Out-Law Guide | 29 Nov 2005 | 4:07 pm | 6 min. read
Developing or producing with someone else makes sense for lots of reasons: it shares the risk, opens up funding opportunities from other countries and can bring on board a more senior producer's experience. However, if you embark on co-development or co-production it is important that the arrangement between you and your co-producer(s) is clear and set out in a contract.
The first and most important thing to do is to check out the person you plan to work with. Ask around and get a feel for their reputation in the industry – do you know his existing work? Checking out his previous production credits on the Internet Movie Database can be useful. You can find out information on foreign producers by carrying out searches and enquiries of the local producers' association in their territory, as well as basic checks at the local companies' registry. Obviously, the first aim is to establish that the person exists and that he is solvent.
It is also important at the earliest stage to establish what the respective responsibilities and rewards from the co-production for each co-producer are going to be. Even if the finance plan and budget are not finalised, it is important at least to get agreement in principle: better to find out early if your impression of what you are doing and getting paid matches your co-production partner's.
Often one of the co-producers is naturally the lead in the project, for instance if he is the one who has originated the project and brought it to the other. Whether or not there is a natural leader, it is important to establish early who will have final say in the event of a dispute. While both sides are likely to feel a bit uncomfortable about ceding ultimate creative control to one party, proceeding without this runs the risk that the project will grind to a halt if both sides cannot agree.
Even if the project is in early stages and requires further development, it is still important to enter into a co-development contract. Key areas to cover in this agreement are finance and rights ownership, even if what is written down is only an "in principle" statement.
It makes sense to draw up a budget for the development process. That way both sides can agree the overall cost and the contribution that each is expected to make to it.
The budget should normally be split between costs that are attributable to the producers' own overheads and costs that are payable to third parties, such as screenwriters, for commissioning drafts. If either producer is putting his own money into the development budget then you should ensure that provision is made for this to be recouped out of the production budget for the film/programme.
It is also sensible to draw up at least a rough budget for the eventual production. This allows the co-producers to verify that they agree the scale of the production. It also allows you to begin drawing up a strategy for raising the finance required, including who will approach which financier and what approval from the other co-producer is required to enter into financing deals. Where the co-production is to be between two different geographic territories, the producers will normally assume primary responsibility in their own territory for raising finance.
In the UK, accessing film tax relief (and the tax credit) in relation to co-productions involves an application to the Certification Unit at the UK Film Council (UKFC) for approval that the production qualifies as a British film for co-production purposes. This is done either under one of the specific co-production treaties that the UK has with other countries (e.g. Canada, France and Australia) or the European Convention on Cinematographic Co-production, which covers a number of European countries. The main issues that UKFC will consider are the respective financial and creative contributions of the parties and the local spend that the production is generating in their home area.
See also: The UKFC's co-production information.
There are two aspects to the issue of rights in the co-development/production. The first relates to rights that exist prior to the establishment of the co-development/production (underlying rights). These underlying rights should normally be transferred into the co-production or at least the development agreement should confirm that the co-producer who owns these rights does so for the benefit of the co-production. This can be coupled with an obligation on that co-producer to transfer the rights to the co-production at the relevant time.
If further work is being done as part of the co-development process, the agreement should confirm who owns the rights to that work. If the co-producers are sharing the cost of commissioning further work, you should provide for what should happen with the rights if the co-development/production comes to an end. Often co-producers will agree that the rights stay with the producer who originated the project, but with an obligation on that producer to reimburse any costs incurred by the other co-producer.
When the production is eventually made, ownership of rights will be dealt with in the production contracts with financiers, but it is always useful to provide in principle what the share of rights should be between the co-producers for rights which do not end up being transferred to financiers.
Co-production agreements will come into play when the project has been more developed and is at the stage of financing and production. It is very important at this stage that the co-producers set out the terms of their agreement in writing, covering such issues as production roles and responsibilities, budgets and finance and rights.
It is important to decide which of the co-producers will be primarily responsible for managing the production and who will in turn engage the production heads of department, lawyers and take the project from pre-production through to edit and finalisation.
Normally the producer who has been the originator of the idea will take this on. However, if one producer is contributing significantly more of the budget than the other then this also influences the choice of managing producer. Nomination of this person should not replace a statement of the respective roles and responsibilities of the producers in the co-production agreement and also agreement on the extent to which the producers need to consult with one another and seek approval for what they are doing in the production and the method of obtaining that consent/approval, especially where the producers are in different countries.
Credits are always a big issue in film and television production. In any production there will be a significant amount of negotiation around the size and type of credit, whether it is alone on the screen, for how long, in the front credits as well as the end credits etc.
Sometimes in co-productions the producers can agree a different set of credits for each territory, giving the producer in the particular territory more prominence. However this is not to be recommended, since it adds to the cost and adds another layer of discussion about which set of credits gets used in which territory.
As with most aspects of production, one co-producer may take the lead in organising this, whether in conjunction with a third party publicist or alone. Consultation with the other co-producer is essential, since they are often best placed to advise on the best marketing for their home territory.
All co-producers should be involved in the production of the finance plan and budget for the production. In addition, the agreement should make provision for what happens if the project goes over budget (normally the producers will share this overspend in the same proportions that they are sharing the profits). The agreement should also reflect what production fee (if any) each co-producer is receiving out of the budget.
It goes without saying that if the film or television programme proceeds to production then any underlying rights held by the co-producers need to be transferred into the co-production entity, with the co-producers then agreeing the proportions in which they are to own copyright in the finished product.
The agreement should also deal with exploitation of those rights and state which of the co-producers is has the final say on appointing distributors and sales agents. The co-producers should collaborate on the distribution strategy for the production, especially in relation to their own territories where they are likely to be best-placed to advise. Often the distribution rights will be carved up according to the territories of the co-producers in the first instance, with each of them being granted exclusive rights in their own territories.
As with any contract, it makes sense to provide a "get out" clause in case things are not working. Common reasons for the contract being terminated would include one of the parties becoming insolvent, failing to carry out an important duty or responsibility under the contract or something beyond the control of either co-producer (war, strikes, natural disaster etc.).
Co-production can provide a valuable way of levering in production finance and experience to a production. However, as with any arrangement where there are complex rights and obligations on each side, it is important to enter into a contract at the earliest stage to govern the key points for each party.