How can producers best manage Covid-19 legal and commercial risks over the next few months?

In every issue of zoom-in we examine the commercial, legal and regulatory hoops programme-makers have to jump through to get their programmes safely to air. Our production legal schedule above sets out the five key stages of production which producers need to consider and the advice and expertise they are likely to need at each stage. In each issue, we focus on one or two particular aspects of production legal requirements.

Is filming legal?

The first question is where you are filming, to determine which laws apply.  Laws are likely to relate to restrictions on gatherings, the wearing of masks, who has to quarantine and for how long. The laws of multiple countries may apply if you are filming in different locations, or crew or contributors are travelling from one country to another.  And, of course, the rules are different depending on where you are. 

For example, whilst exceptions to restrictions on freedoms for ‘work purposes’ apply in most jurisdictions of the UK, the exceptions don’t all operate in the same way.  Take restrictions on gatherings in private dwellings.

Whilst filming with a contributor showing you their antique clock collection in their home in England may be permissible because it is reasonably necessary for ‘work purposes’, and thus falls within an exception, the same filming may be illegal in Northern Ireland where the ‘work exception’ to restrictions on gatherings in private dwellings is drawn more narrowly. 

And now, even within England, consideration needs to be given not only to the rules where filming is taking place, but to where a crew member or contributor resides, as rules and restrictions that an individual must comply with, depend not on where they are, but where they live. 

A contributor from a city under Tier 3 restrictions must abide by those restrictions whether they are in Liverpool or rural Cornwall.  The lesson to take from this – do your homework and try to anticipate how law might change which would affect future plans!  

Health and Safety first

Never has health and safety been so centre stage in TV production. Consideration of all matters COVID-19, thorough risk assessments and implementing protocols and measures to minimise risk is now an essential pre-requisite of any commission and production.

Broadcasters, financiers and other commissioners are likely to insist upon it and, indeed, production may only be legal if a proper risk assessment has been undertaken and requisite health and safety measures put in place. Engaging and investing in experienced industry H&S professionals is a must.

Various helpful guidelines have been published to help guide and assist the UK production sector get back on its feet. Most are available on the PACT website: https://www.pact.co.uk/covid-19/production-guidance.html

Business affairs and underlying agreements

Making television is an expensive business with producers committing themselves to huge financial outlay from the start, albeit largely underwritten by commissioners, distributors and other financiers.

There are the outgoing financial commitments producers have to make to crew and others who work on the production, then there’s the money producers receive (or are promised) from commissioners, financiers and distributors in return for which they are contractually obliged to produce and deliver content. What, if anything, can producers do to protect themselves commercially and financially from a COVID-19 shutdown?

With underlying agreements, like those which oblige production companies to pay crew and others working on production, the key to managing financial risk is focussing on what the agreements say about force majeure, suspension, and termination.

Underlying agreements should include a right for producers to suspend an engagement for reasons of force majeure (extraordinary events beyond the parties control), so that no further fees are payable while a production is stood down, and allow for the engagement to continue after the suspension ends.

As to how long a suspension can continue, contractual provisions should be fair and reasonable, considering the specific circumstances. If an individual is contractually barred from accepting other engagements during a period of suspension and therefore cannot earn money, it would not be reasonable for suspension to continue for an extended period.

PACT has suggested a maximum of 21 days suspension for crew where they are unable to accept other work. However, if an individual is allowed to accept other work during suspension (provided they undertake to promptly re-take up their suspended engagement when required), it may be considered reasonable to keep the suspension in place for longer.

The right to suspend engagements in contracts should work together with the termination clause, which should state that producers can terminate an engagement if a force majeure event continues beyond a stated time period (whether there has been a suspension or not), so that if production is cancelled or decommissioned, the producer can cut off payment of fees from the date of termination, or the start of the prior suspension if there has been one.

The other main commercial risk for producers concerns the contractual relationship with broadcasters and other funders who either release, or promise to release, funds subject to contractual obligations being fulfilled by producers i.e. delivering content.

Most of the main UK broadcasters looked to revise their force majeure wording, or introduce new COVID-19-specific wording, after the lockdown eased to mitigate their financial risks, and to place risks primarily onto producers and in May 2020, PACT posted a note warning their members of the BBC’s, Channel 5’s, and ITV’s changes.

The BBC changes stated that if the production schedule for a programme is disrupted due to COVID-19, a revised commissioning specification should be completed by the producer within 6 weeks, and if revisions cannot be agreed, the BBC is entitled to terminate the agreement – the consequences of termination under the BBC General Terms is that cashflow is cut off at the point of termination.

Channel 5’s new wording granted the broadcaster a right to suspend and terminate if continued production might harm Channel 5 or Viacom’s reputation or be against either party’s internal guidance.

PACT and Channel 5 subsequently agreed that any such suspension must continue for more than 4 weeks before termination. PACT and Channel 5 have also agreed that both the producer and Channel 5 can suspend a production agreement if to continue production would be against government COVID-19 guidelines or instructions, and that if suspension continues for more than 4 weeks then either party may terminate, and that Channel 5-approved ‘pause and start up production costs’ resulting a Covid-19 suspension (and which are not covered by insurance) can be recouped from any underspend and in first position from net receipts.

The ITV changes stated that in the event of any COVID-19 delay to production, ITV would not pay towards postponement or associated costs on the basis that they only pay a licence fee on delivery and acceptance.

Channel 4 didn’t change their wording, probably because the force majeure clause in their general terms is sufficient to cover them (and I would expect the SVOD content commissioners to not be overly worried about changing their contracts either, on the same basis).

In order to try to manage the risk to producers of not being paid by commissioners/financiers in the event of a second lockdown, PACT lobbied for an insurance scheme to underwrite potential producer losses and on 28 July the Government announced the introduction of a UK-wide £500 million Film and TV Production Restart Scheme.

The Scheme makes direct compensation available to producers that incur costs caused by coronavirus abandonment or delays to eligible pre-existing and new productions.It was formally launched on Friday 16 October.

To be eligible a production must, amongst other things, have at least half the production budget spent in the UK. The Scheme provides compensation for costs up to a value of 20% of the production budget, with abandonment covered up to 70%. Where initially the deadlines for registration and start of PP were 31 December, this has been extended to 28 Feb 21.

Here is a link to the Government guidance on the scheme: https://www.gov.uk/government/publications/film-tv-production-restart-scheme

And here is a link to the Marsh Commercial website where producers can apply to the scheme: https://www.marshcommercial.co.uk/campaigns/film-and-tv-restart-scheme/