January 31, 2005

Cable Entanglements: The Devil's in the Details

Deliverables. Boilerplate. Milestones. E&O.

Those are the words that follow "You've got a deal" or "We want you to make your film for our channel."

And they tend to get lost in the fuzzy elation of having closed a sale. Let's face it: there's nothing easy about getting a cable network to decide that your idea is worth making. And often the specifics of the contract seem like a series of annoying details with which someone else should deal.

Increasingly, the expansion of original production at major cable networks has created a production-line environment in which flexibility has been replaced by rules and production deliverables that have become mandates.

This may seem theoretical, but in practice these deliverables for a show can be the difference between earning a small profit and incurring a significant loss.

Here are a few terms worth paying attention to:

Deliverables:

Increasingly, cable nets now "buy your project" and agree to budget it, and then weeks later you find that you did not include eight Digi-Beta masters in split track, with separate m&e and a DA 88 for audio, as well as a boatload of transcriptions (which must be done at the network's vendor, at your cost), and a whole host of other flavors of dubs, mixes and formats. This is big money. And the budget that you contemplated didn't cover any of it—thousands, sometimes tens of thousands of dollars in costs that you must cover.

Demand that you have a list of deliverables before you sign off on the budget.

Overages:

You think that overages mean "mistakes" on your part—and it seems fair that you don't get paid additional fees for such mistakes. But at some networks, "overages" are synonymous with "change orders." That means that a network can order more shooting, more editing, more post, more locations, more travel...and not pay production fees on any of this additional work. Make sure that network-ordered changes are subject to production fees. Also, ask about tying your budget to a calendar, since more weeks of production mean more weeks of rent, phones, accounting, legal, etc.

Milestones:

Payment of the budget is now based on "milestones," or phases of production. But often these phase approvals are at the sole discretion of the network, so approval of the rough cut, fine cut and legal binders can take significantly longer than may seem reasonable.  This means that a network can take your film, air it and, months later, still not have approved your legal binder. If this is a few thousand dollars, it may be OK. But the percentages are creeping up, and you may find yourself loaning the network tens of thousands of dollars long after the film has aired. Ask your lawyer to put a clause in your contract that makes the airing of the film de facto approval of all outstanding milestones. And be careful that you don't allow the network to move milestones out of step with your incurring costs. If fine-cut approval moves three months forward, your crew costs and editorial costs are still fixed in time.

Footage:

This is another recent occurrence. Networks now take ownership of not just the finished masters, but all underlying rights and footage. While this makes sense for full commissions, there is no reason that networks should have footage rights to films that they are only partially funding. I would argue that networks are buying the finished film, not the elements that are used to put it together. And in an increasingly tricky business, you may need get revenue from unused footage to help make ends meet.

What Should You Do?

First of all, understand that networks will hold you to every term, condition, page and deliverable in the document you sign. Don't accept an executive who says, "Oh, that's in there but we never really enforce it." If that is true, have them take it out. Most importantly, don't rush. If there seems to be a disconnect between the creative execs who want to "get going right away" and the business affairs lawyers who are on vacation and may take a few weeks to get you a draft, hold tight. That's hard to do, but it's essential. Once you're in production and spending money, the horse is out of the barn. You'll never regain control of the deal.

Also, make sure you have an attorney who knows cable and cares about your long-term survival. You don't have to win every point, but you do need to sign a deal that allows you to make a living.

Finally, be willing to walk away. Like all negotiations, there are some deals you just can't afford to take. If you think you'll make it up on the next project, you're setting yourself up for a rough ride.

 

Steve Rosenbaum can be reached at steve.rosenbaum@CameraPlanet.com.

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