the unfurling story of would-be Queen Daenerys Targaryen), is cautious about the piracy issue. “We work with our US colleagues to try to minimise the impact of piracy,” he says.
One way HBO Europe has played a leading role is the development of HBO Go, which allows HBO subscribers to access the company’s content online, similar to the BBC’s popular iPlayer platform.
“We feel that as a company we’re promoting access to solutions that allow consumers to access our programming online, which really reflects HBO as a company,” says Finlayson. “We’re also working hard to ensure the lead time between the US broadcast and our airing on our
linear channels is as small as possible. There are various ways we’re dealing strategically with the piracy issue and an important aspect of that strategy is to deliver our product to consumers through a premium online product and as close to US broadcast as possible.”
The solution is not perfect – it does not help those who do not have an HBO subscription – but it is an attempt to address a growing issue by giving viewers a legal option to watch a show online. Finlayson himself says he watches Game of Thrones on HBO Go in Hungary.
“The legal work for this project is highly challenging since it involves a range of software systems and delivery to numerous major platforms such as Apple’s iOS, Google’s Android, Smart TVs and PCs, and laptops,” explains Finlayson. “There are also challenges concerning data protection, affiliate relationships and programming acquisition that need to be taken into account in building the system.”
Finlayson adds that proving the company’s commitment to its local markets is another way to build consumer trust and loyalty.
“We’re committed to our local markets to ensure there’s a connection between us and these markets,” he says, referring to Burning Bush as a “culturally significant” move by HBO Europe.
What the company does is also influenced by EU regulations, as many countries within HBO Europe are member states.
“The market for media services is high on the agenda for Brussels at the present time, so it’s important to keep track of the latest changes and initiatives from the EU as some of the initiatives being contemplated have the potential to significantly change the media landscape for distribution and production of European content,” Finlayson says, pointing also to data protection as an EU issue.
The number of countries in which HBO Europe operates means the company needs plenty of external legal advice, particularly on regulatory, data protection, competition, litigation and M&A issues.
“Through our in-house legal team we have a large degree of capacity throughout our core territories, but in addition to our in-house team for smaller countries we use retained counsel who undertake commercial and local corporate work for us in countries such as Bulgaria, Serbia, Croatia, Slovenia, Moldova, Macedonia and Bosnia,” Finlayson explains.
He does not have a formal panel. “Due to the extent of our operations in Europe it’s difficult to find law firms that have consistent coverage and skills across all our markets,” Finlayson says, adding that he reviews external counsel on an ongoing basis. “Law firms are assessed on their operative strength in particular markets and retained for key areas of expertise.”
Finlayson is also fairly agnostic when it comes to picking his firms, with preferred advisers ranging from large international firms to dominant domestic players to boutiques. For example, Baker & McKenzierepresents the company on EU competition matters and Olswang’s Berlin office advises on European copyright and IP.
On a regional basis, Wierzbowski Eversheds and Dentons (formerly Salans) have acted for HBO Europe in Poland. Wolf Theiss is a regular adviser in Hungary and was recently instructed on contentious and regulatory work in the Adria region.
Another firm used in Hungary is White & Case, notably for real estate, but it also has a relationship with HBO globally. DLA Piper provides commercial advice to HBO Europe’s joint venture in the Netherlands. Finlayson also turns to smaller firms including Rights TV and Sheridans for television production matters, and Prica & Partners in the Balkans.
Firms tend to be engaged on a retainer, with fees negotiated in detail at the outset.
“Where individual projects arise that have a specific scope I generally prefer to negotiate a flat fee to be assured of the billing and allow me to budget appropriately for the expenses,” says Finlayson. “Most of my budgeting headaches with our finance department result from unexpected bills, not reasonable quotes flagged in advance.”
The increasing level of legal work has prompted Finlayson to undertake a full review of HBO Europe’s legal systems, and he is working with the IT department to deliver a new legal workflow system.
“It may be one of the less glamorous elements of the role, but the challenges of managing a diverse network of in-house and external counsel across multiple countries requires attention to the application of policies and procedures that allow lawyers to act in the best interests of the company while not restricting the business from moving at a pace that allows it to make the most of opportunities,” he says.
With the media industry moving at a faster pace than ever and the popularity of HBO’s programmes in Europe and worldwide showing no sign of diminishing, Finlayson and his team have their work cut out to keep on top of the issues that will inevitably arise.
Position: General counsel
Reporting to: Chief executive Linda Jensen
Employees: 34,000 (Time Warner companies consolidated)
Revenue: $28.7bn (Time Warner companies consolidated)
Total legal capability: 11 plus one administrative assistant
Main external law firms: Baker & McKenzie, Dentons, DLA Piper, Olswang, Prica & Partners, Sheridans, Wierzbowski Eversheds, White & Case, Wolf Theiss
Total annual legal spend: Not disclosed
The regulatory environment
The media industry has to work within the guidelines of legislation and, when it comes to copyright, can be hampered by the time lag between the law and how shows and music are sold and consumed.
This is accentuated in Europe, where EU regulations on copyright lag behind the reality of the industry by some margin.
Olswang partner Victoria Gaskell explains that copyright law historically has been focused on physical assets such as books, and it has not caught up with the modern digital reality.
“Trying to shoehorn clients’ exciting ideas into the existing framework can be difficult,” says Gaskell. “Clients are often trying to understand how to fit the digital world into the existing copyright framework.”
Protection of digital rights has already been explored by courts in the UK and Europe. Earlier this year the European Court of Justice (ECJ) ruled that websites streaming live TV online need to have permission from broadcasters to do so, while the High Court in the UK has seen a succession of cases relating to websites making pirated content available.
“There’s a debate going on about copyright reform,” Wiggin partner Ted Shapiro says, adding a warning: “If you change copyright law every time technology changes you’ll be changing it constantly.”
Shapiro, who is based in Brussels, thinks EU regulation is reasonably flexible and good at adapting to the changing environment, but adds that some of the changes have not been particularly helpful for the owners of the copyright.
The view from outside Europe
Pooja Dua took over from HBO Europe’s Finlayson in 2011 as senior legal counsel for Middle Eastern satellite company Orbit Showtime Network (OSN). OSN buys content from the US and Europe, including HBO shows, and screens shows to subscribers in 23 countries across the Middle East and North Africa.
“Anti-piracy isn’t as robust here as it is elsewhere,” Dua says. “We’re having to work quite hard to lock piracy down.”
Getting exclusive rights over content and negotiating the right deals with providers is key. A member of the OSN legal team is dedicated to regulatory and piracy issues and co-ordinates closely with a member of the IT team.
OSN is also trying to collaborate with other media companies in the UAE, as well as the authorities, to get better regulation in place to combat piracy.
“We’re finding in the UAE that we’re now getting a lot more support from the government,” she adds. “The UAE does look a lot to the US, the UK and Europe to see what the standards are and what they should be aiming for.”
As a company OSN has been renegotiating access agreements recently in an effort to close down routes to piracy, and it is targeting those redistributing pirated content as opposed to those who simply access it.
The view from the UK
Enforcing IP rights in the courts can be a long process, as ITV, Channel 4 and Channel 5 are finding. In 2011 the channels brought a joint case against a company providing live streaming of their shows – and, indeed, those of the BBC and other channels – in the High Court.
The defendant, TV Catchup, relied on legislation originally written to cover cable TV. The High Court referred the case to the European courts and it is due back in the High Court in October.
ITV’s director of policy and regulatory affairs Magnus Brooke says the battle to enforce copyright in cases such as this has been hard-fought, not only in the courts but also with government.
“We approached government on this four years ago and flagged the problem,” he says. “Four years later, we’re not much further on.”
Brooke does not think the law should necessarily be changed to reflect new technology, but he says that legislation drafted when cable TV was the norm is now difficult to apply to an online world.
“The future of IP law more generally is a massive issue,” he says. “In terms of the EU, that’s the biggest single issue facing all content companies.”
Effective co-operation between companies, such as that which enabled the TV Catchup case to reach court, is crucial.
“It’s entire sectors that need to co-operate,” says Brooke, explaining that this extends to book publishers and anyone who has an interest in copyright, not just television and film companies.
As a result, in Brooke’s wide portfolio, IP and copyright are key issues which ITV has devoted more resource to dealing with in recent years. Finding effective ways of disseminating content to consumers is a big part of the battle.
“Our entire objective is to get our content out to as many people as we can,” Brooke concludes.