Entertainment Deals in
Scripted Television
Segun Aluko, Esq.
Entertainment Attorney
http://www.segunaluko.com/
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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”
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Inverted Pyramid System of TV
Pitches
Development
Pilot
Series
Hits
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Development
• Three part structure of Television
– Network
– Studio / Production Company
– Talent
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Cycles (broadcast network)
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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
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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)
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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
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Issue-spotting
Paperwork / Agreements
Relationships
Clearances
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Contracts / Agreements
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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
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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
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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
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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
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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
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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.
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Talent Agreements
• Pilot Writer (Showrunner/Executive Producer)
• Test Option (Actors)
• Pilot Director
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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
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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
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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
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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
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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
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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”
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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
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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
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Test Option cont’d
• Name and Likeness (voice overs, commercials,
bloopers, etc.)
• Perks (travel, dressing room/trailer, honey
wagon for extras)
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Pilot Directors
• The biggest ticket in Hollywood! Why?
– If show is picked up, pilot director gets royalties for
the entire series
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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)
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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)
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Production Contracts
• Production Services Agreements
• Overall or Term Deals
• TV Package Commission Deals
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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?)
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Production Services Agreement
cont’d
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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
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“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)
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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
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Co-Production / Split Rights
Model
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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
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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?
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Digital Media Distribution
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Webisodes
Online streaming
VODs – (AVOD, SVOD, EST, DTO, etcs)
IPTVs and OTTs – (Netflix, Hulu, Roku, Xbox)
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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
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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/
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Thank you for listening
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