Television series joint venture
- John Deane
- Updated: Thu, 8th Dec 2016
We established a joint venture company for a writer and producer, to exploit royalties received from broadcasters.
The value add
We created an:
- Appropriate joint venture structure;
- Shareholder’s agreement;
- Articles of association;
- Ancillary production documents.
We ensured our client, the writer, retained copyright ownership, to maximise future exploitation. Consequently, our client retains:
- Full voting control of the joint venture if anyone acquires the production company;
- The rights in the television series, which
- Protect his future revenue streams;
- Control, due to preferential voting rights in the joint venture company.
Currently, we are reviewing finance arrangements with the broadcasters.
Joint venture: use in media
Our client wrote a script for a television series. A limited company, wholly owned by our client, owned the rights to the script. The production company became interested in producing the series. We advised our client to incorporate a joint venture company.
We negotiated with the production company, who sought finance from two broadcasters, with the following arrangement:
- The first broadcaster would finance the production,
- It had a right of first refusal to exploit the series,
- If the series went ahead, the joint venture would receive royalty payments.
- The second broadcaster had a second right of refusal,
- This broadcaster could only exploit the series after the first company had aired the series,
- It would pay royalties to the joint venture.
We incorporated a joint venture company. Our client’s company licenced the rights in the series to the joint venture company.
Joint venture company: structure
The company was incorporated with 10 shares. The:
- Writer, our client, held 7 shares which were ordinary A shares.
- Production company held the remaining 3 shares, which were ordinary B shares.
Each issued share had the right to appoint a director. That way, our client controlled the board with 7 votes out of 10.
We also included ordinary C shares. Apart from voting rights, all shares were equal. The ordinary C shares entitled the holders to:
- No votes;
- No right to appoint a director.
Articles and shareholders’ agreement
We always ensure we understand our clients’ objectives and concerns. Here we identified risks that another company might acquire the production company before production finished, i.e. acquiring the production company’s shares in the joint venture company. The acquirer might then acquire rights in the series, and a degree of control of the joint venture company. We added “change of control” provisions to the:
1 Shareholders’ agreement
We added “change of control provisions” to the shareholders’ agreement. If the production company was acquired then our client gained the right to acquire the production company’s ordinary B shares at fair value.
If the writer did not acquire the shares, then the production company’s ordinary B shares would convert to ordinary C shares. C shareholders have no voting rights.
2 Licence terms
We also added a term to the licence agreement which states: the licence terminates on a change of control of the ordinary B shares holder. Any third party who acquires the production company is not entitled to any further rights in the series. The most important right is the further right of exploitation granted to the second broadcaster. The company’s value lay in that right.
Besides the articles and shareholders’ agreement, the writer and production company signed a “co-production agreement”. This gave the writer further control of all decisions relating to:
- Series development: When the series was deemed “final” and:
- Ready for submission to the broadcasters.
- Production documents: Holding and maintaining production documents, e.g.:
- Employment agreements,
- Finance agreements,
- Framework agreements,
- Outsourcing agreements.
Copyright is valuable. Here, our client’s copyright was the joint venture company’s sole asset. By combining our company, commercial and intellectual property experience, we maximised our client’s position.
We gave our client sufficient control to proceed with production, and control of any future productions. We have the expertise to create flexible structures, and will identify the right structure for your project.
John Deane is a partner in the commercial team. John manages the commercial issues and agreements that arise or are necessary on a production project. John’s team encompasses tax, intellectual property, and corporate expertise.