Splitting sales away from formats is fraught with danger
Melissa George, Essie Davis and Sophie Okonedo star in The Slap
Most shows are optioned
“DCD had US format rights on The Slap and we sold them after selling all territories for TV licences of the finished show, including the major markets. Buyers included the BBC, Arte, SundanceTV and DIRECTV. NBC had good showrunners on board the new version giving it value. It is now in distribution too and Screen Australia and the producers will have seen money from the production going ahead, although the lion’s share of revenue tends to be from the finished program sales in the first instance – format license options tend to be low and fees only paid once and only if the show goes into production.
Alex Dimitriades in The Slap
“Overall The Slap format had a positive impact on sales, but if a format is less successful it can dampen the enthusiasm on the markets for the sales, so it’s important to have the finished program sales in place first to see returns overall.
“I’ve not found the appetite for formats falling, including drama formats. The issue with format options is that, as I said, the option fees are low and the odds of going into production are hard to predict, so we tend to look on options as a bonus not the meat and potatoes. We have optioned most of our dramas as formats in the US. We also have options ongoing in France and the UK on a couple of shows. The difference is that there are many more channels commissioning drama in the US than in Europe where it is a fairly crowded market. The US tend to operate on a fee per episode and Europe tend to operate on a percentage of budget.”
Doing business with America
“We have found that you are helped considerably if you have name showrunners on the creative team alongside the original producers in order to be noticed and to inspire confidence in the networks.
“Studio contracts are an enormous amount of work to ensure that they cover all eventualities as well as ensure that both the producer’s and the investor’s interests are covered. You can expect to run though many drafts and have to think way beyond the immediate time frame and into the future to protect the long term interests of a format as well as cover off any potential breaches against existing sales. There are certain elements of studio contracts that are hard to shift, including the formulas for modifying gross receipts according to the talent acquired to get the show made, and so this is another point to navigate to ensure that there is a floor of what you will see.
“Before we embark on any of these conversations we have found that it’s important to find out what the producer wants. Some want to go to Hollywood. That’s their ambition and you structure the deal according to that, although this is by no means always the case, and the interest may be in the highest returns. It’s all very time consuming and people get emotionally engaged because it can be a dream world. Nobody should be under any illusions that it’s simple.
“Format deals are utterly appropriate to do if they are well handled and at the right stage of exploitation. What you don’t want is for a format option to hold up anything because you’ll lose all value in your finished show. If you are proud of your show – make sure you get good sales across the world first – and as part of that aim to sell into cable and other networks in the US.”