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)
• 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
• Issue-spotting
• Paperwork / Agreements
• Relationships
• Clearances
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 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

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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
• 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

• 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

• 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
• 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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