Stubbs Alderton & Markiles, LLP (SA&M) represented client Funny Or Die (FOD) in the sale of its branded content studio to Roku, and subsequently in the sale of the company to Henry R. Muñoz III, a prominent business leader and philanthropist.

Funny Or Die, an Emmy Award-winning leader in comedy entertainment, has expanded into a full-service video website and television production company that is now the number-one comedy brand across digital, social, and mobile channels.   

The sale consists of the Funny Or Die content library, original production slate, and all social media assets that include over 40 million followers. LionTree served as the financial advisor throughout the duration of the deal, while SA&M worked with Funny Or Die as its legal advisor. The deal demonstrates the firm’s commitment to providing clients with top-tier transactional services in the entertainment and media industries.  

Attorneys working on the transaction included Greg Akselrud, Madeleine Barenholtz and Brent Armitage.

The Internet, Digital Media & Entertainment Practice Group advises individuals and companies across all aspects of their corporate, strategic and licensing businesses, including in connection with a full range of mergers, acquisitions, dispositions, joint ventures and other strategic transactions. For more information about the Internet, Digital Media & Entertainment practice, contact Greg Akselrud at .

Stubbs Alderton & Markiles' client  HouseCanary, a real estate technology company offering the most accurate home valuations, has announced that it has raised $65 million in a Series C funding round with help from a group founded by billionaire and former U.S. Secretary of Commerce Penny Pritzker. Including this Series C round, HouseCanary has raised a total of $130 million in funding.

To read the full article visit Law 360. 

Stubbs Alderton attorneys representing in this transaction were Greg Akselrud and Caroline Cherkassky.

About HouseCanary
Founded in 2014, their mission is to help people make better real estate decisions. Built on a foundation of great data, powerful models and predictive analytics, the HouseCanary platform aggregates millions of data elements, including more than four decades of property data and a rapidly expanding arsenal of proprietary data calculations and analytics, to accurately define and forecast values and market influences. The company is headquartered in San Francisco. www.housecanary.com

For more information about our Internet, Digital Media & Entertainment practice, contact Greg Akselrud at 

Greg Akselrud

Q.       I want to run a sweepstakes, why are there so many restrictions?

A.   Sweepstakes and contests offer companies a relatively inexpensive, but effective, way to market their products and services.  However, state laws have been passed to, among other things, prevent companies from operating an illegal lottery (entry into a random drawing for consideration) and to prevent false advertising.  As such, each state has statutes addressing sweepstakes/contests and advertising requirements.

Q.     What is the difference between a sweepstakes and a contest?

A.   A sweepstakes, like a lottery, is a random drawing.  The key difference, however, in operating a sweepstakes (and avoiding the operation of an illegal lottery) is consideration. To properly run a sweepstakes, a company must eliminate consideration from any entry requirement.  As such, a company must provide a free form of entry – at least as an alternative.  A contest is essentially a skill-based game or competition.   The ability to win a contest is not by random drawing, like in a sweepstakes, but is rather based on skill-based judging criteria set forth in advance.

Q.     Do I have to include all the fine print?

A.   An essential part of operating any sweepstakes or contest is to have a proper set of official rules.  These rules are designed to address the many state by state regulations of sweepstakes and contests (and advertising issues).  They also clearly set forth key information – such as, among other things, the fact that no purchase is necessary to enter or win, the method of entry (and collection of personal information), the eligibility requirements, the period of time that the promotion is offered, the manner in which winners are selected, and information about prizes and their value.  Of course, the official rules also address some of the key legal issues – like obtaining rights to use the winner’s name once they win, limitations of liability, and dispute resolution.  Certain states have registration and bonding requirements so it is also important to address whether residents of those states should be eligible (and if so, whether the company is complying with those requirements).  Also, if a promotion is intended to be international, countries regulate sweepstakes and contests differently, which will of course affect what is stated in the official rules.

Greg Akselrud is a founder and partner of the Firm. He chair’s the Firm’s Internet, New Media and Entertainment practice group. Greg advises a wide range of public and private clients across a number of industries, including companies in the entertainment, Internet, technology, and apparel industries. Greg’s practice involves providing advice in connection with general corporate matters (including company formation, stock incentive plans, executive employment agreements, and various commercial and business contracts), venture capital and angel financings, mergers and acquisitions (including public reverse mergers), private equity and debt securities offerings, public offerings, federal and state securities law reporting requirements, intellectual property strategic counseling, Internet and e-commerce matters, and entertainment, content and digital media transactional matters.

Do you have a question for one of our attorneys?  Send your questions to to be featured in future 3 Questions columns.

Greg Akselrud, Chair of the Internet, New Media & Entertainment Practice Group at Stubbs Alderton & Markiles, LLP discusses the difference between co-marketing and a joint venture, and the benefits and risks involved with each.

______________________________________

Co-marketing arrangements present a wealth of opportunities to expand your business. They allow business owners to expand distribution and revenue while leveraging another’s strengths, all while providing a better offering to users.  But at a certain point, a longer term initiative presents itself - the joint venture.  Joint ventures offer many advantages to traditional co-marketing arrangements, but also bring significant disadvantages and risks.

What is co-marketing?

Co-marketing takes many forms.  When online, co-marketing can mean two parties marketing each other’s products and services, co-branding a single product or service under a combined brand or using each party’s trademarks, and bundling two pieces of software.  It is usually documented in the form of an agreement between the two parties.

What is a joint venture?

A joint venture is a form of partnership (not necessarily in the legal sense) where two or more parties agree to undertake a business, or to operate a product or service, or in the co-marketing sense, to co-market their respective products and services.  A joint venture can be documented by virtue of an agreement between parties, a more formal formation of a partnership or the formation of a limited liability company or other entity the parties determine to use to undertake the business, or to operate or co-market one or more products or services.  For example, Hulu is a joint venture of NBC, Fox and Disney, and Vevo is a joint venture of Sony Music, Universal Music and Abu Dhabi Media (to create a Hulu for music videos!).

What are some of the key differences?

• Time – While co-marketing arrangements can be long-term commitments, they are more often structured as shorter term agreements (1-3 years) – so that the parties can facilitate key initiatives but also have an exit strategy if things are not working out.  Joint ventures, on the other hand, are by their very nature long-term arrangements.  They are an extended partnership between or among parties.

• Commitment – Co-marketing arrangements require both parties to commit to marketing and distribution initiatives (both of which require financial commitments).  Joint ventures, however, often take a further step in that they require one or more of the joint venture partners to commit real capital to form and operate the business, obtain office space for operations, and hire employees (among other things).

• Management – Co-marketing arrangements have both parties contributing time and resources, but it is typically through their respective company’s efforts.  A joint venture often appoints management from one or all of the joint venturers, or independent management in many cases.  Sometimes the parties appoint a board comprising of all joint venturers, while only one party manages the enterprise.  In all events, through such a combined management structure, among other factors, the joint venture takes on a life of its own.

• Building Value – Co-marketing arrangements go far in building individual value for both parties.  With a joint venture, the parties can actually build value, equity value or otherwise, in a third party – the joint venture.

What are some of the advantages of forming a joint venture vs entering into a co-marketing agreement?

• Additional Resources – In many cases, joint ventures require one or more parties to invest real capital to form the venture and keep it going, including funding its initial losses from operations.  Sharing these obligations allows a smaller joint venturer to have some of its operational costs subsidized by its larger partner.  This often happens in situations when a larger, well-capitalized partner desires to get in business with the smaller partner that has the “next best thing”.  In a co-marketing situation, the larger partner may be undertaking activities that ultimately help the smaller partner thrive (such as distribution or marketing of its software or website), but they may not be contributing real capital.

• Market Entry – In many territories outside the United States, it is extraordinarily difficult to enter a market without venturing with a local partner.  In those cases, a co-marketing relationship may not work for legal reasons, or may not provide adequate incentive for the local partner to be involved.  But once achieved, a territory-based joint venture can accomplish international market expansion that would have been otherwise unachievable or at a minimum, cost prohibitive. Territories in Asia (e.g., China) are typical for these forms of joint ventures.

• Equity Value – As mentioned above, a successful joint venture can not only have value as a stand-alone enterprise, but can also increase the value of its individual partners.  Additionally, when a joint venture is highly reliant on one of the partners and thereby mostly building value in that partner, there may be opportunities for the others to tie their equity in the joint venture to equity in the key venture partner (e.g. “put” rights for their JV equity in exchange for securities of the key partner) – thereby ensuring that a successful liquidity event for the key partner is also beneficial to the other joint venturers.  A co-marketing arrangement will not have such an arrangement in most cases.

What are some of the disadvantages of forming a joint venture vs. entering into a co-marketing agreement?

• Loss of Control – As described above, one of the key features of a JV is the role of management, and the necessary participation in management by all joint venturers.  The result of joint management is in many cases a loss of control.  Whereas parties can direct their own activities in co-branding arrangements, subject only to their contractual obligations, in a JV, each partner must take into consideration the views of the others, and in some cases, one partner is dependent on the other (for financial support or otherwise).

• Unwinding the JV is Difficult – While co-branding arrangements are short term in many cases, joint ventures are often times permanent.  The JV entails the conscious decision of joint venturers to enter a market or launch a product or service together – hand in hand.  If it doesn’t work out, divorce is often messy. Joint ventures necessarily have to consider what happens to office space and users, as an example, and also to other assets and liabilities (including to other joint venturers).  This unwind is complicated and often times expensive to the extent that a buy-out must be accomplished (of one JV partner by another).

• No Exit Strategy (sometimes) – In some cases, JV partners find themselves stuck within the joint venture.  In the absence of outright breach, they may not have contemplated an exit from the JV under all circumstances.  Accordingly, even if successful, they can end up stuck.  For example, in the absence of an ability to terminate on the change of control of another joint venturer, or to participate in that venturer’s transaction, the other partners may find themselves stuck in a JV with a partner they did not expect or desire (e.g., the acquirer of the other joint venturer).

Ultimately, while their formation is more complicated than the standard co-marketing arrangement, and requires significant analysis, joint ventures can bring extraordinary value to the individual joint venture partners – particularly in co-marketing-focused arrangements – and are worth exploring.

 ________________

 For more information regarding our Internet, New Media & Entertainment Practice Group, please contact Greg Akselrud at gakselrud@stubbsalderton.com or follow him on  Twitter @gregakselrud.