By Ilan Haimoff (Partner, GHJ) and Jonathan Blinderman
Cash Flow Management
The complexity of the business and the its volatile nature can make it a challenge to predict the timing of license fees, tax credits and other cash receipts. Additionally, CFOs must manage expectations of profit participants, investors, vendors, consultants and subcontractors. Unexpected expenses can also lead to late nights and extra antacids. Well drafted agreements, adequate risk management and timely reporting go a long way toward mitigating these issues.
Considering the nature of the industry, there is always a risk of facing lawsuits which could have a direct financial impact on the company or a public relations impact. Even merit-less claims can cause heartburn, as substantial costs can be associated with responding to the most trivial of claims. Risk management, adequate contingencies and addressing issues as soon as discovered will lead to fewer sleepless nights.
Acquisitions in the Marketplace
Growing consumer appetite for creative fresh new content keeps quality content producers in high demand. This may be a good thing for investors but it’s not necessarily fun for employees and contractors who have to put in long hours to create watchable material. A high pressure, fast paced environment can increase the likelihood of potential claims, including wage, hour, work discrimination and hostile work environment claims.
Keeping track of reporting requirements is critical to the continuance of a successful business. However, as time and resources are stressed and regulatory demands increase, the potential exists for missing deadlines, especially in dealing with state or foreign tax credits. As government seeks every revenue stream possible, even minor violations can lead to material costs.
Keeping Up with New Media
In the constant pursuit of new revenue streams, some worry that they might miss the boat and lose an opportunity to make money in the new media space. The fast pace of updating content in new media can lead to additional exposure, with creators becoming more likely to skirt copyright, trademark, name and likeness and privacy rights of individuals.