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Entertainment Deals in Scripted Television

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"Entertainment Deals in Scripted Television" is a presentation delivered on May 11, 2015 at the Artist Resource Center, North Hollywood. It describes various agreements and other business and legal issues encountered in scripted television and the role of the entertainment attorney.

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Entertainment Deals in Scripted Television

  1. 1. Entertainment Deals in Scripted Television Segun Aluko, Esq. Entertainment Attorney http://www.segunaluko.com/ WWW.SEGUNALUKO.COM 1
  2. 2. Rights • The most important concept of the entertainment industry • It can be developed in-house or commissioned as work-for-hire • It can be acquired through the outside “Pitch Process” WWW.SEGUNALUKO.COM 2
  3. 3. Inverted Pyramid System of TV WWW.SEGUNALUKO.COM 3 Hits Series Pilot Development Pitches
  4. 4. Development • Three part structure of Television –Network –Studio / Production Company –Talent WWW.SEGUNALUKO.COM 4
  5. 5. Cycles (broadcast network) • Development season – Aug – Jan • Pilot season – Jan – April • Upfront – May (ad slots sold upfront) • Staffing – May – June (for ads that are not taken upfront) • Fall – (Premieres) • Mid Seasons • Concept is a continuous production cycle for cable networks WWW.SEGUNALUKO.COM 5
  6. 6. Materials Acquisition Process • Options (X against Y) – typically for 6 months to a year • Work for hire (contract or conduct) – e.g. writing, consulting or production services • Licensing (renting a portion of a material without owning or optioning) – e.g. music, TV show, image, video clip • Public domain – e.g. facts, news item, discoveries (note famous people’s right of publicity/privacy) WWW.SEGUNALUKO.COM 6
  7. 7. Why do you need a lawyer? • Pre-Litigation Counseling – copyright and trademark infringements, conflict of interest, waivers, breach of contract (implied in the pitch process), proper chain of title – Desny v. Wilder • Issue-spotting • Paperwork / Agreements • Relationships • Clearances WWW.SEGUNALUKO.COM 7
  8. 8. Contracts / Agreements • Literary Rights Option/Purchase • Life Story Rights • Program License Agreement • Talent Agreements – (Test Options and others, overall or term deals) • Production Contracts • Co-Production/ Split Rights Model WWW.SEGUNALUKO.COM 8
  9. 9. Literary Right Option/Purchase • What is an Option? – exclusive right to keep a piece of entertainment product with an opportunity to purchase at an increased price • Option fee – (may be free but WGA minimum fee required for members) • Option period / extension • Purchase Price • Contingent Compensation WWW.SEGUNALUKO.COM 9
  10. 10. Literary Right Option/Purchase cont’d • Royalties • Credits • Reserved v. Separate Rights – (WGA concept automatically reserved for writer if based on original work of author) • Holdbacks / Blackouts • Derivative productions • Reversion / Turnaround WWW.SEGUNALUKO.COM 10
  11. 11. Life Story Rights • No recognized class under the law; not an IP right • Basically an insurance policy waiving right to sue; so not necessary • Option v. Acquisition? • Length of time – perpetual or term? • Scope of right – certain rights or all rights? • Enforceability • Consulting arrangement WWW.SEGUNALUKO.COM 11
  12. 12. Program License Agreements • History – “Fin/Syn” rule aka Deficit Financing Model – Studio owns/produces show for TV; Network (ABC, CBS & NBC) only gets right to broadcast and exploit the show – 4 or 4 ½ license rule • Types of Program License Agreements – Traditional Deficit Financing / Agreement – Co-Production / Co Financing Model WWW.SEGUNALUKO.COM 12
  13. 13. Program License Agreements – Deal points • Steps (Pilot and Series – up to 5 or 6 years license options) • Order pattern (series renewed or strip of episodes) • Repeat pattern / Fees • Holdbacks (restriction in order to exploit syndication rights) • Rights across traditional and digital media platforms (VOD, EST and IPTV) • Others – Bonuses, Renewals, Royalties, etc. WWW.SEGUNALUKO.COM 13
  14. 14. Talent Agreements • Pilot Writer (Showrunner/Executive Producer) • Test Option (Actors) • Pilot Director WWW.SEGUNALUKO.COM 14
  15. 15. Pilot Writer (Showrunner/Executive Producer) • Who is a Showrunner? – writer and creator of the show aka Chief Creative Officer (CCO) • TV writer / showrunner is to a TV show as a director is to a movie WWW.SEGUNALUKO.COM 15
  16. 16. Pilot Writer cont’d • Pilot writing fees / steps – (WGA 5 – steps process and minimums) – Story (30%) – prose of a script e.g. manuscript – Teleplay (40%) – like a shorter version of screenplay for movies – 1st Rewrite (10%) – 2nd Rewrite (10%) – Polish (10%) • Rewrite and Polish are optional and it could be just one rewrite WWW.SEGUNALUKO.COM 16
  17. 17. Pilot Writer cont’d • Pilot Option • Pilot Exec. Producing Services / Fees • Series writing and EP services / fees – – first and subsequent cycles and additional eps • Producer Credit – EP, Co-Exec Producer, Supervising Producer, Producer, Co-Producer, Exec Story Editor, Story Editor • Note Writer performing in additional capacity – Art. 14 K, WGA MBA WWW.SEGUNALUKO.COM 17
  18. 18. Pilot Writer cont’d • Locks / Reduction to Consultant (employment guarantee) – services on “one-for-one basis” • Royalties (reducible) – pilot writer gets royalties for the life of show; episodic writer gets WGA residual • Backend (reducible) – e.g. if show makes it to syndication • Derivative / Subsequent Productions – First Opp. / Passives / “100-50-50” rule WWW.SEGUNALUKO.COM 18
  19. 19. How about other writers? • Staff writers (hired at the lowest level) • Episodic writers (freelance writers assigned per WGA) – Freelance Writer Agreement • Overall/ Term Deals • Non-writing showrunners WWW.SEGUNALUKO.COM 19
  20. 20. Test Options • Test Option is conditional – actor is auditioning for a role • Testing season (February – April) • Test Mechanics – test time, decision time and pick-up • Term (pilot and series – usually 7 years) • Salary / Increases (Guaranteed/Contingent) • Credit (required per SAG-AFTRA; form is negotiable) – “Vanity Credit” WWW.SEGUNALUKO.COM 20
  21. 21. Test Option cont’d • Subject to Close of License Fee – no pilot fee until studio gets license • “Pre-Empts” – if actor gets on another show, s/he becomes “pay or play” or “pay and play” • Pick-up dates – helps studio avoid guaranteed compensation • Guaranteed eps – – SAG-AFTRA – at least 6 or 7 eps on “pay or play” basis; – Studio may increase to 13 eps to make actor exclusive or get SAG benefits WWW.SEGUNALUKO.COM 21
  22. 22. Test Option cont’d • Fractional Guaranteed Eps (Unique to TV) – e.g. 7/13th (for 1st season); 10/22nd (for 2nd Season); 7/13th ep guarantee of 10 eps will be 5.3 rounded up as 6 eps • Guaranteed eps may be cut back for creative reasons • Exclusivity – no other leading role on TV; limited to 3 guest starring roles every quarter; no hosting on TV, etc. – Not applicable to movies and commercials WWW.SEGUNALUKO.COM 22
  23. 23. Test Option cont’d • Name and Likeness (voice overs, commercials, bloopers, etc.) • Perks (travel, dressing room/trailer, honey wagon for extras) WWW.SEGUNALUKO.COM 23
  24. 24. Pilot Directors • The biggest ticket in Hollywood! Why? – If show is picked up, pilot director gets royalties for the entire series • Pilot Directing Fee (minimums per DGA) • Pilot Producing Fee (if also serving as producer) • Series Deal (to be retained for the entire show) • Series or Minimum Episodes directing (at minimum rate; separate contract) WWW.SEGUNALUKO.COM 24
  25. 25. Pilot Directors • Locks / Reduction to Consultant • Series Scales bonus (reducible if there is second director but very rare) • Royalties (reducible if credit is shared) • Backend (e.g. syndication) • Credits (pilot/series producing credit, incl. prod co) • Subsequent Prod (first opp. / passive) WWW.SEGUNALUKO.COM 25
  26. 26. Production Contracts • Production Services Agreements • Overall or Term Deals • TV Package Commission Deals WWW.SEGUNALUKO.COM 26
  27. 27. Production Services Agreement • Different from License or Co-Production • Network hires studio/prod co. to produce on work-for-hire basis • Fees and calculations based on budget (usu. Flat fee; e.g. 10% of Prod budget /per eps) • Development steps/ Deliverables • Presentation / Pilot Options • Series Option • Seasons (annually or semi-annually?) WWW.SEGUNALUKO.COM 27
  28. 28. Production Services Agreement cont’d • Underages / Overages • Ownership / Distribution • Exclusivity • Credits (producer’s credit and prod co.’s logo) • Profits / bonuses • Product integration / placement • Timelines and milestones • Control / legal issues WWW.SEGUNALUKO.COM 28
  29. 29. “Overall” or Term Deals • Usually for writers or artists hired for a period solely for the network • Description / Guarantee Concept (buy out of exclusivity for certain genre – TV or feature deal) • Credited earnings / “earning out” (a weekly check) • Office / Overhead • Future Options / Ties • Back ends (advances recouped against royalties and bonuses) WWW.SEGUNALUKO.COM 29
  30. 30. TV Package Deal • Talent Agency package TV by attaching talent and pitching to network • Original / Use • Fees / Calculations – – 3/3/10 for reality TV and 5/5/10 for scripted – budget/license fee; deferred fee payable at net profit; back end participation (MAGR) • NB for talent – may not be good for talent’s career ‘cos talent is tied to the package WWW.SEGUNALUKO.COM 30
  31. 31. Co-Production / Split Rights Model • Rights / Ownership spilt • Distribution control split • Sharing / pooling of revenue • Possible deficit “buy-in” deals (upfront advance fee in return for right to distribute) • Possible control / partnership issues WWW.SEGUNALUKO.COM 31
  32. 32. Role of the Production Attorney • Intellectual Property and Business Law issues • Production Documentation – location agreements, E&O insurance, personal releases, rentals and leases • Clearances – visual materials, clips and union materials (e.g., music, audio track), reuse, music (synch/performance license) • Guild / Union issues – is it a union prod? Is the Prod Co. a union signatory? WWW.SEGUNALUKO.COM 32
  33. 33. Digital Media Distribution • Webisodes • Online streaming • VODs – (AVOD, SVOD, EST, DTO, etcs) • IPTVs and OTTs – (Netflix, Hulu, Roku, Xbox) WWW.SEGUNALUKO.COM 33
  34. 34. Much Ado about Webisodes • Same legal issues as in traditional TV production • Although a small project, any other legal and business issues may arise • Is it a marketing or stand-alone original work? • At least get clearances from talent • Have a production attorney review all contracts and advise on issues WWW.SEGUNALUKO.COM 34
  35. 35. Who am I? • Entertainment Attorney • Other practice areas – business, corporate, intellectual property and technology transactions • Email: segun@segunaluko.com • Phone: (626) 354-3791 • URL: http://www.segunaluko.com/ WWW.SEGUNALUKO.COM 35
  36. 36. Thank you for listening WWW.SEGUNALUKO.COM 36

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