Co-development and co-production
This guide is based on UK law. It was last updated in March
2008.
Overview
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.
Key issues
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.
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Co-development agreements
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.
Finance
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.
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Rights
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.
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Co-production agreements
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.
Roles and responsibilities
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.
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Credits
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.
Marketing and promotion
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.
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Finance
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.
Rights
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.
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Getting out of the agreement
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.).
Conclusion
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.
Contact: Yvonne Dunn (yvonne.dunn@pinsentmasons.com
/ 0141 248 4858) or see Yvonne's
biography.
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