entertainment deals in scripted television

Entertainment Deals in Scripted Television

Segun Aluko, Esq.Entertainment Attorney

http://www.segunaluko.com/


WWW.SEGUNALUKO.COM 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”


Inverted Pyramid System of TV

Hits

Series

Pilot

Development

Pitches


Development

• Three part structure of Television–Network– Studio / Production Company– Talent


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


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)


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


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


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


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


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


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


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.


Talent Agreements

• Pilot Writer (Showrunner/Executive Producer)• Test Option (Actors)• Pilot Director


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


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



• 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



• 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


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


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”


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



• 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



• Name and Likeness (voice overs, commercials, bloopers, etc.)

• Perks (travel, dressing room/trailer, honey wagon for extras)


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)


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)


Production Contracts

• Production Services Agreements• Overall or Term Deals• TV Package Commission Deals


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?)


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


“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)


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


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


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?


Digital Media Distribution

• Webisodes• Online streaming• VODs – (AVOD, SVOD, EST, DTO, etcs)• IPTVs and OTTs – (Netflix, Hulu, Roku, Xbox)


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


Who am I?

• Entertainment Attorney• Other practice areas – business,

corporate, intellectual property and technology transactions

• Email: [email protected]• Phone: (626) 354-3791• URL:


mailto:[email protected]



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