by Dr. Boyce Watkins
One of the most interesting things to have happened this month is the unexpected leak of very sensitive messages being shared among executives at Sony Studios. One of their biggest money makers is comedian Kevin Hart, who has a multi-picture deal with the studio netting him millions and the studio even more.
Their understanding, it seems, had been that Hart’s massive social media presence would come as part of the $3 million they’d already agreed to pay him for the film. Apparently, that’s not the case. Here’s what Mr. Culpepper had to say about Hart’s demand for more money:
It’s not as if we paid him 3M and 4M respectively for his last 2 films thinking he might be nominated. We paid for his ability to open a film which included his social media savvy. I feel like this is something that should be negotiated going into the film as opposed to after the fact. It feels tantamount to buying a car and then upon picking it up being told that the engine will cost extra. I’m tempted to suggest we call his bluff. If he doesn’t do his normal routine, his film will not open as well and his brand will appear diminished and he will- in fact – be f*cking himself because we have his next 2 immediate films. And then there’s the social media precedent we’re setting…especially in light of the fact that Channing is at the same agency.Sent from my iPhone
Financial Juneteenth lessons from this story:
On one hand, some might applaud Hart’s boldness in negotiation. His social media presence is massive and valuable. Additionally, Sony is going to earn far more than Hart on the film, and most of Kevin’s projects have been quite successful.
On the other hand, some might say that this could be considered bad faith negotiation, because if things don’t work out, the studio is likely to remember that you played hard ball earlier in the game. Gaining a reputatation as someone who is difficult to work with can cost you in the long-term. Given that studios are taking a huge risk when they put out a film, Hart’s team may have been able to negotiate something other than money in exchange for the tweets.
However, the onus lies on Sony executives, who probably should have added a precondition to the deal that Kevin give them so many sponsored tweets in order to promote the project (Culpepper mentions this, but doesn’t state whether or not this is part of the original contract – when I negotiated to be a part of a film, it was made clear that I would use my social media presence to promote the project). The reason that Culpepper felt compelled to called Kevin’s bluff is because they are both on the same ship and if that ship sinks, Kevin’s career will sink with it. So, it might behoove Kevin to do all he can to ensure that his films are successful – sometimes, we can be so determined to prove a point that we end up screwing ourselves as a result.
The concept of Moral Hazard in Finance speaks to the tone of this negotation. Moral Hazard basically talks about what happens in a negotiation before and after you sign on the dotted line. If Sony’s people had a concern about Hart tweeting the film to promote it, they should have realized that once Kevin signed the contract, an agreement would already be in place. If that agreement doesn’t specifically include tweets, then Kevin could easily ask for more money in order to tweet the film. To say that this was like “being told that the engine would cost extra” might mean that Culpepper was a victim of not considering the moral hazard of signing a contract that does not specifically designate what Kevin Hart is and is not supposed to do.
Social media platforms have tremendous value, and are literally worth millions of dollars. Not only are they lucrative, but they are powerful in educating/influencing the masses. Unfortunately, too many celebrities are trained to use their social media platforms to take narcissistic selfies or make money for themselves, while too few actually use these platforms to institute change, upliftment and education of their people. This is unfortunate.
Dr Boyce Watkins is a Finance Professor and author of the book, “Black American Money.” To have Dr Watkins’ commentary delivered to your email, please click here.