Television series joint venture
Gannons established a joint venture company for a writer and producer, to exploit royalties received from broadcasters.
Our client was a script writer and had written a script for a television series. A limited company, wholly owned by our client, owned the rights to the script. A production company became interested in producing the series. We advised our client to incorporate a joint venture company in order to facilitate this. Thus we incorporated a joint venture company and our client’s company licenced the rights in the series to the joint venture company.
Documentation we created
To serve our client’s needs, we created an appropriate joint venture structure between the writer and producer. We also drafted a shareholder agreement, the articles of association, and various ancillary production documents for the joint venture. We also reviewed the finance arrangements with the broadcasters.
We ensured our client retained copyright ownership, to maximise future exploitation. Consequently, our client retains full voting control of the joint venture if anyone acquires the production company. He also retains the rights in the television series, which protects his future revenue streams.
Negotiation with broadcasters
We negotiated with the production company, who sought finance from two broadcasters. The following arrangement was agreed. The first broadcaster would finance the production, with 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 also pay royalties to the joint venture.
Joint venture company structure
The company was incorporated with 10 shares. The writer, our client, held 7 shares which were ordinary A shares, while the 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 did not entitle the holder to vote, or appoint directors.
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, thereby 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 shareholders’ agreement and licence terms.
Our change of control provisions meant that 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.
We also added a term to the licence agreement which states that the licence terminates if there is a change in control of the ordinary B shareholders. 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:
The writer had control over when he deemed the series complete and ready for submission to the broadcasters.
The writer also held and maintained the production documents, including employment agreements, finance agreements, framework agreements, and 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.
Gannons saw to our every need, and made things seem remarkably straightforward