Author: Neal Weisman, Co-Chair, Producing Department, New York Film Academy
It is a core principle that producers must own their projects. In order to move successfully through the producing process, finance must be raised. A common form of film finance is equity investment. In exchange for cash, the investor will receive some ownership of the project. Before producers can give away partial ownership, they must first own their project.
Similarly, at a certain point, producers will sell the distribution and/or broadcast rights to a project. That’s the whole point, to have audiences see our work. Again, before selling something, we must own it first.
In order to own a project, a producer must acquire the film and television rights. While a producer cannot own an idea, we can own a literary property. A producer can simply purchase the film and television rights to an existing script. We can also commission the writing of a screenplay; inherent in any writing deal is the fact that the producer will own the script, as a result of paying writing fees to the screenwriter. In the case where a project is to be developed based on an already existing piece of underlying material (a book, a play, a video game, a person’s life), we can purchase the film and television rights from the creator of the underlying material.
How much do we pay for the film and television rights? We usually calculate the purchase price as a % of the project’s production budget. The industry standard is around 2%, but this will vary according to the value of the underlying material. A best selling book will have greater value than an unpublished manuscript. As the purchase price can be a major cost outlay, we usually wait until the first day of production to actually buy the rights. In order to create a path to purchasing film and television rights, we arrange for an option period—an amount of time during which we have the exclusive ability to make the purchase. Producers can expect to pay an option fee (around 10% of the purchase price, depending on the value of the material) for this option period.
An exclusive option to purchase the film and television rights is the mechanism by which producers can own their projects.