Thread by @DavidHSteinberg

Welcome back to our deep dive on your Writing and EP Services Contract. We’re on pages 6-7 today discussing Paragraph 11, CONTINGENT BONUS.

Here's our link back to page 1 if you're just joining us:

https://twitter.com/DavidHSteinberg/status/1458131000907550721?s=20

This contract is a bit unusual in that it lumps the traditional “back end” definition with season bonuses. I mean, both are contingent, so it makes sense, but they are pretty different ideas.

Subsection (c) covers season bonuses and those are pretty straightforward. Every time the show gets renewed for another season, the creator gets a bonus. The numbers are redacted but the bonus gets bigger and bigger.

One highly relevant detail to note: This is where almost all your “back end” money comes in on a streaming contract. These bonuses are modest for a broadcast network but huge for Netflix.

That’s because there really is no traditional “back end” for streaming so they make up for it with season bonuses. Also, getting to season 5 is next to impossible at some streamers so that bonus is gigantic.

And the reason I jumped ahead to season bonuses is not only because it’s simple to understand and calculate but it’s highly relevant to any pilot contract, not just broadcast. This is contrasted subsection (a) (usually its own section IMHO), which is the traditional back end.

What is “back end”? Back end is profit participation. It’s an equity stake in the show itself. It’s a piece of the pie where the pie is every income stream the show ever generates: soundtracks, DVDs, syndication, merchandising (just to name the ones I could think of).

Think of it this way. Season bonuses are great, but wouldn’t you rather have a percent of the profits from the Stranger Things merchandise? The Simpsons franchise is worth many, many billions.

A show creator gets a piece of the back end. It’s a negotiable percentage of the adjusted gross/net proceeds. And how that adjustment is calculated is literally 76% of the length of this contract.

(Spoiler alert: This contract is actually only 14 pages. The rest is the “Terms and Conditions” that define back end.)

I’m not going to get into how studios cook the books to claim no profits on a film (hint: cross collateralization) but it’s hard to cook the books too much on a tv series that generates billions in revenue.

So they spell out in great detail what all the deductions are to get to the adjusted proceeds, of which you take your percentage.

To be clear, this is real money. It only really comes into play for broadcast network (or some cable) shows that go into syndication but also any huge franchise that has secondary markets or merchandise generates significant back end.

In film school, our tv professor showed us a picture of a big-time film writer’s house. It was very nice of course. Then he showed us a picture of Aaron Spelling’s house. Creators of hit shows in the 70s, 80s, and 90s made hundreds of millions of dollars.

They still do, but it’s harder. Any franchise, Law and Order, CSI, NCIS, Seinfeld, Friends, etc. is worth billions. So that piece really, really matters.

For broadcast network shows. Because they’re sold into syndication. Which we’ll get to shortly. But for cable & especially streaming there is almost never a syndication sale, so the back end is never going to be massive. So they compensate you on the “front” end w season bonuses.

That’s it for Contingent Compensation. Short and relevant folks can skip ahead to the next section. Long and detailed nerds, here’s a one-year course on tv finance and distribution in a Twitter thread:

https://twitter.com/DavidHSteinberg/status/1465367021974011904?s=20

Paragraph 12, CREDIT (and welcome to page 8). Not too many surprises here. Writing credit is determined by the WGA, if you EP the pilot you get EP credit, if you EP or consulting produce the series you get that credit.

Standard language about size and type ("not less than 100%") means they can't make your credit tiny just to fuck with you. These clauses are much longer in actor contracts where billing is more important.

Finally, subsection (e) deals with company logo. On your first and maybe several more subsequent deals you might get a company logo credit but not an *animated* company logo credit.

"Animated" company logo credit is the top-of-show (i.e., best) credit; it's the one you see and remember from hit shows like the Bad Robot robot or Fremulon or if you're older, "Sit Ubu Sit, Good Dog" or Stephen J. Cannell's page flying out of the typewriter.

If you're an ordinary mortal, you get non-animated company logo. If you watch all the way to the end of No Good Nick, you'll see mine!

Paragraph 13, OFFICE/PARKING/ASSISTANT. Not sure what insights I can add to this one other than everything is spelled out, even your office, parking, and assistant.

We've covered most of the important sections so tomorrow I'll speed through the rest of the contract and wrap things up on Friday with a big surprise!

As promised, here's where we discuss the rest of the main section of the contract:

https://twitter.com/DavidHSteinberg/status/1466444780733300738?s=20