So you’re sitting there watching “American Idol” and you’re wondering, “Man, I wish I thought of this. Where did they get the idea to make a show like this? I could be as rich as Simon Cowell by now!”
While, the Simon Cowell part might be a bit far-fetched, the rest of it actually has a pretty simple explanation. The creators of “American Idol” (and a continually expanding number of other reality and/or format shows) are not original at all. They based their shows on foreign formats and licensed those formats to create new versions of the same show.
Example: “The Office” is based on a UK original of the same name and was licensed to US producers on conditions which kept original producers, Gervais and Merchant, involved.
Example: “Homeland” is actually based on an Israeli original called “Hatufim” (“Prisoners of War”).
Example: “Dancing with the Stars” is actually based on a UK original called “Strictly Come Dancing“.
The foregoing examples have been radically simplified to illustrate the point that, essentially, as long as you can license the underlying concept of a program, you can adapt it for your own marketplace.
How do you get one of these licenses? Well, that’s really a question for a Producer, but it involves a lot of lunches and travel.
If, however, you are drafting or negotiating a Format License, there are a variety of factors to watch out for. I’ve included some more pertinent ones in my experience below:
- Rights: This is generally the most comprehensive aspect. Essentially, while you (if a producer) or your client (if counsel) may be licensing rights to the format, which rights are you actually licensing? Do you have to use the same script? Are you obligated to use the same producers? What about languages? Does the licensor wish to allow you to create a version in the same language as the original, or must you create it in a different language so as not to compete? If its a sitcom, can you change the plot substantially? Do you have to use the same characters? If a reality or game show, does it have to look the same, with same set decoration, format of game, etc.? Are any of the rights sublicenseable?
- Spin Offs: related to the above, will you or your client be able to create spin offs from the version created based on the format? What if one character takes off but the new version bombs? Do you need that right?
- Exclusivity: will you (if producer) or your client (if counsel) be the only party to license the format? If so, where? Which brings me to the next issue…
- Territory: where will you or your client be producing and/or distributing the formatted program? And, in what languages? Are there any limitations on where it can be distributed?
- Term: for how long do you or your client want to produce the licensed version of the program? Or rather, how long do you want to have the right to do so? If you don’t produce, does the licensor get a right of reversion to take back the license? How long after production of the version can you distribute the program or cause others to do so?
- Reps and Warranties: generally speaking, you or your counsel will want to be sure that the licensor has the rights to give what they are giving and that the format being licensed is wholly original. Of course, there are many others which you and/or your counsel will want to discuss.
- Credits: what credits will the original producers get? What about the new producers?
- Payment: This is the biggie in most cases. What is the licensor going to get as compensation for the license? Is the deal going to be structured on the front end (i.e. upfront license payment) or back end (i.e. royalties on distribution fees, revenue received through exploitation, minimum guarantees, broadcaster fees, etc.). Will payment be structured a combination of the two? What about timing of payment? On execution? Or, rather, part on execution and if back end payments, then after collection? Is anything contingent on commencement or completion of principal? Or, does any payment depend on securing financing by the new producer? If royalties, on what are the calculated (gross vs. net revenues) and how do you define either or both of those?