Pre-production / Production / Post-production

What Are Legal Fundamentals of Motion Picture Making? 

Wednesday, October 12, 2011 by Doron F. Eghbali From legal perspective, making a motion picture is esoteric, convoluted and fraught with peril. The process of movie making encompasses numerous deals and consequent contracts. To properly and prudently effectuate such contracts parties involved have to contend with plethora of issues ranging from acquisition of rights, preproduction, financing and production to distribution. Let us in some depth delve into movie making process from the legal perspective.

SOME LEGAL BASICS OF THE MOVIE MAKING PROCESS

First, the rights to the underlying story to be portrayed in the movie should be acquired. Then, the employment agreements for hiring of writers, directors, actors, performers and producers to create the script and parlay such creation into a finished product. Afterward, the production agreements associated with financing and producing the picture are drawn up. Fourth, the distribution agreements are crafted to distribute the picture in various media.

The following breaks down each part briefly discussed here and seeks to shed further light on process of movie making from the legal perspective:

1. ACQUISITION OF RIGHTS

The first step in movie-making process involves acquiring rights to an original screenplay or underlying property such as a book, life story, treatment, or an idea. To this end, usually, the Production company and the author or owner of the underlying property enter into an Option Agreement. Then, a rights clearance analysis and due diligence of the literary property to be acquired must be conducted. In fact, many motion pictures are not solely based on an original screenplay or literary properties. Motion pictures often start by pitching i.e. a verbal synopsis of the subject by the author to a studio or production company. This literary search and due diligence often involves a copyright search especially if the underlying property was not specifically crafted for the motion picture.

To properly effectuate the Acquisition of Rights, numerous agreements need to be drawn up ranging from Option/Purchase Agreement for the original screenplay or preexisting literary property to Writing Services Agreements for adaptations or revisions and the license and music of the motion picture. In addition, a title clearance may need to be acquired which may require a title search and a subsequent registration of the title.

In addition, even if the script has already been written for the particular motion picture, it has to be reviewed and cleared from both legal and factual perspectives. For clearance, there might be a need to obtain various releases for products, names or locations used in the script. The worst case scenario would be to alter the script if certain releases are impossible or very hard to obtain.

2. PREPRODUCTION

After Acquisition of Rights is completed, there are certain steps before production. Such Preproduction steps in making a motion picture aside from procuring some main cast members encompass:

• Crafting a Production Schedule: Production schedule spans the periods from Pre-Pre production to preproduction to post-production. The Pre-Pre Production is a period, as the name denotes, referring to the period even before preproduction. The latter period is salient as it might avoid triggering contractual obligations accompanying preproduction period.
• Crafting and Diligently Analyzing a Production Budget
• Procuring a Completion Bond: Completion Bond could be integral to the success or failure of a motion picture given the plethora of risks a picture is fraught with. A Completion Bond fundamentally mitigates investors and banks concerns over fears of budget overruns and abandonment, among others. A Bond Completion, generally, guarantees investors and banks that: (1) Producers’ will deliver the picture in compliance with budget, script time and financial guidelines approved by investors and banks. (2) Producers will complete the picture despite the overruns and the guarantors will advance the needed sums. (3) Producers’ abandonment of the picture won’t culminate in financial loss for investors and banks.
• Procuring General Insurance: Insurance for the picture not only covers general liability and property damage BUT ALSO errors and omissions insurance insuring any liabilities deriving from the literary material on which the motion picture is predicated upon.
• Procuring Clearance of Names, Locations from Property Owners: If the motion picture is using ACTUAL names of locations, properties, etc. then producers need to procure appropriate clearances, if possible, or change the names.
• Procuring Necessary Contracts for Production Facility
• Procuring Necessary Contracts for Physical Components Used in the Production
• Procuring Copyrights of the Picture and Its Components Such As Music

3. FINANCING

Financing is the life blood of motion picture. In fact, unsurprisingly, projects bereft of financing or sufficient financing is doomed to failure. Financing could be procured through various channels depending upon the stature and caliber of participants most specifically producers, director and actor, possibly writers. If a large studio does not bankroll the picture, other funding sources must be sought and procures including but not limited to: Production-Financing-Distribution Agreements whereby the investor not only invests in the motion picture but also becomes involved in technical and production aspects of the project and wields relatively substantial approval controls over the budget. It is possible to secure investments from limited partners after the productions company complies with applicable securities regulations.

SALIENT CAVEAT

This article NEITHER supplants NOR supplements the esoteric breadth of the subject matter delineated here. In fact, this article, ONLY, provides a rudimentary restricted analysis of such salient rarefied legal topic.

Some BASICS of Rights Clearance in Entertainment Deals 

Thursday, May 5, 2011 by Doron F. Eghbali

Clearing world rights of an underlying source for translation, adaptation or republication is invariably a cumbersome complicated lengthy process. Clearing rights serves a very important purpose in entertainment transactions, as such rights supplant and serve as future sources of income. Hence, it behooves entertainment participants to ascertain their salience and take proper methodical steps to implement them.

SALIENCE OF RIGHTS CLEARANCE

Clearing rights is a sine qua non to financing and distribution of any legitimate entertainment-related product. In fact, such rights are as lofty, worthy and valuable as property rights and, as indicated, serve as future sources of income for their rightful owners.

SALIENCE OF DETERMINING WHICH RIGHTS TO BE CLEARED

Most probably, it is rather financially and practically impossible to clear world rights of an entertainment product for all uses thinkable, imaginable and available. Hence, it is incumbent to first ascertain what the available budget for rights licensing is and the urgency expected to implement such rights clearances.

Most probably, the rights to be cleared are the ones needed to generate sufficient income to recover investment and be profitable, too.

SALIENCE OF REPUBLICATION RIGHTS AND ADAPTATION RIGHTS

Most generally, clearance of rights could be divided into two major groups:

1. REPUBLICATION RIGHTS

Republication rights encompass rights of reproduction, display and publication where the underlying source material is reused in the form of the original work.

CLEARING RIGHTS FOR REPUBLICATION

Generally, clearing rights for republication relatively involves less cumbersome procedures. Often, the publisher through contractual agreements aspire to share in the proceeds of subsidiary-rights licenses for the underlying work it owns. It is imperative to note republication of the underlying work PER SE does NOT create a new copyrightable product. The latter point has some exceptions including but not limited to possible copyrights for: organization, layout, epilogue, design or a new preface, among other things.

Nevertheless, it is imperative to still review the subsidiary rights previously granted to ensure no violation or conflict with previous licenses.

2. ADAPTATION RIGHTS

Adaptation rights encompass the transfer of rights from the underlying source material to a totally new work where the new work possesses its own rights to copyright protection.

CLEARING RIGHTS FOR ADAPTATION 

Clearing rights for adaptation is relatively much more complicated cumbersome and lengthy as a new work has its own copyrightable rights and privileges.  Therefore, for such rights, it is VITAL to establish. among other things:

• Whether the rights to adapt for the underlying work is available
• Whether the rights to adapt conflict with other subsidiary rights already granted to others in the underlying work.

SALIENT NOTE

This article presents a very rudimentary general understanding of such complicated subject matter.

What Does TV Production Encompass? Friday, April 8, 2011 by Doron F. Eghbali
Film and TV production are rather largely dissimilar. Let us explore such esoteric variations in some detail.

SOME BACKGROUND ON TV PRODUCTION

Film production, arguably and relatively, embraces a larger number of independent producers compared with Network Television, often dominated with large studios and a limited number of large independent producers. Even, those few independent producers supplying programming to Network Television have production-financing deals with larger studios or larger independents. In fact, unfortunately, industry demands such symbiosis because of the costs involved in producing original/new programming. Such costs surpass first-run license fees and such producers MUST accomplish long runs spanning at least 22-episode seasons to provide enough programming to run in a 5-episode week and become profitable through foreign sales and reruns.

Trust our Professional Production Attorneys in Beverly Hills and Los Angeles.

SOME ESOTERIC MECHANISMS IN TV PRODUCTIONS

DEFICIT FINANCING

Deficit financing is probably the most salient aspect of Network TV production since it determines if someone can or cannot produce. To understand deficit financing, it is useful to understand how prime-time series are financed and created.

The Federal Communications Commission (the “FCC”) has severely restricted the ability of TV Networks in the Network’s control of and financial interest in Network Programming, to foster a relatively more competitive environment. This FCC restriction has culminated in the fact that most prime-time series are not owned by TV Networks, but licensed from rather large independent producers.

Now, the way TV Networks pay for prime-time series to such independent producers is fascinating and daunting:

1. TV Networks, to make their programs more attractive, require independent producers to budget each hour of a new series more than $1.1 to 1.3 million.
2. TV Networks pay a starting license fee of around $800,000 to $900,000.
3. TV Networks payment arrangement, thus, creates anywhere between $300,000 to $500,000 or more budget deficit per episode for TV producers.

HOW COULD INDEPENDENT PRODUCERS RECOUP THE BUDGET DIFFERENCE, IF ANY? 

Now, the question arises how could relatively large independent producers recoup their money if it costs them to produce each episode around $1.3 million and receive only $900,000? The answer is as elusive as the money since most producers could recoup by having a repository of at least 50 to 70 episodes (22 episodes per season for three to four years of syndication). Nonetheless such recoupment strategy is fraught with perils since:

1. Possibly, TV Networks do not renew prime-time series beyond pilot let alone the second season.
2. Possibly, even if successful on TV Networks, the series are not necessarily successful upon syndication.
3. Possibly, even if successful on TV Network and syndication, it takes at least several years after the series were created for it to become profitable.

CAVEATS

Hence, given this rather daunting TV Production economics already delineated, the following caveats are worth considering:

• It is incumbent on TV producers to be large, well heeled and diversified. Such TV producers must be able to front the whole money required for production in the hopes of recouping the deficit with some reasonable yields in foreseeable future.
• It is incumbent on TV producers to have a balanced portfolio of programming. In other words, such portfolio diversification should encompass one or more prime-time series. It is ideal, not always feasible or foreseeable, to have a mix of programs some in syndication yielding profits, others in renewals on Network TV, and some in development and pilot stages.
• It is incumbent on TV producers to take note of two evolving trends. First, the ever increasing number of new programming channels COMBINED with new media to broadcast and monetize TV programming, is revolutionizing TV production market and economics. Second, Reality TV (unscripted TV) often involves different economics as there are no reruns, but other evolving opportunities for its monetization.

Some BASICS of Film Production Contracts Thursday, February 24, 2011 by Doron F. Eghbali

Film production contracts encompass some “standard production guidelines” which producers must adhere to. Such standard production guidelines include but are not limited to: picture length adherence, budget adherence, screenplay adherence, rating adherence, cover shots adherence and end credits adherence, among other provisions. Let us further explore this salient rather complicated topic.

SOME BACKGROUND ON THE ROLE PRODUCERS

Producers, unlike writers or directors, do not necessarily have specific functions. Producers could do some, most or all of the following depending upon their title and scope of responsibility:

• LINE PRODUCER: Often, most productions include line producers, whether or not such individual is referred to it by such title. The Line Producer is often the hands-on manager of the production preparing budgets, securing locations and negotiating leases, among other functions.
• PRODUCER STATUS BY VIRTUE OF ASSOCIATION: It is conceivable and standard practice to earn producer status solely because the person is a personal manager to the film’s star, is the film writer, is film star’s friend or is the film star. In such scenarios, studios, usually, do not require full-time producer work from such individuals.
• EXECUTIVE PRODUCER: This title was traditionally bestowed on people who helped secure financing for the film. Nonetheless, this is no longer necessarily the case. For instance, it is possible production companies accord such status to one of their people credited with spearheading the project during its development stage.

FILM PRODUCTION REQUIREMENTS

It is customary for most studios to require producer to adhere to the following guidelines:

1. BUDGET ADHERENCE

Studio contracts, generally, provide that “the picture shall be produced and delivered in accordance with the approved budget – subject only to the changes approved by the studio, in writing”. In fact, as the contract specifies, producer needs to closely watch the approved budget and should not unreasonably expect more budget or deviations from what the studio approved, unless the studio in writing acquiesces to such changes.

2. PICTURE LENGTH ADHERENCE

Studio contracts, generally, provide that the completed picture must have a running time of “not less than 95 minutes and not more than 110 minutes.” Nonetheless, it is possible that the studio and producer could modify such length of time and agree on the precise running time, at the end. It behooves the producer to closely work with the editor to consummate such picture length, as agreed to by the parties.

3. RATING ADHERENCE

Studio contracts, generally, specify a particular rating requirement in the producer’s agreement. Such rating requirement, usually, varies based on the type of the film. For instance, if the movie is an animated feature for children, such requirement would be for a “G” rating. It is important to note the Motion Picture Association of America (MPAA) is the final arbiter of the rating. Producer, based on the specific language of  the contract, might be expected to use his best or reasonable efforts to accomplish this objective.

4. SCREENPLAY ADHERENCE

Studio contracts, generally, specify a particular language ensuring the motion picture adhere to the approved shooting script. This requirement is intended to minimize, to the extent possible, any “significant” deviation from the approved screenplay for which the studio agreed to pay.

5. COVER SHOTS ADHERENCE

Studio contracts, generally, require the producer to include “cover shots”. Cover shots are referred to alternate scenes and language used to replace or “cover” scenes containing nudity or profanity shot for the film’s theatrical release. Such cover shots are used to supplant such scenes or dialogue in television network, airline, or other versions of the motion picture.

6. END CREDITS ADHERENCE

Studio contracts, generally, impose running-time limits on end credits. The contracts require that the end credits not exceed 3 minutes.

Consult with our Beverly Hills Production Attorneys in Los Angeles, CA by calling 855-598-3258.

DISCLAIMER

This article NEITHER in any way supplants seeking competent professional legal counsel NOR serves as legal advice. In fact, this article encompasses ONLY SOME of the salient points concerning this rather complicated topic.

What Are Some Basics of Film Producer’s Compensation? Monday, February 28, 2011 by Doron F. Eghbali
Producers’ compensation, similar to directors’, may encompass disparate elements ranging from development fee to guaranteed fee to pay-or-play. Let us explore these salient components in some detail.

1. DEVELOPMENT FEE

Development Fee is extremely important since it might be the only money producer ACTUALLY is paid. This is often because so many projects are produced, but FEW are developed.

SOME BASICS OF DEVELOPMENT FEE

• AMOUNT OF PAYMENT: If there is any payment, then most studios customarily pay $25,000. This is important to note such amount could range from $10,000 to $60,000.
• MANNER OF PAYMENT: Development Fee is payable, typically, half upon commencement of services and half upon the earlier of (1) abandonment of the project or (2) the studio proceeding to production.

2. GUARANTEED FEE OR PRODUCING FEE

This is extremely important to ascertain there is NO union-prescribed minimum producing fee. Hence, studios are free to pay as low a fee as parties are willing to negotiate.

Accordingly, such negotiating prowess depends  – subject to Federal Minimum-Wage Statute – on variety of factors, including but not limited to:

• The Box Office Success of Any Films the Producer Has Been Associated with.
• The Critical Success of Any Films the Producer Has Been Associated with.
• The Nature and Scope of Services the Producer Will Provide.

SOME BASICS OF GUARANTEED FEE

MANNER OF PAYMENT

The Producer’s Producing Fee LESS Development Fee is paid based on the following schedule for more VETERAN Producers:

• 20 percent of the Guaranteed Fee payable during 8 weeks immediately preceding principal photography, typically in weekly installments
• 60 percent of the Guaranteed Fee during the period of principal photography
• 10 percent upon completion of the director’s last cut
• 10 percent upon delivery to the studio of the answer print

Such fee schedule is referred to as 20/60/10/10.

3. PAY OR PLAY

A Producer needs to identify the point in time at which producing fee becomes GUARANTEED, subject ONLY to default, disability, death and force majeure.

SOME SALIENT POINTS ON PAY OR PLAY

• TERMINATION AND CREDITS: Studios often contend even if they terminate producer without cause, then they have no obligation to accord credit to such producer. On the other hand, Producers feel even if they are terminated early, they are entitled to credit. Such tension might escalate especially when the Producer brought the project to the studio. Such point is usually governed by the Producer’s contract and NOT union arbitration. Thus, it is incumbent upon Producers to seek competent knowledgeable legal counsel.

Law Advocate Group, LLP is proud to offer Production Law Services in Beverly Hills and Los Angeles, CA.