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Residuals for Made-for-Free Television Projects

(Example 2)

Product that is made for free television (network or syndication) generates both fixed and revenue based residuals depending on where it is reused. The first broadcast is covered by your initial compensation and therefore no residual is due for this use. For "dramatic" programs (e.g. episodic dramas, sitcoms, television movies, and miniseries), the Other Than Network Prime Time minimums are generally the basis for residuals calculations, which we will call the "residual base."

If the material is rerun on network prime time television, a residual of 100% of your residual base is due. For all other domestic reuse--network non-prime time and syndication--a decreasing percentage of your residual base is due.

When the product is broadcast on foreign television, you receive up to a total of 35% of your residual base. The 35% payment can be made in three installments of 15%-10%-10%, which are triggered by the first foreign telecast and levels of foreign sales. For programs on which the writer's services were commenced on or after May 2, 2001, an additional 1.2% of foreign gross receipts (from both free television and basic cable) is due when distributor's foreign gross receipts reach certain levels.

For reuse in other markets, you will receive revenue based residuals. It is important to remember that, in most cases, the Company is not obligated to pay revenue based residuals until it actually receives the revenue due for the license of the product. If the license fee covers several years, the revenue may be spread over the entire term and the residuals would be paid in the same manner. Residuals that are revenue based are allocated as follows: "Written by"--100%; "Teleplay by" (if a "Story by" or "Television Story by" credit is accorded)--75%; "Story by" or "Television Story by"--25%. In general, if no form of "Story by" credit is accorded, 100% goes to the writer(s) receiving "Teleplay by" credit.

The following are the percentages and the due dates for each type of residual compensation payable for made-for-free television product:

Reuse Market/Residual Payment Owed & Due Date

Network prime time (ABC, CBS, NBC, FBC)

No residual is due for the initial broadcast. All reruns in network prime time are paid at 100% of your residual base.

In general, as of May 2, 2003, all reruns in prime time on the Fox Broadcasting Company ("FBC") will be paid at the network rate of 100% of your residual base.

Residuals are due within 30 days of the date of telecast.

Network non-prime time

A percentage of your residual base is due based on the number of broadcasts as follows:

Broadcast # Percentage
2 50%
3 40%
4, 5, 6 25% each
7, 8, 9, 10 15% each
11, 12 10% each
13+ 5% each

Residuals are due within 30 days of the date of telecast.

Syndication (including UPN, WB and PAX)

A percentage of your residual base is due based on the number of broadcasts as follows:

Broadcast # Percentage
2 40%
3 30%
4, 5, 6 25% each
7, 8, 9, 10 15% each
11, 12 10% each
13+ 5% each

Residuals are due within four months of the date of telecast. For reruns occurring after May 1, 2003 on the WB or UPN, payment is due within 30 days of the date of telecast.

Half-hour series placed into syndication after May 1, 2001.

For half-hour series syndicated in markets representing 50% or less of U.S. television households, an additional residual of 20% of your residual base is due for each run. In the event the series is also syndicated in more than 50% of U.S. television households, full payment of the applicable rerun percentage, as set forth above, is due for each run.

Payment is due within four months of the telecast date.

Fox Broadcasting Co. ("FBC")

Reruns on FBC in prime time are subject to FBC percentages as set forth below. Residuals for services performed for FBC prior to May 2, 1995 are the same as the syndication rates.

Writing services commenced May 2, 1995 through May 1, 1996
Broadcast # Percentage
2 50%
3 37.5%
4, 5, 6 31.25% each
7, 8, 9, 10 18.75% each
11, 12 12.50% each
13+ 6.25%each
Writing services commenced May 2, 1996 through May 1, 1998
Broadcast # Percentage
2 55%
3 41.25%
4, 5, 6 34.375% each
7, 8, 9, 10 20.625% each
11, 12 13.75% each
13+ 6.875% each
Writing services commenced May 2, 1998 through May 1, 1999
Broadcast # Percentage
2 60.5%
3 45.4%
4, 5, 6 37.8% each
7, 8, 9, 10 22.7% each
11, 12 15.1% each
13+ 7.6% each
Writing services commenced May 2, 1999 through May 1, 2001
Broadcast # Percentage
2 66.6%
3 49.9%
4, 5, 6 41.6% each
7, 8, 9, 10 25% each
11, 12 16.6% each
13+ 8.4% each
Writing services commenced May 2, 2001 through May 1, 2002
Broadcast # Percentage
2 80%
3 59.9%
4, 5, 6 50% each
7, 8, 9, 10 30% each
11, 12 19.9% each
13+ 10.1% each
Writing services commenced May 2, 2002 through May 1, 2003
Broadcast # Percentage
2 90%
3 67.4%
4, 5, 6 56.3% each
7, 8, 9, 10 33.8% each
11, 12 22.4% each
13+ 11.4% each

Residuals are due within four months of the telecast date.

After May 1, 2003

Residuals on all programs rerun in prime time on FBC, regardless of the date on which writing services were performed, will be paid at the same rate as projects rerun on ABC, CBS, and NBC, which is 100% of your residual base. The increase to 100% of your residual base does not apply to reruns occurring between May 2, 2003 and October 31, 2003 of episodes of FBC series 1) produced for the 2002 - 2003 FBC prime time season, and 2) written prior to May 2, 2003.

FBC Non-prime time

Residuals for non-prime time reruns on or before May 1, 2003 of programs produced for the FBC are paid at the syndication rates discussed above. After May 1, 2003, such reruns are paid at the network non-prime time rates.

Residuals are due within 30 days of the date of telecast.

Foreign Television

Writing services commenced before May 2, 2001

A maximum of 35% of your residual base is due. The 35% may be paid in increments of 15%-10%-10%.

The initial payment is due within 30 days of the Company's knowledge of the foreign telecast, but no later than six months from the first foreign telecast. Subsequent levels are due when levels of receipts, determined by the length of the program, have been reached.

Writing services commenced on or after May 2, 2001

After payment of the 35%, 1.2% of foreign gross receipts is due, in perpetuity. The 1.2% payment is triggered when foreign gross receipts reach the following levels:

Program Length Level of Receipts
1/2 hour $350,000
1 hour $700,000
over 1 hour, up to 2 hours $1,800,000
over 2 hours, up to 3 hours $3,000,000
over 3 hours, up to 4 hours $4,000,000

Effective May 2, 2003, the level of receipts increases to $357,500, $715,000, $1,830,000, $3,060,000, and $4,085,000.

Payment is due every six months.

Theatrical

Up to 150% of your television residual base, or 100% of the theatrical minimum depending on the scope of release.1

Residuals are due upon theatrical release.

Pay Television

1.2% of distributor's gross receipts.

Residuals are due within 60 days of the end of the quarter in which gross receipts or licensing fees are received by the Company.

1This is a theatrical release payment for a program produced for television. If you write a television script but it is produced as a theatrical project, please call the WGAw Contracts Department at (323) 782-4501 or the WGAE at (212) 767-7800.

In-flight

1.2% of distributor's gross receipts.

Residuals are due within 60 days of the end of the quarter in which gross receipts or licensing fees are received by the Company.

Videocassette and DVD

For programs produced prior to March 1, 1985: 1.2% of the Company's reportable gross.

For programs produced on or after March 1, 1985: 1.5% of the first million dollars of the Company's reportable gross (or "producer's gross"); 1.8% thereafter.

Residuals are due within 60 days of the end of the quarter in which gross receipts or licensing fees are received by the Company.

Basic Cable

For programs produced prior to July 1, 1984: 2.5% of distributor's gross receipts.

For programs produced on or after July 1, 1984: 2% of distributor's gross receipts.

Residuals are due within 60 days of the end of the quarter in which gross receipts or licensing fees are received by the Company.

The One-Hour Waiver

In 1988, the Guild agreed to change residuals due for certain one-hour made-for-network prime time series rerun in syndication. As of May 2, 2002, the waiver will also apply to one-hour dramatic series produced for FBC which have not been exhibited in syndication prior to May 2, 2002.

Previously, regular fixed syndication residuals applied to such programs. However, under a Sideletter to the 1988 MBA, often called the "one-hour waiver," the residuals due may be as low as 50% of the usual fixed residual or as high as 150% of the fixed residual. If the total license per episode is $650,000, you will receive 100% of the fixed syndication residual amount. If the total license fee per episode is less than $650,000, then you will receive less than 100%, to a floor of 50%, of the residual calculated under the regular syndication rerun formula. (If the program is telecast in markets amounting to less than one-third of the television households in the U.S., the 50% floor does not apply.) Likewise, if the per episode license fee is over $650,000, you will receive more than 100% of the regular residual amount, to a ceiling of 150%.

Residuals are due within four months of the date of telecast.

In the case of foreign reuse of a program for which a one-hour waiver applies, a single payment of the 35% of the residual base is due. For programs on which writing services commenced on or after May 2, 2001, an additional 1.2% payment is due. Residuals are due within 30 days of the Company's knowledge of the foreign telecast, but no later than six months from the first foreign telecast.

Application of Excess

The Company may seek to include an "Application of Excess" provision in your writing services agreement. Under this provision of the MBA, any monies paid to you in initial compensation for story and/or teleplay (not rewrites or polishes) that exceed double the Guild minimum may be credited against residuals. The Company may only use this provision if the intent to do so is stated in your writing services agreement.