Option agreements for film and TV – what to look out for?
A few months ago I wrote a blog post about option agreements for film and TV on the Raindance site: link here. On my own blog, I also made a list of the 10 things every party to an option agreement for film and tv rights needs to think about. In this article, I highlight some of the aspects both parties to an option agreement should be aware of before commencing the commercial and then legal negotiations of option agreements.
Pre-existing rights in an option agreement: Figure out which rights you need to secure
The Raindance article sets out which rights producers need to think about securing when - before! - they start negotiating an option agreement with the rights-holder. We live in an age of nearly endless monetisation possibilities for great content. A good idea, whether in book or script from, can easily end up on the cinema screens, reformatted as a series on one of the streamers - and why not think about developing a video game, too?
It’s all about the money: the option fee and purchase price in the option agreement explained
Most of the negotiations between the producer and the rights-holder revolve around who gets how much money and when. The Raindance article goes into more detail about the different types of payments that are typically negotiated as part of an option agreement. What I have found useful in helping producers and rights-holders agree an option agreement is to think about their ideal outcome and how best to get there. If a party to a negotiation asks for a 5% profit share, would they be happy with 3%? What’s the absolute worst position they would still be satisfied with? As long as each party is clear on what sort of outcome they would be happy with- and also what outcome they could live with, negotiating commercial terms won’t feel as threatening as it might otherwise do. It also means that both sides are more likely to walk away from the negotiations satisfied, which will make the future relationship of both parties a lot less contentious.
How and when is copyright transferred in film and TV?
One very important aspect of option agreements is the license of rights during the option periods and then, on the so-called “exercise” of the option, the further transfer of rights from the rights-holder to the producer. If you could like to dig a little deeper into copyright in the film and tv word and how it is typically transferred, then you could read more about it in this blog article of mine.
Need help drafting and negotiating your option agreement for film or TV? Get in touch!
After many years of negotiating option agreements for producers and rightsholders, as well as reviewing option agreements from the point of view of financiers, I have learned one thing: option agreements can be difficult to draft but even more difficult to negotiate. Each project is different, so experience is priceless in ensuring that you are getting a good deal. There are so many unknown variables that parties can easily get lots in the jungle of licences, assignments, rights and net profit participations.
I hope this has helped clarify the process a little - I also drafted a handy checklist or both parties to an option agreement to follow along during their negotiations. If you would like a copy of the checklist or if you have any further questions, please do get in touch with me. I’m here to help you through the jungle!