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Deals – Standards & Expectations

The value of any deal made when selling a project to the film or television industry is influenced by a variety of factors, such as; the experience or credits the writer has, the project/property itself, the company optioning the project, and a myriad of other influences that will determine the potential financial participation you would have. That said, there are standards and basic expectations that any person should have when selling their project to another company.

Below you will find different categories of projects, as each have their own value and potential as a property sold to be produced. Any deal should be negotiated and scrutinized by an entertainment Attorney who will protect your interests, and position you for the greatest financial gain possible.

What is an Option Deal?

The first “sale” of a project is an Option Deal, in which a Production Company “options” the project (script, concept, book, story, or other property) from the Writer, securing exclusive rights to sell and produce the project during a limited time period. The Writer is given token money as a down payment toward larger fees they would receive at the time of selling it to a Network or Studio. When the production company sells it to a Network or Studio, they are essentially optioning it to the Studio, and the Studio then works to develop and produce the project for airing or distribution. If the production company does not receive a bona-fide offer from a Network or Studio within the period of their option agreement with the writer, then the rights to the project revert back to the Writer.

In any option deal it is standard to expect and negotiate for the following:

Limited Term

Television option deals are usually 1 year, while Feature Film projects may be as long as 2 years because of the time needed for further development, packaging and securing a deal with a studio that may also involve raising money. Film is a much more complicated and longer process.

Reversion

If a production company does not sell your project to a studio or distributor within the timeframe of your option deal, then ownership of the project reverts back to you.

Option Money

This is an area of least importance, as it is usually token money, and not as valuable as having the opportunity for a production company to package and sale your project to a studio or network. Regardless, it is standard to receive anywhere from $500 to $5000 in upfront option money, depending on what the project is. Many writers will agree to a “free option”, taking no money up front, and focusing all of their negotiations on their credit, purchase price, and profit participation (points).

Set-Up Bonus / Purchase Price

When the production company sells the project to a Network or Studio they are exercising the option, and the rights to the project are transferred to the new third party. At this point, it is standard to have in place a “purchase price” or “Set-Up Bonus” to be paid to you, the writer, by the Network or Studio. These fees are significantly larger, but do vary greatly. This may be $20,000.00 and upwards of $100,000.00 to a half million, depending again on the project and person involved.

Credit & Fees

It is standard for any writer or creator to receive an on-screen credit. For new writers this may be, “Story by”, “Written by”, “Screenplay by”, “Consulting Producer”, “Co-Producer”, or other negotiated credit. Credits are typically contingent on approval by the Network or Studio. In television, fees are paid per episode that are applicable to specific credits.

Net Profit Participation (Points)

This is where significant and extraordinary sums of revenue can be made when a television show or movie become a hit. The percentage of profit participation you would receive is locked in and tied to all of the licensing fees the production company receives from production and distribution, and any and all ancillary revenue (new media, products, etc.). Don’t let the “Net” scare you. Very rarely does a writer or creator receive “gross” points. When negotiating a percentage of the profit, if only Net is offered, your attorney may ask for the company’s definition of net profits and a right to audit. This would ensure that only specific deductions can be made against the gross revenue that would be disclosed to your attorney.

A Production Company’s licensing and production fees are usually a percentage of the overall budget. Your percentage of participation is a percentage of the Production Company’s licensing and production fees. You can typically negotiate a participation of 2-5% Net.

Optioning Screenplays

  • Term: 1 – 2 Years
  • Option Money: $1,000 to $5,000
  • Purchase Price: $50,000 to $1,000,000.00
  • Profit Participation: 1-5%

Optioning Movie Ideas

  • Term: 1 Year
  • Option Money: $500 to $3,000
  • Purchase Price: $50,000 to $250,000.00
  • Profit Participation: 1-5%

Optioning Life Story Rights

  • Term: 1 – 2 Years
  • Option Money: $2,500 to $10,000+
  • Purchase Price: $50,000 to $500,000.00+
  • Profit Participation: 1-5%

Optioning TV Formats

  • Term: 1 Year
  • Option Money: $500 to $5,000
  • Purchase Price: $20,000 to $50,000.00+
  • Credit/Fee: $2,000 to $5,000 per episode (varied by outlet & budget)
  • Profit Participation: 1-5%

Optioning Book Subsidiary Rights

  • Term: 1 – 2 Years
  • Option Money: $2000 to $5,000+
  • Purchase Price: $20,000 to $1,000,000.00+
  • Profit Participation: 1-5%
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