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What You Need to Know about TV Star Contracts

Television actor deals are frequently set up as an agreement to test the actor for the pilot, with the Producer having an option to engage her services for the pilot and the Series, if ordered by the Network. The Producer's goal is to lock up the exclusive services of the talent at the earliest stage possible. This way, the Producer already has the talent obligated, at the Producer's option, to render services for prenegotiated compensation (thus, the talent can't hold up the Producer for more money). Accordingly, the Producer will want to require talent to sign a test option agreement at the time when the Producer has the most leverage -- before the actor goes in for the test.

One of the first points negotiated by the parties is the time period in which the Producer must exercise its option to use the actor in the Pilot. The Producer will want as much flexibility as possible (and, obviously, the talent will want to know within a matter of only a few business days so she can plan her professional schedule).

A. Timing: As with the Pilot option, the talent will want the Producer to exercise the Series Option quickly. Producers usually agree to make such a determination within a certain number of business days (10 for example) after the Producer's written acceptance of the Network order for the Series.

B. Series Relocation Fee: If, at the time of the option for the first year of the Series, the performer is living permanently outside of the production location, the Producer will likely be asked to pay a Series relocation fee in an amount to be negotiated.

C. Number of Optional Years: Producers typically seek to lock up talent for up to either 6 or 7 years of a Series. The options are consecutive and generally each for a 1 year.

D. Initial Season: Series contracts usually have an initial option period for the first year of the Series that runs until the end of June, allowing for enough time for the New York Announcements (where the Networks announce which pilots/series they are picking-up). In most cases, the Producer will provide that for an additional payment the option is subject to extension until the end of December (to allow for a mid-season pick up for a show).

E. Subsequent Seasons: After the first year, the option exercise date is usually set for the middle of June (allowing for the NY announcements of series renewals).

F. Exclusivity of Option/Priority: Typically the Producer will require that the option, and the actor's services in the area of television, are exclusive to the Producer. However, there are a few related points that are commonly discussed:

(i) Sometimes the Producer will not make the option exclusive, but will allow the talent to test for other pilots as long as the exercise of the series option by the Producer gets a priority position. Thus, if the Producer's series gets picked-up, the talent is obligated to be in such Producer's series (regardless of what happens with any other pilot for which the actor tested). 

(ii) Additionally, if the deal is for a cable series, the Producer may be willing to discuss shorter option periods. Cable series usually do not function on the same time schedule as network series. Thus, when a cable producer is locking-up a talent's services, it may not be to the exclusion of testing for network pilots. Accordingly, the option periods can be different and, in turn the Producer can negotiate for a lower pilot fee (arguing that Producer is not tying up the talent to the exclusion of network pilot opportunities).

(iii) If a star's option is picked up, she will seek to carve out voiceover work and television guest appearances on other shows (including MOWs and mini-series). The Producer may be willing to agree to a limited number of carve outs so long as the role is not similar to that of the character the actor is portraying on the Series. It is currently being argued by talent representatives that the standard exclusivity provisions should not prohibit talent from starring in webisode series on the Internet. To the extent that Producers desire this exclusion, Producers are advised to specifically restrict the talent's services in webisodes.

A. Pilot Compensation: The compensation for the Pilot is usually no more than double the episodic compensation (i.e., Rs 150,000 for the pilot if the episodic rate is Rs 125,000). Usually this double ratio is the attempted starting point by talent in the negotiation; however, they usually are offered less by the Producer.

B. Series Compensation:

(i) The test option contract specifies the compensation that the talent will receive if the option is exercised. The talent's representatives will want to specify that the compensation is on a "pay or play" basis (owed to the talent even if the actor's services are not used or required).

(ii) Depending on the level of the star and the size of the role, the Producer will be asked to guarantee compensation for a minimum number of episodes (the number of episodes guaranteed may be lower in the initial years, and increase over the life of the Series). Typically, a full season means an order of 22 episodes. For the initial year, the Pilot should count as 1 of the guaranteed Series episodes. Next, the Producer may be asked to set the ratio of episodes for which talent is guaranteed compensation, such as ASP (all shows produced), 10/13, or 7/13. The bigger the star/role, the better ratio the talent can obtain. If it is a 22 episode order, 10/13 = 17 episodes, 7/13 = 12 episodes. Obviously, if a star appears in more episodes than the ratio, she will be paid for each additional episode on which she renders services.

(iii) Additionally, some producers break out a portion of the episodic compensation to cover foreign residuals that would otherwise be owed pursuant to SAG. This amount is treated as prepayment of these residuals.

(iv) The agreement generally sets forth pre-negotiated increases per year for the episodic compensation, usually a set percentage per year (5% is fairly customary). 

(v) Backend compensation is beyond the scope of this summary and will be addressed in the Legal Elite program on television proceeds definitions. Nevertheless, depending on the level of talent, the "star" may be able to obtain a percentage of the Producer's backend in addition to her fixed compensation.

Credit is sometimes as, if not more, important than compensation. The negotiated points are position (first, second, etc.), shared vs. separate card, and location (whether in the main/opening titles or in the end credits). Star talent will also want to be accorded credit in paid ads for the Series. The Producer will want to clarify that all other credit matters are within the Producer's sole discretion.

The agreement must clearly specify that the Producer owns all of the results and proceeds of the talent's performance (on a work-for-hire basis). The Producer must completely own all aspects of the character

The Producer will want broad rights to use the talent's name, voice, likeness, etc. in connection with the Series, advertising of the Series, advertising of products or services of Producer and/or the Network's commercial sponsors (i.e., commercial tie-ins and point-of-purchase campaigns), exploitation in new media (i.e., internet, cd-rom, etc), merchandising, literary and music publishing, and sound recordings and jackets. The talent will seek to place limitations on the Producer's use of her name and likeness such as attempting to obtain various levels of approvals or consultations on particular categories of usage; and, with respect to permitted usage, talent may seek to obtain "separate pot" participations for merchandise (5% of the Producer's net merchandising receipts is not uncommon, the royalty may be reduced if an item of merchandise depicts 2 or more cast members)

The Producer will want to obligate the star to render promotional services in connection with openings, closing, lead-ins and lead outs for episodes and other promotional and institutional appearances. Promotional activities may be subject to the performer's professional availability. The Producer will seek to obtain the maximum amount of promotional services for no additional compensation (or for scale). Talent lawyers seek to have these services rendered at a multiple of scale

Test travel, accommodations, and per diem; and, Series dressing facilities, hair, make up, wardrobe, etc. are items that are also negotiated in connection with the test option. Rather than getting bogged down with negotiations on these points with a number of actors, the Producer will frequently offer "perks" consistent with the budget and indicate that the cast will be treated on an "MFN" or "most favored nations" basis (in other words, an actor who is the beneficiary of an MFN provision will be treated no less favorably than any other cast member with respect to the applicable "perk"). While an "MFN" provision can facilitate closure of a deal, it can also lend to increased costs across the board in the event the Producer ultimately agrees to "bump up" the perks for another actor.

Even though a test option agreement might cover an actor's services for up to 6 or 7 years, talent on a successful Series will likely seek to renegotiate certain aspects of the deal, and Producers engage in such renegotiation to keep their stars happy and to lock in the talent for further additional seasons of the Series.

DISCLAIMER: This discussion is general in nature and is not intended to and does not create a lawyer/client relationship. This discussion should in no way be relied upon or construed as legal advice, particularly since most legal outcomes are highly dependent on the facts of a particular case or situation. This discussion is provided on the condition that it cannot be referred to or quoted in any legal proceeding; if this condition is unacceptable to you, immediately delete this email and do not keep a copy of it in any form. The reader or recipient is strongly urged to consult with a lawyer for legal advice on these matters. Any reliance on the discussion information by someone who has not entered into a written retainer agreement with the lawyer providing the discussion information is at the reader's or recipient's own risk.

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