Network Produced Game Broadcasts for Itself, Not Team

[ Editor's Note: Clarifying ILM 201545018.]

Third Party Communication: None

LEGEND:

Network is a producer of television programming as part of its business, and seeks out events of the type offered by Taxpayer to make programming for its own stations. Network entered into the Contract to make the Game Broadcasts for itself. A review of the facts indicates that Network controlled most aspects of the creative production of the Game Broadcasts. First, Network had editorial control over how to film the game, and how to incorporate that film into coherent and complex broadcasts that were consistent with Network standards. For example, Network had largely unfettered discretion to decide which of several camera feeds it would broadcast at any point during the game, when and where to zoom in on players, umpires, cheerleaders, coaches, etc., when to show a replay (in slow or real-time motion), which players to focus on, and when to pan to the live audience or the sidelines. Network also decided whether and when to add graphics, sound effects and music. Network also provided the commentators who described events on the field and provided background, statistical information and color commentary. Network decided when to use various technologies such as the SkyCam. All of these activities were part of creating a unique Game Broadcast, which involved a much different experience than simply recording a game broadcast for Taxpayer. Moreover, all of these activities were largely within the discretion of Network.

Further, Network provided and controlled all equipment essential to the Game Broadcasts and a game day staff of b employees and freelance contractors. Those employees were responsible for all aspects of production from setting up and testing the equipment, to recording the games, producing the game feeds, monitoring the broadcasts, and tearing down the production equipment. Network's employees included a director, who was responsible for calling out the camera shots, a technical director who controlled the cameras, and a producer, who decided on whether and when to show replays and commercials. Network's producer was in charge of the particular broadcast.

Network also brought in support staff, graphics staff, and audio staff. About c Network employees worked inside the broadcasting trucks. The remaining staff worked at the stadiums. Network's graphics team prepared thousands of graphics to be shown at specific times throughout a broadcast. Based on these facts, Network, not Taxpayer, is the producer of the Game Broadcasts on its own behalf and not pursuant to a contract for purposes of §§ 1.199-3(f)(1) and 1.199-3(k)(8). Accordingly, all gross receipts that Taxpayer derived from the Contract are non-DPGR as the gross receipts cannot be considered derived from a disposition of qualified film produced by Taxpayer.

However, if the IRS were to determine that Network produced the Game Broadcasts pursuant to a contract for purposes of §§ 1.199-3(f)(1) and 1.199-3(k)(8) then a benefits and burdens of ownership analysis would be required.

Please call David Selig at 202-317-4137 if you have any further questions.