Video Age International October 2016

58 October 2016 V I D E O A G E counsel needs to be involved in all aspects of review of the constituent elements of the production. In fact, every E&O Insurance application specifically requires that the producer’s attorney be identified, a confirmation that the attorney has both read the standard “Clearance Procedures” required by the insurer and also that the attorney will attest to the adequacy of the clearance efforts undertaken by the producer. The procedures referred to involve all literary and musical intellectual property incorporated in the production, releases of all real-life individuals depicted in the production (including any fictional or composite characters that real-life individuals may believe have been depicted unfairly). In addition to the attorney’s attestation, the insurer will require that the Producer provide a copyright report. This is a detailed report prepared by one of several well-known national clearance law firms that reviews each element of the production in its entirety (script elements, characters names, location names, prominently displayed props etc.), and advises as to publicly available information that may require additional clearance activities by the producer. What It Costs ... And Saves The typical E&O Insurance Policy will contain limits of coverage of between $1 million and $3 million for each “occurrence” (essentially each claim) and between $3 million and $5 million in the aggregate (as a total ceiling for all insurable payments that may be called upon in connection with a production). Producers will, of course, have the opportunity to obtain a liability “umbrella” to provide further insurance protection if a claim should ripen to a judgment that would requirement payments in excess of the ceiling. Some production companies will actually self-insure, but such companiesare typically limitedtoextremelysolvent and deep-pocketed studios where all licensees believe that there exists the financial wherewithal to pay for any legal judgments without facing the risk of bankruptcy. Absent an E&O policy, production entities (typicallyLLCs or LLPs)wouldhave tobeprepared to have a calamitous monetary judgement push them into insolvency and the result would be that the party that was indemnified would be forced to satisfy any judgment with no policy proceeds available. E&O policies typically have deductibles (that is, the amount that must be absorbed by the producer before the actual insurance proceeds commence paying for liabilities) of $10,000. In summary, E&O Insurance is an invaluable risk management device that is an integral part of all licensing transactions in film, television and digital media, allowing licensees to acquire rights with the confidence that any legal problems that may arise, as a result of exploitation by the licensee, will have financial third party protection. Content buyers don’t need to worry about the integrity of the intellectual property being licensed when they enter an output deal with a U.S. studio since they know it is backed by “the full faith and credit” of the licensor. Studios have deep pockets and are not disappearing; so requiring “insured indemnification” may not be deemed necessary. Some companies self-insure because they have very deep pockets of net worth. “Indemnification” (i.e., the express or implicit agreement to stand behind representations regarding the integrity of the material being licensed) is typically part of every license agreement. “Insured Indemnification” (in other words, requiring an insurance policy to stand behind the promises of integrity in case they are breached) is an additional concept that end-users in any territory may require. A typical E&O policy with no special issues presented will typically cost between U.S$5,000 and U.S.$10,000 and have a three-year duration (the period during which most claims would present themselves). Umbrella coverage is for “back up” and fees will vary depending upon the scope of the protection purchased. It can include protection for things like personal injury — a person suffering an injury on set, for example. The concept is using risk management to avoid financial disaster. Errors And Omissions Insurance Sample of E&O insurance form E&O Insurance is an invaluable risk management device that is an integral part of all licensing transactions in film, television and digital media, allowing licensees to acquire rights with confidence. (Continued from Page 56) E & O— From a Media Consultant’s View “While E&O insurance isn’t a major factor in global original local programming, it becomes a major factor for documentary and non-drama series that catch the eyes of American programmers. It is not an easy process, but it is not impossible to purchase an E&O policy for a non-U.S. documentary or short factual series that a U.S. cable network wants to acquire. In order to get the U.S. policy in place to sell the project, sometimes new contracts have to be created and signed with creative contributors, which is not required in the local country. The process needs collaboration between the creative team, a good lawyer or business affairs executive and a trusted and knowledgeable insurance agent.” Russel J. Kagan, Los Angeles Todd P. Leavitt is a 40-year veteran primarily of the television industry. His first MIPCOM was in 1982. He has served as the senior executive of NBC Studios, chairman of Alliance Television, president of the Television Academy, and has been managing director of Tulip Media since 1998. Most recently, Mr. Leavitt was packager of the Emmy- nominated game show, Monopoly Millionaires’ Club .