Expert: Marrissa O`Leary - 5/8/2008

Question
QUESTION: Hi Marissa -- we are in process of negotiating a reality show based on a current film program we run.  The production co is an EP (no in-house production staff) who will sell show and hire on the ShowRunner et al.  They have offered 70/30 split (30% to us) on income. Not the production budget but the portion of license for EP fees, and then other revenues.  We will negotiate rights fees direct with network (when/if they buy).  Rights fees will be 100% ours.  We will also get a small % of the production budget as we will need to assist in the actual show production.

Would love your advice on whether this is a good deal or not.  

And what is the approximate Exec Pdr fee (or %) we should get from the deal?

And finally -- how do royalties work in Reality (is this part of the rights we negotiate?)

Thanks So much!!


ANSWER: Dear Kelli:

Thanks for the question and congratulations on your success thus far.

The proposal on the table seems pretty fair to me, especially since you retain the ownership.  Make sure you have ownership or at least approval over any and all format right sales as well (in case the show is a hit and they want to do a similar version in other countries).

As far as the producer fee goes, there's no real formula.  It depends on the budget and whether the show is once per week or stripped.  You should get close to as much, if not the same as the other exec producers.

Royalties are another unpredictable thing.  If you're getting a production fee and ownership, I'm not certain I would give you a royalty, so I don't know what to suggest here.  Maybe a royalty of 50% of your last applicable producer fee if you stop being an active producer at any time - that way, you keep getting money even if you're not actually working on the show.

I hope this gets you on your way.  Please write me again if you need anything else.

Congratulations again!

Best,
Marrissa

---------- FOLLOW-UP ----------

QUESTION: Thanks for the first feedback!  couple more quick questions! (hope you dont' mind)

Since we own program, should we also expect to get
1)  Option Fee?
2)  Purchase Fee?

3)  We are offered per episode "rights fees" -- these are the rights to show on TV, create/sell DVD, international etc., Correct?  And this is instead of royalities?


Thanks again SO much!

Answer
Hi, Kelli -

I think an option fee could be warranted.  It depends on your relationship with whoever's pitching and how strong that person is in the industry.  You could use a small option fee to establish a time limit for the pitch period, or you could just say 6 months for free and then they would have to pay.  The problem with the latter is that you might have been shopped all over town by then, and gotten nothing for it.

By the same token, you might get a purchase fee,and if the initial order is solely for a pilot, I would recommend you ask for it.  It used to be that the option price was 10% of the purchase price, but who knows if that holds true for reality (the new frontier?).  Instead of a purchase, I would suggest you simply license them the rights to produce and distribute.

The "rights fee" you mention would likely be in lieu of a royalty.

Hope this helps, but you just let me know.

Best,
Marrissa