BASED ON (part 5)

A non-lawyer’s guide to acquiring rights for film and television.

By Ken Aguado

This is part 5 of a 6-part article. If you just landed here, please go back and read parts 1 through 4 before you continue. It’s important to remember that I am not giving you specific advice about any one project. If at any point you feel you’re getting in over your head, consult with a qualified entertainment attorney. You can follow me on Twitter @kaguado.

Part 5

Making the Deal

This article is intended for film students, emerging filmmakers or really anyone who wants to get the rock rolling down the mountain by acquiring the film and television rights to something you love. Of course, if you’re rolling a rock in Hollywood, you’re more likely to resemble Sisyphus than anyone else.

While the previous parts of this article have covered a lot of ground, it’s possible that the actions required of you so far are very few: You wanted some rights, you located the author or agent, and gave him or her a call. Wow, and it only took me 11,051 words to get you there. Ugh, I’m feeling kinda queasy. Gimme a minute.

“So, now what?”

Now that you’ve made contact with the rights holder or agent, it’s time to make a deal. Unfortunately, you can’t start making a deal until you have some idea of what’s customary in the entertainment industry, and what a typical rights agreement looks like. The most common agreement for this purpose is an option/purchase agreement, and I will get to that in part 6.

The title of part 5 is “Making a Deal,” which is the first part of a process that should result in an agreement that accomplishes three things: It should be legally binding (and enforceable), “knowable” (with fixed/locked terms), and allow you to proceed with your intended plans (allowing you to develop and produce what you want). If you don’t have these three things, you don’t have a proper deal. Of course an agreement will have many more elements, but I want to make sure you keep these three fundamental aspects in mind.

Side Note: What follows is not about the art of negotiating. If you’re interested in that topic, visit your local bookstore (if it still exists when you read this), where you’ll find an entire bookshelf dedicated to the topic. Instead, what follows is how the process of making a deal will unfold in different situations.

After you’ve read this article, you may not be ready to draft contracts, but hopefully you’ll be able to start the process and come to an agreement on the key deal points. You can then hand it off to your attorney who will draft a formal agreement.

I’ll start with some tips about how to conduct yourself as a professional when making a deal. If some of this is obvious, please bear with me. I don’t know what you don’t know, so I want make sure I take nothing for granted.

TIP: Find an entertainment attorney.

If you’re embarking on an effort to lock up film/television rights, start by finding an entertainment attorney you like. Do this in advance, before you start negotiating a deal for the rights you want. This way you will avoid an unnecessary delay later in this process. Also, it must be an entertainment attorney. Most of them work in Los Angeles or New York. There are areas of specialization within entertainment law, but you’ll quickly sort that out once you start talking to prospective attorneys.

Warning: Some of you will be tempted to use a non-entertainment lawyer who is a personal or family friend, thinking it will save you money. There are two main reasons you should never do this:

1) Entertainment law is a specialized and eclectic mix of legal disciplines, and only entertainment lawyers are familiar with the customs and practices unique to Hollywood. Yes, their services can be costly, but it can also be money well spent.

2) If you plan to embark on a long career in entertainment, you want to have a long-term relationship with someone who has your legal interests at heart. It’s possible an attorney will be your first representative — before an agent or manager. In my case, an attorney is the only representation I’ve ever had. [For those of you interested in learning more about representation in Hollywood, please read the comprehensive article I co-wrote with screenwriter Doug Eboch called How to Get an Agent.]

When you find a lawyer you like, let her or him know that you’re planning to negotiate a rights deal and will be handing the attorney the deal to “paper” thereafter. He will probably give you some advice. Listen to it. If you’re feeling out of your depth with the process, your attorney will be happy to negotiate the agreement on your behalf, but this can become costly if the negotiation is prolonged. Working out the terms of an agreement can take weeks or even months. Attorneys will usually charge you by the hour, and that’s a lot of billable hours.

Despite their reputation as sharks, many entertainment lawyers are great people, who love film and television. And even if your lawyer is a shark, he’ll be your shark when he’s working for you. Bottom line: Conduct yourself professionally, don’t waste his time, pay him, and you’ll get along great.

TIP: Make the deal!

Don’t postpone making a deal for the rights you want. Kicking the can down the road is a rookie mistake.

Too often I hear novices say things like “I can always get the rights, if I need them,” or “The author is a friend of mine. It’ll be no problem.”

Sometimes an inexperienced filmmaker will talk to an agent or author, determine that the rights to a book (or comic, short story, etc.) are available and assume that — when they find an investor or get ready to shoot — they’ll grab the underlying rights at that time.

Or a screenwriter will do an adaptation of a book or comic without controlling the underlying rights, assuming that they’ll be able to acquire the rights when they’re ready to shop or sell their script.

Don’t do any of this.

There are many, many things that can go wrong, and you never want to find yourself in a position where you need the underlying rights, but can’t get them. (For example, an interested buyer will not buy or finance your project if you don’t have the underlying rights.) And even if you can get the rights, you will have weakened your bargaining position, and it might take you months to close the deal. Will the interested buyer still be interested at that time? Are you sure? Because it’s for sure they’ll think you’re an amateur, and that’s no way to start your career.

Bottom line: If you’re serious about your project, lock up the underlying rights before you proceed. This agreement will probably be the first document in your chain of title. (I discuss chain of title in part 2.)

TIP: Make the deal in writing.

Making a deal with an agent or author will start with a phone call. You’ll introduce yourself and let them know what you are planning. But when it comes time to negotiate a deal, you can always do it by email. There are two reasons to do this:

1) There’s less chance of a misunderstanding.

2) If you’re inexperienced, you’ll probably feel more comfortable negotiating in writing, rather than sparring verbally with the agent. For example, if the agent writes that he or she is seeking a “gross position” for the author, you can Google that phrase rather than verbally replying, “Sorry, but I’m only interested in positions that are sanctioned by my church.” That’s not what the agent meant.

There’s nothing wrong with a verbal negotiation, and sometimes it can be better if you are a knowledgeable and persuasive person. But if you do conduct a verbal negotiation, always follow up your conversations in writing, confirming what was discussed, proposed, or agreed. Once again, email is fine. And cc:ing the agent’s assistant on all your correspondence to the agent is also a good idea.

You can also cc: your own attorney — but if by doing so you’re asking for his or her input, you’ll probably be billed for that input. If you don’t copy your attorney on correspondence, instead you can add something like, “I haven’t shared this proposal with my attorney, so must I reserve her [or his] right to comment.” This is another way of saying, “If I goofed, I’m hoping my attorney can bail me out at a later date.”

If you’re negotiating with an author directly, double check that he or she control the rights to the work and find out if the author has a lawyer. (This sub-section assumes the author is unrepresented, otherwise you’d be negotiating with the author’s agent, most likely.)

If the author wants you to negotiate directly with his or her lawyer, be aware that there are rules of ethics that regulate when a lawyer is allowed to negotiate with a non-lawyer. Check with your lawyer about this.

If the author says something disparaging about involving his or her lawyer in the deal, that may be a warning flag. Or it may be that the author is loathe to pay her or his lawyer if it will cost the author more in legal fees than you’ll be paying for the rights! In any case, make sure the author knows that you will be involving your lawyer in the final contract. If the author has a problem with this, it’s another warning flag, and you should consider walking away from the deal.

TIP: Making the deal may cost less than you think.

Cost is usually the thing that filmmakers will care most about when they are making a deal. But here’s a little secret: Locking up rights may cost far less than you think. (“Locking up” means no one else can use the same rights.)

If the film and television rights you want is to an older work, is not a bestseller, or is otherwise obscure, you may be able to acquire the film and television rights for very little cost up front. (“Up front” is money you will owe when you sign the final rights agreement.)

Here is your strategy.

Contact the agent (or author), explain who you are, and ascertain that the rights you want are available. Convey your passion and your plans for the work. (Of course, this means having a real plan. And if you don’t have passion at the start of your career, consider pursuing another line of work.)

Ask the agent or author if they’re open to a film or television production, based on the work. If yes, tell them that you’d like to send over a proposal for a deal — and that your offer will involve very little money up front.

If you are a regular person (and not a well-funded production company or studio), the agent will know the up-front money is likely to be meager. And if the work is not in demand, they may be very happy to get such an offer.

Think about it: most works will never have a chance of getting made as a film or television project without the efforts of someone like you — a person willing to do all the hard work to get it produced. From that perspective, you’re bringing a lot to the table in the negotiation. Of course if you don’t have a track record, maybe you’re bringing a little less. And this is where passion and a viable plan can be meaningful. You need both.

What will the up-front cost be? There’s no way to answer that. But I’ve made plenty of deals for under one thousand dollars up front — sometimes as low as one buck.

If your intention is to produce a student film, or similar production, it may be possible to negotiate a low cost, non-exclusive “license agreement” to the underlying work. This is different from an option/purchase agreement, which has been the intended end zone dance for most of this article.

Author Stephen King is famous for his “dollar babies”: a list of his short stories that he’ll license to student productions for one dollar. That’s not a typo. As you’d expect, most of the short stories on the list are minor works. So Mr. King is probably thinking why not make it easier for emerging filmmakers, or at least make it less expensive for them.

Writer/director Frank Darabont, and a dozen other filmmakers have launched their careers using one of King’s dollar babies. These license agreements with King severely limit the ways that the resulting films can be distributed, but at least these filmmakers got to make a film that was “based on” the work of a famous author.

I’ll talk more about license agreements in part 6 of this article. I know — a nail-biter, right?

Notwithstanding the pre-set price of King’s dollar babies, it’s impossible for me to tell you what the cost of rights will be for any given work. It’s all subject to negotiation, and it will be influenced by how much competing interest there is for the work. And the person with whom you’re negotiating might have no problem exaggerating the other “interest” in the work to get you to pay more. In fact, this is a pretty common tactic. In most such cases, I usually call the bluff. (“Hey, that’s great news! Let me know if that other deal doesn’t work out.”) And if you’re not willing to overpay for the rights, what’s the downside?

Keep in mind that studios and production companies will sometimes pay tens of thousands of dollars — up front — for the rights to a work. And much more for a bestseller. But the typical cost for a private individual might be from one dollar to five thousand dollars. If no one else is vying for the same rights, it’ll probably be on the lower end. But again, there are no rules.

Making a deal with an agent.

If you’re negotiating with an agent, you’ll send over a proposal/offer, laying out several key terms of a deal. The agent will then consider your offer, discuss it with their client, and probably send you a counteroffer a few days later. If you sent your offer in writing, the agent may do the same with their counteroffer. But many agents prefer to negotiate verbally. If you get a verbal counter offer, take notes, say “Thanks,” and think about it. After the call, send a polite note to the agent, confirming what the agent proposed. (“Hey, before I respond, I just want to confirm what you proposed today on our call….”) Keep records of calls.

Typically, you will go back and forth a few times as the agent tries to get a better deal for their client and you try to resist that trend.

I will get to the terms of a deal in part 6, but if you are unfamiliar with Hollywood agreements, it’s likely your “bottom line” in the negotiation will be based on guidance you get from your attorney. This is because — while there may be no rules in a negotiation — you’ll need to make sure the deal you sign is within acceptable Hollywood parameters. This may be less critical if you’re making a student film, where you’re probably funding the production yourself and where real distribution, beyond film festivals, is unlikely. But otherwise you want to make sure you end up with a deal that will be viable in the marketplace.

For (exaggerated) example, why would you pay a million dollars for the film rights to a book for a film that will end up costing three million dollars total? No one would finance a production of this scale with such costly underlying rights. And the same considerations can apply to other aspects of the deal. Remember, you need an agreement that is legally binding, knowable, and allows you to proceed with your plans. So ending up at an appropriate agreement is an important goal.

For this reason, I always prefer negotiating with established Hollywood people — not because they are nicer — but because we speak the same “language,” and they’ll be familiar with the business customs of Hollywood. This is not always the case when making a deal with non-industry folks.

Making a deal with authors and other (non-Hollywood) people.

Negotiating deals directly with authors and other non-Hollywood people can be a challenging. There are three main reasons for this:

  1. They are often distrustful of Hollywood, which is completely rational! And winning their trust can take a lot of courtship and hand-holding.
  2. They are unfamiliar, or unsophisticated, regarding the traditions and parameters of Hollywood deals, and/or they have unrealistic expectations about the money they deserve. This means they might ask for unusual or unworkable terms (for example, creative control), or expect they should be paid enough to retire in splendor.
  3. Or they may be represented by a non-entertainment attorney who is also unfamiliar with the traditions and parameters of Hollywood deals. It’s tough to make a deal in the best of circumstances, and even tougher when one of the negotiating parties has no idea what a typical entertainment agreement looks like. The learning curve can be steep.

None of this is meant to discourage you, and these problems do not always arise. In fact, many authors will be star-struck and quite eager to make a deal. And still there can be problems.

For example, a few years ago I found an author/artist who had created a wonderful children’s story and characters. The author lived in Florida and had no agent. The author was enthusiastic about the deal and I started a negotiation with his “entertainment” attorney in Florida. (There are very few entertainment attorneys in Florida, and this was not one of them.)

I sent a fair contract to the author’s attorney, and a few days later I got back the attorney’s markup with the changes they were requesting. When I read the markup, I was surprised to see that the attorney was asking for changes that actually made the deal worse for the client.

Now, I could have let it slide. But an agreement would have put me in business with the author for years, and I knew the author would eventually discover the mistakes, and then hate me for screwing him.

So I tried to play the long game. (I’m sure this will be written on my tombstone someday, with no hint of irony.) I politely informed his attorney of the mistakes, and when the (concerned) author called me later that day, I told him the same.

The author refused to believe that his (idiot) lawyer could have made such mistakes, and they both thought I was pulling a fast one, Hollywood-style.

My relationship with the author fell apart and so did the project. This is a pretty good illustration of all three problems I outlined above. Oh well.

Making a deal for someone’s life-rights.

As I said in part 4, the term “life-rights” is misleading. Because of this, making a life-rights deal has some additional challenges, the most obvious of which is that there’s a person, or subject, at the center of the rights.

Consider this process from the subject’s perspective.

Say you live in Frederick, Oklahoma (pop. 3797). You have an interesting life story. One day, strangers from Hollywood come knocking, wanting to make a deal. You have no idea who they are, or what a deal looks like, and you’re worried that some fella with a $200 haircut is about to make a fool out of you. It’s your life, after all, and you don’t want to be misrepresented.

Because of this, making a deal for life rights is sometimes more about courtship and hand-holding than deal making. And, unlike the other kinds of rights acquisition I’ve been discussing, you may need to travel and spend some quality face-time with the subject (and their family), especially if there’s competition for the subject’s life-rights.

Before he became a director, Grady Hall started his career by making dozens of life-rights deals for the once-thriving TV movie-of-the-week business.

I asked Grady how he was able to make so many deals. He told me that his approach used a combination of his innate, genuine sincerity (to which I can attest) and his instincts as a writer, which he used to convey a more meaningful vision of the story to the subject. But Grady also added, “Of course, I had a lot of irons in the fire, so if I sensed a yellow flag of trouble with someone, I’d just walk away.”

Remember, you’re not really buying someone’s “life story” in a life-rights deal, and a life-rights deal will have many unique terms that other underlying rights agreements (for novels, comics, etc.) will lack. Many aspects of a life-rights agreement should be left to your attorney, but there are some terms that may come up in conversation with your subject. This is all part of making the deal, so be prepared to discuss the following:

1) Money, of course. While there are rare competitive situations when a life-rights deal can go for big money, this is usually not the case. Of course, this doesn’t stop some people from having unrealistic expectations about what they think they deserve. But most of these life-rights deals end up in the low tens of thousands of dollars, and typically that money is only paid if/when the project is made. So don’t let your subject be misled.

2) Creative control of story, script, and casting is sometimes an issue. As I said, the subject may be concerned their story will be misrepresented when it’s presented on film or television. But it’s very important that you not agree to give away any creative controls. If you do, it can severely limit your ability to develop and produce a film or television project. Making films and television is a hard job and you want to make sure you leave yourself (and the studio or network, etc.) as many options as possible.

3) You might agree to allow “creative consultation,” and possibly a “consultant” credit of some kind. This can be a win-win if you’ll need the help or input from the subject as you develop and produce the project about him or her. But creative “consultation” is very different from creative “approval.” And most life-rights agreements will define what “consultation” means. Does the subject get to read all drafts of the script, or just the outline? Do they get to review all editorial cuts of the film, or just one? Etc.

In truth, some life-rights agreements do allow some very specific creative controls for the subject. For example, a limitation of the time period in the subject’s life that can be portrayed in your story. Or perhaps a requirement that some specific incident or aspect of the subject’s life not be portrayed. (“I don’t want my jerk ex-husband in a film about me.” Etc.) But you should think long and hard before you agree to these kinds of restrictions.

I’m sure some of you are still thinking, “So what’s a deal look like?” I decided to push the answer to that question into part 6, when I will talk about option/purchase agreements. I can’t wait.

Next: Part 6 — “Papering the Deal.”

You can follow Ken Aguado on Medium and on Twitter @kaguado.

One clap, two clap, three clap, forty?

By clapping more or less, you can signal to us which stories really stand out.