Mark Rowland, head of London-based film and television rights and royalties specialist Compact Media discusses how AVSR is an increasingly important revenue stream and why you need to carefully check your contracts.
Mark Rowland (MD)
“Little is known about secondary rights, but they are worth cash to every producer, says Mark Rowland
TV production has always been a tough business – but every year profit margins seem to get squeezed a little harder. The transition to HD/4K, the increased cost of talent and on-set Covid-19 compliance are a few factors that have pushed up the price of production – just as commissioning broadcasters have been forced to tighten their belts in order to stay competitive.
Against this backdrop, there is one valuable revenue stream that producers would do well to explore – the obscure and under-exploited world of audio-visual secondary Rights (AVSR).
Without overcomplicating the story, AVSR refers to a series of rights that can flow out of a licensing deal with a broadcaster. Let’s say, for example, that a UK producer licenses a TV programme to a German free-to-air broadcaster, granting them the right to transmit it ten times over a period of two years.
Without going into too much detail on the underlying legal principles, these transmissions may lead to a variety of royalties being payable to the producer, including royalties for the retransmission of the programme, private copying or use as an educational resource.
What are they worth?
AVSR may sound a bit esoteric, but the sums of money involved can be significant. Globally, the total value of the market is around £360m – while the sums due to UK producers is reckoned to be worth $43m-50m.
Right now, the figures may even be higher for UK producers with good back catalogues, with broadcasters around the world forced to rely on acquisition to fill slots in Covid-hit schedules.
It’s not uncommon for a modest sized producer to be picking up anywhere between £7,000-£41,000 a year off the back of its AVSR rights. In the current climate, that can be the difference between surviving or shutting up shop.
So where does this money come from? Put simply, it is gathered in by national collection societies in over 40 territories (not every country in the world has a robust royalty collection system, though the 40 in question tend to be the most lucrative).
It is then distributed to content owners, who are registered with each respective system – usually in the form of quarterly payments. Any kind of producer can benefit – though drama is generally the most lucrative genre.
How to access revenues
Theoretically, producers could handle this process themselves. In reality, it is usually managed by experienced firms like my company Compact Media – in return for a commission.
The main reason for this is that dealing with over 40 individual collection agencies and verifying the accuracy of their reports is actually a very laborious, tech-driven process – the last thing time-pressed producers need to be thinking about. By working with a specialist, producers get peace of mind – plus access to an online dashboard that provides a detailed breakdown of their AVSR entitlements.
There are additional considerations too. At Compact, for example, we have a team of three dealing specifically with rights conflicts – a situation that can easily arise if two different parties both believe themselves to have an interest in a show.
We also manage scenarios where local collections agencies make mistakes and seek to recoup royalties that have been paid in error – a not uncommon situation that can occur even 2-3 years after the initial payment.
It is possible that a producer’s AVSR rights may already be covered off by a clause in their contract with a commissioning broadcaster or distributor, the latter of whom are among the key users of AVSR specialist service companies like Compact).
That’s fine if the producer has sanctioned such an arrangement – but it is definitely worth checking to make sure that any contractual entitlement to receive these royalties has been fulfilled and the royalties accounted for properly – check distribution statements carefully.
The bottom line is that AVSR is a valuable set of rights – and producers need to know if they’ve transferred them for free.
Alternatively, it may be that the producer in question is growing in scale and has decided to handle distribution in-house. Again, this is a good moment in time to ask whether they have created a watertight legal framework that enables them to unlock true value for the secondary rights to their content. As the largest independent player in this sector, with 25 years’ experience, Compact Media is well placed to provide upfront guidance – at no cost.
Mark Rowland
Managing Director
Web: www.compact.media
Web: www.compact-data.com
For Further Information
For further information on AVSR rights check out ‘The Devil Is In The Detail: Secondary Rights’ (May 2021) session featuring Compact’s Mark Rowland (MD) and Jane Hyndman (General Counsel) as part of PACT’s virtual Regions & Nations roadshow.