Rights, rights, rights: How to structure a successful media deal

 

 

In property transactions the key to successful deal making is, as everyone knows, location, location, location. Perhaps not so widely appreciated is the need, in a deal for say a television programme or a book publication, for a focus on rights, rights, rights…

 

In structuring a media or entertainment based deal there are 2 main component parts. First the money and second, but maybe even more importantly, the rights. These rights are more formally called intellectual property rights and for the most part will comprise; copyright, trade marks, patents and registered design.

 

When putting together a transaction to acquire, develop or exploit such rights ask who brings what to the table? By this I mean the creativity, both in the original work and those elements still to be created, the money and the expertise. Look at the big picture and ask which contributor is bringing the most value and which taking the biggest risk. Having done this you can begin to make a fair allocation of the rewards which will flow if, and hopefully when, the new enterprise is successful.

 

In terms of finance those putting hard cash at risk will usually expect to redeem their money in first place from potential earnings. Those who have added their creative work to the mix are due some up-front payment. All will probably expect a share of back-end – the profit earned when all expenses and investments have been repaid.

 

In terms of rights you need to think about the big picture and if, for example, you are creating a TV or internet based programme there are the rights in the programme itself but also the rights and ownership of any spin-offs, remakes, sequels and/or prequels. Then there are the international sales, the DVDs and streaming rights, the merchandising and licensing, domestic and global. In a successful brand these so called secondary deals can far outstrip the original programme rights in terms of their value so providing for a fair allocation of this profit/revenue is essential.

 

Where possible you need to ensure that these rights are allocated to parties who will fully exploit them, ie to those that have the appropriate and relevant experience. This exploitation should be in done in the best interests of the brand and not for just a quick profit so a system identifying the brand owners and for appropriate approvals needs to be in place.

 

You also need to ensure that definitions are, as far as possible, future proofed, so for example that when tape rights were identified 30 years ago that the definitions were broad enough to include DVDs, discs, streaming and download rights. 

 

Finally you need to be very clear about your definitions of gross and net receipts and identify who is allowed to deduct what before you get your percentage cut. There is no point being entitled to 10% of the pot if there is very little left in it!

 

For legal help on any of these issues or for further information about me or my business please feel free to contact me. I have 20 years experience as an in-house lawyer in the media sector and am now a consultant based in Lewes near Brighton.