To Option Or Not To Option?

Producers can develop projects with option agreements or attachment agreements; how to choose?

Producers can acquire rights for underlying works, including books, articles and life stories in one of two ways: they may either “option” the property or become “attached” to it.  The former affords the producer significant control of the property and the ability to raise financing or enter into an agreement with a distributor, studio or sales agent.  An attachment agreement is expedient but does not grant rights or enable the producer to “set up” the property with a financier of studio. 

In essence, an option agreement provides that the producer controls the exclusive rights in the property for a period of time — the “option period” — and has the right or option during such option period to purchase certain exclusive rights in the property on agreed terms.  Because the producer controls the exclusive rights in the property during the option period and the material terms of the agreement have been agreed to, if the producer exercises the option to acquire the property, the producer may safely expend money to develop the property.  For example, the producer can engage a writer to prepare a script, hire a casting director, attach a director and actors to the property, and contract with a foreign sales agent, because the producer can simply exercise the option to acquire the property and produce a film.    

An attachment agreement provides that the producer and the property are “attached” to one another during the “attachment period.”  The material terms of the agreement for the acquisition of the property are not resolved.  The purchase price and other benefits payable to the owner of the underlying rights are left for further negotiation. During the attachment period, the producer may attempt to obtain financing or set the property up with a studio, but may not complete an arrangement because it does not control the property.  If the producer is successful in attracting a studio or other financier, the producer furnishes notice to the underlying rights owner, and the owner then negotiates with the studio or other financier directly for the acquisition of the property.  The producer will simultaneously negotiate an agreement with the studio or financier to furnish services as a producer on a film based on the property.  If the owner is unable to reach an agreement with the studio or financier for any reason, the producer’s “attachment” comes to an end. 

The terms of an attachment agreement generally are simple and not subject to lengthy or expensive negotiation.  The producer does not typically pay an option fee or any other fee for the right to become attached to the property.  However, the producer assumes a risk that the owner of the property will come to an agreement with the studio or financier found by the producer.  It’s a choice between control and certainty versus expediency and limited investment.