Entertainment & Media Law Signal : Canadian Entertainment Lawyers for Licensing, Intellectual Property & New Media Matters

 While advertiser’s traditionally spend a significant amount of money, effort and time to protect their brands from the potential negative implications of aligning with scandalous celebs, Charlie Sheen’s bad boy image and controversial behaviour seems to have been exactly what attracted advertiser’s Fiat and DirecTV to the star.

Advertisers pay huge dollars to tie their products or services to successful celebrities and athletes in order to create, alter or reinforce a particular brand image that aligns with and leverages the personality, image and success of the celebrity.  But what happens when the celebrity behaves badly? How does a brand save itself from the negative effects of the association? The answer: a “morals clause”. Morals clauses recognize the potential negative effects that a star’s off camera activities can have on the brand with whom the star is associated. To guard against this risk, the morals clause gives the advertiser the contractual right to terminate an endorsement deal in the event the celebrity engages in certain offending conduct or behaves in a manner that would reflect poorly upon the individual’s character, and, by association, that of the brand.

Morals clauses were initially introduced in the early 1920’s (allegedly following the scandal of silent film comedian Roscoe "Fatty" Arbuckle) in Hollywood studio agreements with their contracted actors. Morals clauses were also initially employed in agreements between major sports leagues and their athletes (e.g., Babe Ruth). Today, morals clauses are ubiquitous in talent and endorsement agreements. Morals clauses can be drafted broadly to apply to behaviour that may shock, insult or offend public morals or decency, or which may bring the actor (and the brand by association) into public hatred, contempt, or disrepute, or behaviour that is simply embarrassing or inconsistent with the image of the brand (e.g., alcohol abuse or extramarital affairs).  Others, however, usually following significant negotiations, can be more specific allowing contractual cancellation only in certain instances. For example, if the celebrity is convicted of a crime (e.g., dog fighting or sexual assault) or is involved in a scandal alleging particularly offensive conduct such as drug abuse, pornography or domestic violence. Without a morals clause, advertisers may still attempt to protect their image by pulling any advertising featuring the star and by deciding not to renew a contract upon its expiration. However, without a morals clause, and depending on the terms of the arrangement, advertisers may still be required to pay hefty sums to the engaged talent following a scandal despite publically distancing the brand from the talent. 

While we do not know the specific details of these separations, morals clauses likely played a part in sponsorship cancellations following these high profile celebrity scandals.  In 2005, after images surfaced of Kate Moss apparently using cocaine, Kate was publically dropped by Burberry, Chanel and H&M.  Following the 2008 Summer Olympics, images of Michael Phelps allegedly smoking marijuana resulted in cereal maker Kellogg's dropping its Frosted Flakes endorsement deal with Phelps and claiming that “Michael's most recent behavior is not consistent with the image of Kellogg”. Similarly, after the scandalous extramarital affairs of Tiger Woods surfaced in the media in 2009, global consulting giant Accenture was the first of many brands to end its sponsorship with the world’s most famous golfer claiming that he was “no longer the right representative for its advertising”. For these and other celebrities whose naughty behaviour has landed them in the public eye, it is likely that any endorsements they attract from now on will be subject to broad non-negotiable morals clauses that protect the advertiser’s ability to easily terminate the endorsement arrangement… Or will they?

What happens where the scandalous activities or rebellious image of a particular celebrity is exactly what the brand wants to leverage? Bad idea or simply brilliant marketing? The latter according to Fiat and DirecTV, two brands that have recently engaged bad boy Charlie Sheen as the star in their new ad campaigns. Charlie Sheen, no stranger to negative publicity, has received significant media attention for drug use, domestic abuse, prostitution and generally strange behavior. While such behavior may be severely off-putting for some, Sheen has received a bit of fan fare for his crazed antics including his “winning” tirades, references to drinking “tiger blood” and his “violent torpedo of truth” tour.  These antics have resulted in parodies on YouTube, a roast on Comedy Central and now, television commercial deals with at least two major brands. In fact, it seems like Fiat and DirecTV are relying upon just that kind of questionable behavior to improve the brand image of their respective products and services.

In the Fiat “House Arrest” commercial, Charlie Sheen aggressively drives a Fiat inside his mansion, which is full of partying guests and beautiful models. Sheen emerges from the vehicle with a visible ankle monitor claiming “I love being under house arrest. What do I get for good behavior?” The DirecTV “Platoon” commercial cautions against the perils of choosing cable TV, which decision results in unhappiness and, subsequently, a series of bad decisions leading the main character down a nasty spiral where he meets Sheen at a Turkish bath house and ends up playing out a scene from Platoon with Sheen. The brand comedically cautions against such bad decision making and states “Don’t reenact scenes from Platoon with Charlie Sheen. Get rid of cable and upgrade to DirecTV”. While brands typically avoid aligning their products and services with controversial celebrities with negative public images, and even take significant steps to negotiate contractual outs in the event of bad behaviour, these brands have embraced the rebellious, out-of-control bad boy that is Charlie Sheen just when we thought we’d seen enough of him. For Fiat, the edgy, bad boy image of Sheen may help give the vehicle maker a more rebellious, rule breaking and fun image than it currently occupies in the minds of consumers. DirecTV’s approach relates the bad decision of engaging in Sheen’s world with the bad decision to choose cable instead of DirecTV.

Whether either of these partnerships will pay off is yet to be determined.  One can assume, however, that the agreed upon morals clause between Charlie Sheen and the respective advertisers, if any, is not reflective of those traditionally enshrined in commercial endorsement deals. Perhaps a reverse-morals clause was even considered.

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On Feb. 23^rd, Stephen Colbert included an integrated sponsorship on The Colbert Report. Colbert refers to these product integrations as brand-funded requests from the network and this most recent “Sponsortunity” was brought to you by Nabisco’s “Wheat Thins” crackers. Colbert goes on to satirically discuss the product and the brand’s ‘important’ role in our everyday lives based on a directional memo provided by the brand. While viewer’s may have been ‘cracking’ up over the broadcast some of the references may have had Nabisco execs tuning out.

Colbert refers to an “actual memo” he received from the makers of Wheat Thins for the purposes of the sponsorship, which details what the role of the Wheat Thins brand is (and is not) and provides instruction for how he should (and should not) interact with the product on the show. Colbert quotes from the memo sarcastically referencing the importance of Wheat Thins in our lives as the “snack for anyone who is actively seeking experiences” and that “Wheat Thins keep you on the path to, and proud of, doing what you love to do no matter what that is…” For example, “driving kids to practice, watching a movie” and “arson”, as added by Colbert. He goes on to discuss further descriptions in the memo, including that “Wheat Thins are not a creator of isolated, un-sharable experiences; they are a connector of like-minded people encouraging sharing”. And Wheat Thins are “not an exclusive or exclusionary brand” so, as Colbert jokes, “blacks, jews get in here!” In addition, Stephen reads from the memo that the Wheat Thins cracker brand is “not a crusader or rebel looking to change individual paths (or the world)”. The memo further goes on to caution against showing over consumption and requests that Colbert not show (as in a bowl), or eat, more than the recommended serving size of 16 crackers. This leads Colbert to obnoxiously stuff 16 crackers in his mouth at one time and then, in a rebellious move, to attempt to add a 17^th cracker, which results in the broadcast cutting out citing “technical difficulties”. The scene is followed by a ‘fauxpology’ – an apology made to appear as though it was either network or brand-mandated but which is clearly incorporated into the sketch as a continuation of the brand mockery.  The skit is likely to be perceived as nothing more than a good natured jab at the brand for its attempts to control the parameters of the sponsorship. For all execs participating in branded entertainment, however, it is also a good reminder of the potential pitfalls involved in engaging in product integrations.

Product placements in film, television and other entertainment vehicles are not uncommon. They come in many different forms, from passive product placement, where products can been visually seen or are referred to in commentary or dialogue, to active integration and usage by the hosts and/or characters of the entertainment program. A classic and well known example of product integration is Coca-Cola’s product placement on American Idol where large Coca-Cola branded glasses are shown prominently placed in front of each judge and from which the judges drink (presumably a Coke product) for the duration of the show.  Product integrations provide another avenue by which brands can reach consumers, and they can be enormously successful (e.g., Reese’s Pieces in E.T.; Ray Bans in Risky Business; Mini Cooper in The Italian Job). On the flip side, however, they also bring certain inherent risks and additional concerns.  There is no specific model for product integrations. Brands may pitch to have their product included in a particular program or the producers may (with or without permission) include a brand as a fundamental element of the script and/or character development.  Product integrations are secured in a number of ways. For example, they can be paid for by the brand, the products themselves may be offered in a barter exchange for inclusion in the program without any payment, or the placement may be provided at the producer’s cost – this usually occurs when the inclusion of the product is an essential element of the plot or will add some value to developing the strength of a show’s character.

With traditional advertising, the advertiser has complete control over the messaging, content and placement of the advertisement. This includes what is said about the product, when it is said, and how and when the product is used (or not used). In contrast, product placement deals (depending on the particular arrangement between the brand and the producer) usually require at least some relinquishment of control over these factors. Too much control can cause the integration to appear opportunistic and transparent, which may degrade the authenticity and creativity of the programming and alienate viewers. On the other hand, having no parameters over the use of the product may backfire resulting in the product being used in a derogatory or inappropriate manner, which can have a significant negative impact on the value of the brand and, ultimately, the bottom line.  So, regardless of whether it’s an integration in online, film or television, or the genre is live action, comedy or drama, or the program is scripted, unscripted, news or reality-based, brands engaging in product integrations must participate in a bit of a balancing act between relinquishing control and taking on risk.

The parameters of the agreed upon deal are usually governed by contract. Typically speaking, however, product integration contracts will include a bar against injunctive or equitable relief, so that any claim a brand may have for a violation of the terms of the integration will be limited to an action for damages and the show will continue to be marketed, sold and distributed without alteration or removal of the offending product integration.

Colbert’s presentation of Wheat Thins in the “sponsortunity” segment appears to be an example of a brand’s failed attempt to limit or control the form of the integration.  That said, Wheat Thins must have been comfortable assuming the risk of Stephen Colbert himself. Anyone who has ever watched The Colbert Report knows that Colbert doesn’t often do what he’s told. Colbert ends the segment by saying “join me next time when I will read the memo from someone else who gave me money.”

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The Alliance of Canadian Cinema Television and Radio Artists (“ACTRA”) claims that Labatt breached its obligations under the National Commercial Agreement (“NCA”) by hiring non-union actors and paying non-union wages in its “Flash Fans” commercial that recently aired during the Canadian broadcast of the Super Bowl. ACTRA negotiates the terms of the NCA with the Institute of Communication Agencies and the Association of Canadian Advertisers, of which Labatt is reportedly a member.

The “Flash Fans” commercial features hundreds of fans (reports suggest at least 600 fans were involved) surprising two unsuspecting Ontario recreational hockey league teams during a recent pick up game just outside Toronto. At one point during the game, the fans rush into the arena screaming and cheering alongside mascots and cheerleaders; at the same time live announcers come on calling the plays and a hidden jumbotron along with a plethora of Budweiser advertising is revealed. The flash fans bring with them the energy usually reserved for professional league play.

The commercial was created for Budweiser Canada by Labatt’s New York agency Anomaly, a part of MDC Partners Inc. network of agencies. As an American advertising agency Anomaly is not a signatory to the NCA. Generally speaking, ACTRA does not have jurisdiction over non-signatory agencies and advertisers, who are free to create non-union productions, hire non-union talent and negotiate talent fees on an individual basis outside the obligations set forth in the NCA or any other collective performers agreement. Like agencies and advertisers, once they become members of the union, ACTRA talent is prohibited from participating in non-union productions. There is, however, no prohibition on non-union talent being engaged in a non-union production.

The issue in this case lies in whether or not Labatt is a signatory advertiser to the NCA. The allegations by ACTRA rely on this being the case. In an ACTRA release issued Feb. 10, Heather Allin, ACTRA Toronto president said “[i]t’s an embarrassing day for Labatt when they’re caught exploiting everyday folks in their multi-million dollar television ads. We are shocked that Labatt, with whom we have a long-standing business relationship, would undermine their agreement and hire workers for much less than industry-standard pay.”  Likely complicating the situation are reports (by ACTRA) that Anomaly has produced a number of union-compliant commercials for Labatt in Canada in the past year.

Had the commercial been produced as a union production, Labatt would have been obligated to pay each performer in the spot, including the hockey players, ACTRA union wages. According to a Feb. 14 article in the National Post, ACTRA claims the hockey players are owed “at least $3,215.15 each, with an extra $537.85 given to players who appeared in short follow-up interviews”.  Similarly, while members of the crowd reportedly would have likely received a cash rate of $11 per hour under the agreement, prominent crowd members may have qualified for a “principal performer” fee of $3,753. Instead, members of the flash mob were reportedly paid $150 a piece and the hockey players were rewarded with a private Super Bowl party.

Labatt has responded to the allegations by calling the commercial “a spontaneous event rather than a traditional, scripted television advertisement.” They draw attention to the fact that the visceral responses of the real life players would not have been possible or may not have been as authentic under scripted circumstances. Anomaly’s approach in producing the ‘event’ has proven successful with over 3.5 million views on YouTube. As to whether or not a similar campaign would be as successful using actors, it is difficult to tell. One would have to recreate the entire event, which as we know would cost the ‘King of Beers’ a small fortune.

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