Director Remuneration and SPV

Introduction

Directors are the primary creators of cinematographic film. The Director is the creative decision maker in a process of artistic collaboration who takes final responsibility for the aesthetic cohesion and artistic integrity of the work.

Getting fair and equitable remuneration for Directors for the paramount role they play in film has and continues to be difficult.

New Zealand lacks managers or agents who can represent Directors in negotiations. Consequently, Directors are usually required to enter into one-on-one negotiations themselves with those who contract them, typically Producers. Many Directors are not as well versed or informed when it comes to negotiating their own terms and conditions. They are also at a disadvantage unless they are a person in considerable demand for their skills. The leverage they have in negotiation therefore can be minimal.

For film funding of domestic productions in New Zealand, there are very specific conditions around how a film production has to be set up and executed to satisfy the New Zealand Film Commission (NZFC). This is normally managed by the Producer. Built into this process are elements that impact on the remuneration of the Director:

• Intellectual Property Rights.
• Secondary Rights.
• The disbursement of equity through the ‘Producer’s Corridor’ in non-NZ Screen Production Grant (NZSPG) films, or ‘Producer’s Equity’ in films that qualify for the NZSPG.

Chain of Title

Although currently under the New Zealand Copyright Act the Producer is considered the author of a film, contractually, the Producer requires the Director to assign their copyright to the film over to ensure that there is no hinderance to the Producer’s ability to license or sell the film. This assignment is the single point of leverage that a Director has in negotiation with a producer, particularly if the Director has already been inputting into the project without a deal memo or contract—the Producer needs the assignment for a clear Chain of Title, without which he or she cannot finance, distribute or sell the film.

Secondary Rights

Secondary Rights generate Secondary Revenues. This occurs when the film is ‘reused’ either through a retransmission or through Educational, Government or other uses. As the primary creator of the film, a Director can negotiate for a share of the revenues generated by Secondary Rights. Often in negotiation, however, they assign away those rights and therefore the revenues they are due.

Producer Equity

The current system of disbursement of equity in either non-NZSPG or NZSPG films goes to the Producer. In other words, the Producer is given part ownership of the film by the NZFC. This equity can generate revenues even before a film meets its costs and goes into profit. Access to this equity can be negotiated and is one form of remuneration through ownership. Ownership in the ‘Special Purpose Vehicle’ (SPV) established to produce the film is another avenue to access this equity gifted by NZFC to the Producer.

Special Purpose Vehicle (SPV)

A contract that addresses all the options for Director remuneration is perhaps the easiest approach to ensuring fair and equitable reward for the paramount role Directors play in the creation of a film. However, a growing number of our members are expressing an interest in participating in ownership of the SPV—a more complicated approach to accessing potential revenues that flow to a film, but also a means to enduring ownership, and management of rights.

Downloadable Guides

The two resources now available to DEGANZ members:

1. How To Set Up An SPV For Filmmakers
2. DEGANZ Director’s Guide To Remuneration

These address the issues involved, with a focus on the SPV. While seemingly complex, a thorough understanding of both documents will better prepare you for negotiating a Director’s contract, and if you wish to proceed down the path of involvement in an SPV, the work required and the responsibilities involved.

These resources (sign-in to access) will align with the updated template Standard Feature Film Agreement that DEGANZ will make available in the first half of 2022.

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