The Insider's Guide to Film Finance

1 Underlying Rights

 

Never judge a book by its movie.

J. W. Egan

 

 

Financing Intellectual Property Rights

One of the fundamental elements of the film business is the buying and selling of rights: rights in books, scripts, treatments, magazine articles, short stories and various other forms of intellectual property. It is customary for a producer or production company to initially option the underlying rights in a project that is based on an existing form of intellectual property. For economic reasons, the cost of an option is much less than buying the rights. As a rule of thumb, producers generally pay 10 per cent per year of the purchase price. If the purchase price is £50,000 then a producer will pay £5,000 for a year-long option. This ...