A novel was published in the mid '90s and became a best seller. A studio paid a small fortune and purchased the book. Over several years they hired writers who adapted the book but the studio never went forward to make the picture. They put it into turnaround. No other studio picked it up.

 The original writer of the novel, frustrated, adapted his own novel and submitted it to the studio. They loved it but much time passed, nothing happened and it was once again put into turnaround.

 I would like to make a deal with the novel/screenwriter and acquire the novel rights and his screenplay adaptation. I understand that turnaround costs generally have to be reimbursed. If I commit to pay the author for the book rights and for the screenplay, who is responsible to reimburse the studio?

Answer by Brandon Blake, Entertainment Lawyer:

Thanks for a great question about a very complicated part of the option-acquisition process. While the terms of a Turnaround Agreement can vary substantially from one project to another, since it is the writer’s job to initially negotiate a turnaround agreement as part of the purchase of the property, there are many elements that most turnaround agreements share.

First, it is important to realize that turnaround is not the same thing as an expired option agreement. When an option agreement expires, and of course depending on the terms of that document, usually the writer at that point is free and clear to thereafter do anything the writer wants with the project, including selling it to a new production company. There can be some strings attached to development materials produced by the option holder, but that is a separate article.

However, a turnaround agreement only becomes applicable after the work has been purchased by the studio or production company. In other words, the acquisition price has already been paid and now the studio is the owner of the work.

So why would a studio ever want to enter into a turnaround agreement, given that the whole acquisition price had already been paid?

The reason is generally because a decision is made at some point to abandon development of the project. While that can be a costly decision, since the whole acquisition price would be lost, it is sometimes better to let that fee go, rather than produce a film that the studio decides will not be profitable.

So turnaround then ends up being to the studio’s advantage. It is too late to get the money back from the writer of the script, but the studio can offer the writer a period of time in which the writer can go out and find a new buyer for the property. Basically the studio is using the writer to try to recoup the costs that the studio spent on the script. Writers have an incentive to do this work because the writer wants to see a script get produced, and besides the career benefits to that, there are also usually bonuses and backend participation that will only be paid if the film actually gets produced.

Now back to the question, which is, who gets paid under a turnaround agreement? It is the original studio that has to be paid, because the studio is the one that actually owns the rights to the project. However, the right to re-purchase the rights owned by the studio are actually held by the writer, so both parties must be negotiated with to complete the deal. The new producer or studio must ensure that the turnaround is conducted correctly, or else there will be a problem with the chain-of-title with the project.

The price to be paid for the turnaround is specified by the turnaround agreement, but is generally more than the initial payments made to the writer for the option and acquisition. How much more will be decided by the initial negotiations the writer or his agent or attorney did when the studio purchased the script in the first place.

As with any entertainment matter, please do not make a decision about complex matters without consulting an experienced entertainment lawyer first. I have been representing feature film projects, television series, and recording artists for more than 16 years. Please feel free to contact my office about a quote.

- By Brandon Blake, Entertainment Lawyer