Prospect Ventures Inc. (fka IVAP)

[spaderox]

NEWS: Update on Canada broadcasters and producers! LEGAL

game changer in a positive way if you were on board with the Rogers aspect

article is massive:
http://www.mondaq.com/canada/x/150250/Broadcasting/Terms+of+Trade+Agreement+Dawn+of+a+New+Era+Between+Canadian+Producers+and+Broadcasters

whole article is worth reading, but this is why i talk about Rogers so much. Look at the license conditions and term changes.


Development and Evaluation

The Agreement provides guidance for the evaluation and development of programs.

It requires that the Broadcasters must make reasonable efforts to effectively communicate with producers across Canada about the types of projects in which they are interested. The Broadcasters must identify on their websites their specific programming services and the personnel in charge of responding to written program proposals with their applicable contact information.

The confidentiality of producers' program proposals is safeguarded by the Agreement and producers must keep confidential the Broadcaster's programming strategies. A Broadcaster cannot request a waiver of any existing rights that a producer may have in its program proposal.

The Agreement further provides that the rights to a program proposal are owned solely by the producer, unless there is a signed development agreement to the contrary. A Broadcaster may not require a producer to commence development before a development agreement is executed. However, once a development agreement is signed, a Broadcaster's financial participation entitles it to certain exclusive rights, such as to request changes to delivered materials, to participate in additional development and to negotiate a license agreement. The development agreement may not incorporate the terms of a license agreement. These terms are only to be negotiated once the project has been fully developed or the Broadcaster has made an order for the project.

Where a Broadcaster expresses an interest in developing a project, the Broadcaster and the producer must use best efforts to execute a development agreement within 60 days. Each phase of development must be specified in the development agreement and the Broadcaster has no more than 18 days (40 days in the case of animation co-production) following the receipt of development materials to inform the producer of whether it approves the submitted development materials. If the Broadcaster chooses to turn down the proposal, the Broadcaster is only entitled to reimbursement from the producer of its out-of-pocket cash investment in the development of the project. If the project is ultimately greenlit by another Broadcaster, this reimbursement is to be paid on the first day of principal photography or key animation.

Once the final deliverables under the development agreement have been received, the Broadcaster has 6 months to decide whether it wishes to license the project. At the end of this 6 month period, the Agreement requires the Broadcaster to either (i) order the project (subject to negotiation and agreement of the licence terms), (ii) agree with the producer to continue to further develop the project, or (iii) release its interest in the project in writing.

Licence Conditions

When a project is greenlit by a Broadcaster, it may then engage in negotiations with the producer to license the project.

The Agreement provides the producer with a 90 day period, once the Broadcaster agrees to order the project, to confirm all other sources of financing for the production. This 90 day period may be altered by mutual agreement so as to provide flexibility for funding deadlines and "exigencies of production".

The Broadcaster must sign a long-form broadcast license agreement at least 2 weeks prior to the commencement of principal photography or key animation, provided that the producer has submitted "reasonable agreed-upon deliverables" . The Broadcaster must then broadcast the program on a CRTC-licensed platform within 12 months of the commencement of the licence term. The Broadcaster must make good faith efforts to notify the producer 30 days in advance of the first broadcast of the program. Finally, if a Broadcaster wishes to order additional episodes of a program for a new season, the order must be made within 6 months of the first broadcast of the last commissioned episode of the preceding season.

A Broadcaster's right of first negotiation ("ROFN") and right of last refusal ("ROLR") in both development and license agreements is limited by the terms of the Agreement. A ROFN provides the Broadcaster with the first right to negotiate to develop or license a program before the producer can enter into negotiations with another Broadcaster. The Agreement requires that that a ROFN must be exercised by the Broadcaster by a fixed start date or in reference to a clearly specified timeframe identified in the development or license agreement. If no timeframe is provided, then the timing of the exercise of the ROFN will be at the sole discretion of the producer. If negotiations with the Broadcaster are entered into as a result of the exercise of the ROFN, the duration of the negotiation will be the timeframe specified in the development or license agreement, but cannot exceed 45 days.

A ROLR provides the Broadcaster with the right to license a project that it previously rejected by matching the terms offered by another Broadcaster. A ROLR can significantly limit the bargaining power of the producer. As a result this type of right is limited by the provisions of the Agreement. Specifically, a Broadcaster may only be granted a ROLR to (i) acquire exclusive exhibition rights for additional programs (meaning additional episodes of the same season or any subsequent season of the program, any sequels, prequels or remakes of the program, or any spin-off programs) or (ii) to obtain an extension of the licence term.

The Agreement further addresses a Broadcaster's entitlement to share in any surplus financing proceeds beyond the original approved financing plan and/or in any production underages. Where the producer receives surplus funds for a project after the Broadcaster has approved the project's financing plan, the Broadcaster and the producer must give good faith consideration to whether the surplus funds should form part of the financing of the production budget. The Agreement provides that under no circumstances will the surplus entitle the Broadcaster to require a reduction in its licence fee. The Broadcaster is, however, entitled to a share of the surplus funds in proportion to any equity investment it has made in the project. Further, where a program is produced under budget, the Broadcaster is entitled to a pro-rata share of the underages proportional to its investment in the financing of the project.

License Term

The Agreement also provides for specific limits on the term of a broadcast license. Specifically, a broadcast license can only have a maximum duration of 5 years (subject to a possible ROFN and ROLF as described below). This 5 year term must commence no later than the earlier of (i) 6 months from the delivery of the program (or the last episode of the program in the case of a series), or (ii) the first telecast of the program (or any episode of the program in the case of a series).

While previously, a Broadcaster could negotiate an automatic extension of the original license term for the original season if additional seasons were ordered, this is no longer permitted by the Agreement. For example, a Broadcaster can no longer automatically extend the term of Season 1 once it orders Season 2 to ensure that the licenses for both Season 1 and 2 end simultaneously. This ensures that producers do not progressively lose the potential value of exploiting earlier seasons as new seasons are produced and broadcast.

A Broadcaster is permitted to have a ROFN and a ROLF in order to extend the original 5 year term of the license, but only if a fair market value license fee is paid to the producer for the extension. Each subsequent license extension is for a maximum period of up to 5 years. The Broadcaster may exercise its right to extend the license as of the earlier of (i) 6 months prior to the expiry of the third year of the original 5 year licence term, or (ii) 3 months following the execution of the licence agreement for a subsequent season of the program.