Recently recognized by Variety as one of Hollywood’s New Leaders of 2022 and featured in Variety’s Legal Impact Report 2023, Nick Jacobus is a transactional tax and entertainment partner in Venable’s LA office. Nick regularly counsels high-profile talent, production companies, and entertainment management companies on matters related to joint ventures, M&A deals, liquidity events, sweat equity deals, and general business operations. In this recent conversation, Nick discussed some of his work in the entertainment field and how his transactional tax background sets him apart in Hollywood.
Despite being in the Tax Group, you do a lot of corporate entertainment work and have even been recognized by Variety as one of Hollywood’s New Leaders of 2022. How has your practice evolved since joining Venable?
Nick: Shortly after earning my LL.M. in taxation at NYU, I joined Venable’s Transactional Tax Group in the Los Angeles office. Being in West LA, I had the rare opportunity to counsel high-profile clients with respect to many prominent entertainment deals from the get-go. Because the entertainment industry poses unique tax challenges and is subject to specific tax provisions, I found myself becoming familiar with a niche practice area. And because tax is an intimate part of entertainment and media deals, I got involved on the corporate side of transactions. This has led to my being recognized in the field as someone who knows both sides—which, frankly, not that many people do—allowing me to wear many hats and have visibility as a hybrid corporate tax attorney.
Can you describe the types of deals you typically work on in the entertainment space?
Nick: Historically, on the entertainment team we have worked on the talent side, whether it was for talent in front of the camera (e.g., actors) or talent behind the camera (e.g., directors, producers, etc.). In the last couple of years, we have really branched out to the point where we now represent more talent management companies and production companies (including serving as outside general counsel), and we've made a name for ourselves in that space. We also work on a lot of brand ambassador deals, and a variety of corporate and tax matters with respect to talent, but one thing we intentionally avoid is true entertainment law. We have solid relationships with the entertainment law firms in town, and we pride ourselves on working with them to achieve our clients’ goals.
What are some of the emerging trends that you’re seeing in entertainment and media?
Nick: On the endorser and influencer side, we have the privilege of representing high-profile talent, which garners a lot more leverage when it comes to negotiations compared with a typical service provider. Companies are enlisting celebrities and endorsers not just to promote their brand, but also to tell the brand’s story and be its face. This shift has given talent more clout than ever, not only when it comes to compensation, but also with respect to rights and entitlements as owners of companies. While key services providers have always received equity incentives consistent with “market” terms, talent can now demand true equity with respect to ventures, including preferred economics and management rights. It has been exciting to be part of a team on the leading edge of this shift, where we are setting the “market” for entertainment talent. We’ve also had the opportunity to represent entertainment management companies as they dive into the production space, which has been a growing trend in recent years.
What challenges will you be keeping your eye on in the coming years?
Nick: On the tax side of the entertainment space, there are a number of federal tax provisions that are about to expire, so we’ll see in the coming years whether those are renewed, or if new provisions are put in place. Entertainment professionals can work anywhere in the world these days, which has resulted in a variety of challenges as far as state and local taxes are concerned. Additionally, there is uncertainty in the market now, but we haven't seen any slowdown as far as our entertainment deals are concerned. There has been a lot of talk about what's going to happen with the streaming industry, since companies have been throwing a lot of capital into developing content. While that market has cooled down a bit, there is still a huge demand, so it will be interesting to see how content development evolves.
How does your background in transactional tax set you apart from other attorneys in the entertainment space?
Nick: Tax issues often arise in financing production and capitalization, and in compensation to entertainment professionals. Often, we'll have to structure a deal to achieve favorable tax treatment or avoid/mitigate a really bad tax result. Whenever money moves from one hand to another, I come in and analyze the tax consequences and determine whether there are better structuring alternatives. Once we're under the hood from the tax perspective, the overall transaction becomes transparent to us, and we can advise regarding business deal terms. I’ve been really fortunate to have the opportunity to be involved and gain a lot of knowledge of how these entertainment deals work instead of focusing strictly on tax matters, but what got my foot in the door in the first place is having that tax background.
Our entertainment attorneys work with many high-profile individuals, representatives, and talent-driven companies on a broad range of business transactions and entrepreneurial ventures. We encourage you to reach out to Nick Jacobus with any questions.