June 19, 2024

Could a Turnaround Agreement be Right for You?!

Courtesy of Freepik.com

Industry insiders often talk about turnaround agreements and how commonplace these agreements are in the film and television industry. As usual, however, most people don’t understand the terminology and when it’s appropriate to request one. Let’s shoot to demystify these agreements a bit!

Turnaround agreements are employed when the original owner of a piece of intellectual property (“IP”) believes strongly in his/her project! Once a project gets shelved by the original producer or studio that purchased the IP, these agreements allow the original IP owner to shop the project to a different studio/producer, effectively giving the project a second lease on life.

Though similar in nature, one of the first distinctions to note is that turnaround agreements differ from expired option agreements. In an option, an agreement is made between a writer and a producer, granting the producer an exclusive option to buy the rights in the writer’s work. The option period gives the producer time to develop a film or television program based on the IP, with the assurance that no one else is developing the same rights simultaneously. If the producer decides to proceed with the project, it will exercise the option and purchase the rights in the work. However, if the producer doesn’t proceed and the time period expires, the writer is free to do shop the project elsewhere.

In contrast, turnaround agreements only become applicable after the work has been purchased by the studio or production company. In other words, the acquisition price has already been paid and the studio is the owner of the IP.

Below is a breakdown of how these agreements generally come to fruition:

• Project Gets Stalled- After acquiring a script, book or other IP with the intention of developing the IP, a studio/producer (hereinafter Producer A) abandons the project.

• The Turnaround- The writer/original IP owner reaches out to negotiate a turnaround agreement to take back control of the IP for a defined time period.
  

• Repayment x Terms- If the writer manages to find a new producer or studio (hereinafter Producer B) to take on the project within that timeframe, the project can be revived there. However, there are usually conditions. Producer B will have to reimburse Producer A for the development costs it incurred (e.g., think script revisions, initial planning etc.). The turnaround agreement will specify the exact amount and terms of repayment. And oftentimes, Producer A will request to co-produce the project with Producer B, especially since Producer A now has evidence of the project’s marketability because of the Producer B’s interest in the project.

It's fairly obvious why writers/original IP owners want to keep the project alive. However, why would studios use these agreements? Turnaround agreements allow the original producer/studio to recoup costs and potentially benefit from the exploitation of the project even if it didn’t originally fit its current slate or vision.

In conclusion, turnaround agreements offer a chance for both the original IP owner and the purchaser/producer to benefit from the exploitation of the IP. The original rights holder gets the opportunity to shop the project elsewhere, and the studio can recover some of its investment and potentially profit if it gets made by someone else. These agreements, if negotiated in good faith and use sparingly, can be a win-win for all parties involved!