Nets Enforcing Contract Clause

Feb 23, 2004  •  Post A Comment

It sounds like a network programmer’s dream come true-a legal restriction that prevents rejected projects from being produced by competitors.
Variously called a “turnaround rights restriction,” an “exclusivity clause” or a “turnaround provision,” the restriction is becoming more integral to development contracts between major broadcast and cable networks and their production partners.
Under certain circumstances, such restrictions can prevent a writer or producer from taking a series or television movie elsewhere, even if the original network declines to produce the project.
“It’s a relatively new concept in television that’s a lousy deal for producers,” said Carrie Stein, head of long-form television packaging for ICM. “If you have a chance to make a project somewhere, you should be able to make it.”
TelevisionWeek spoke to agents, producers and network executives for this story. Very few were willing to go on the record.
Rights restrictions are a standard element of studio development contracts that has recently become prevalent in the historically more communal television industry. Two factors that led to its introduction, sources said, are the growth of expensive, theatrical-quality projects at outlets such as HBO, TNT and FX and the rising number of quality cable networks producing original programming.
“These are not unusual clauses by any stretch of the imagination,” one agent said. “What’s new is that networks are adhering to [them]. It used to be a bit of gentlemen’s club. Now people are more concerned about the embarrassment factor-how can you give up something that might turn out to be a hit, and then will be used as a club against you?”
Here’s how a turnaround rights restriction typically works: Once a network abandons a project, the owner has 11/2 to two years to make a deal elsewhere or the rights revert to the network. However, if any material changes are made to the story line (or in some cases, if a key attachment such as a director or actor changes), the original network once again has first rights to the project.
For this reason, agents frequently tell their talent to line up competing interests prior to a project officially being declared dead at the original network, because once the project is put into turnaround, “The clock starts ticking.”
Industry insiders contacted for this story stressed that each contract is unique, and that a producer’s or writer’s relationship with a network can be far more important in a dispute than the words on the contract.
The network most often associated with using legal restrictions to block material from being developed by competitors is HBO. Though the network declined to comment officially for this story, a source at HBO who is familiar with the contract process said the clause is merely a way of protecting its substantial investments in new programming.
The clause was added about three years ago, the source said, in response to a number of competitors seeking to imitate HBO’s programming success by poaching from the network’s development slate.
Since HBO is both a high-quality production company and a network, it makes sense that the company would take protection measures similar to those taken by a theatrical studio.
Others said HBO’s use of the clause has a specific origin. Several sources noted that HBO’s contracts have long included a restriction against projects going to Showtime. Three years ago, the network added FX to the restriction as the basic cable network began targeting HBO viewers and experiencing success with “The Shield.”
Ironically, HBO’s biggest hit, “The Sopranos,” came to the network after being developed by Fox.
Other networks said to be contractual quagmires include TNT and CBS.
CBS declined to comment. TNT’s current administration denied that the network’s contracts contain such restrictions. “We like to have positive collaborative relationships with the producing community, and that informs our decision as it relates to turnaround material,” said Michael Wright, senior VP of original programming at TNT.
One producer who struggled in vain with HBO to get a project returned said he lost more than a year of time and revenue due to the restrictions.
“You basically have no recourse,” the producer said. “It’s unfortunate that some studios and networks feel they have to take things off the market to limit their competition.”
Some Wiggle Room
The HBO source contended that even though the network’s contract may seem harsh on paper, the company can be reasonable when approached by producing partners who wish to go elsewhere. As long as development costs are reimbursed, plus interest (and sometimes a piece of the back-end), most producers can wiggle free of their condition, the source said.
But according to one business affairs executive at a major agency, if HBO has a producer or writer in a contractual bind, “It’s nearly impossible” to get a project back.
Not that the executive faulted the network’s stance.
“We represent these producers and I can see their point of view,” the executive said. “But part of the HBO argument is that it’s not just their money, it’s their time. They’re not getting paid to develop projects for their competitors. Nobody wants to have egg on their face.”