PRODUCER SHOPPING AGREEMENT

by Richard D. Freiman on Oct. 14, 2018

Industry Specialties Entertainment Business  Contract 

Summary: Introduction to Producer Shopping Agreements

ProducerShopping Agreement is an agreement that allows a producer to “shop” a film or television project exclusively to financing entities such as studios; networks; and production companies for a fixed amount of time.  The producer is “attached” to the project as producer.  In the Agreement, the copyright owner (screenwriter/ television writer/author/playwright, etc.)  of the project which could be a book; spec screenplay; television pilot episode; stage play; or any other type of literary property grants this right to the producer.   However, the copyright owner retains complete ownership of the literary property until a studio; network; or production company buys all of the rights or some of the rights to the literary property in an agreement to be negotiated with the copyright owner. Unlike an option, in which the purchase terms of the literary property are set out and agreed to by the copyright owner in advance, usually for a small option fee, in a producer shopping agreement the copyright owner makes his or her own purchase deal when the producer finds a studio; network; or production company who wants to buy the literary property.  This gives the copyright owner the freedom and right to make the best deal possible at that time. The producer also makes his or her own production deal with the studio/network/financing entity. The project cannot move forward unless both the copyright owner and the producer each makes his/her separate deals.  This protects both the copyright owner and the producer and allows both of them to negotiate with the studio/network/financing entity to reach an agreement satisfactory to each. The major benefit of this to the copyright owner is that in a literary option/purchase agreement, the purchase price is set forth and unless there is a modification agreement, cannot be changed, and the producer who options the literary property can actually make more than the copyright owner on the sale to a studio; network; or other financing entity. For example, a producer options a spec screenplay for $1,000.00 for one year, in the literary option/purchase agreement, the purchase price of the spec screenplay is $100,000.00.  During the option period, the producer can exercise the option and purchase the spec screenplay for that price.  But what happens when a studio comes along and tells the producer that they want to purchase the spec screenplay and the producer negotiates a deal for $1,000,000.00 as the purchase price. Does the copyright owner, the writer who wrote the spec screenplay, get $1,000,000.00?  The answer is no.  The producer purchases the spec screenplay from the copyright owner, the writer, for the purchase price that’s stated in the literary option/purchase agreement, which is $100,000.00 and then sells it to the studio for $1,000,000.00, for a profit of $900,000.00. This can’t happen in a ProducerShopping Agreement as the copyright owner will make his or her own deal with the studio/network/financing entity. The information in this article does not constitute nor is it intended to constitute legal advice.

 

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Richard D. Freiman, Attorney at Law, (310) 917-1021

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