SPE DRAFT 12/6/08
PAY TELEVISION LICENSE AGREEMENT
This Pay Television License Agreement (this “Agreement”) is entered into as of December [12], 2008 (the “Agreement Date”), between STARZ ENTERTAINMENT, LLC,5445 DTC Parkway, Suite 600, Englewood, Colorado 80111 (“STE”) and SONY PICTURESENTERTAINMENT INC., 10202 West Washington Boulevard, Culver City, California90232(“Licensor”).
RECITALS
WHEREAS, Licensor and STE are parties to that Pay Television License Agreement, dated January 26, 2000, as amended (“Original Agreement”);
WHEREAS, Licensor and STE have entered into an agreement to terminate the Original Agreement concurrently herewith; and
WHEREAS, Licensor and STE desire to enter into a new agreement with respect to certain television rights and programming.
NOW, THEREFORE, for the good and valuable consideration, the receipt and sufficiency of which is acknowledged by the signing and delivery hereof, the parties agree as follows:
- Definitions.
(a)“Additional Element” with respect to a motion picture means each of the following:
(i)50% or more of the total P&A Expenses for such motion picture was incurred by Licensor or any SPE Group Member, either in its own right or via third party financiers or investors.
(ii)Such motion picture was developed in-house by Licensor or any SPE Group Member. [Matthew—need more detail around this]
(iii)Such motion picture was produced by Licensor. [Matthew—need more detail around this]
(iv)25% or more of the Negative Costs for such motion picture was incurred by Licensor or any SPE Group Member, either in its own right or via third party financiers or investors.
(v)Such motion picture originated from property owned or controlled by Licensor or any SPE Group Member.
(vi)Substantially all of the [U.S. Home Video and Television rights to such motion picture are owned or controlled by Licensor or any SPE Group Member] OR [all of the following U.S. rights: free television, basic television, pay television, PPV, VOD, Sell-Through Video, ______]. [RT to provide language regarding home video divisions].
(b)“A Film” means any Qualifying Film that is designated by Licensor and satisfies at least one Additional Element.
(c)“B Film” means any Qualifying Film that is designated by Licensor and satisfies at least one Additional Element. In addition, B Category Films shall expressly include Third Party Rent-A-System Films and Sony Rent-A-System Films though such films are not required to satisfy any Additional Element.
(d)“Availability Date” shall mean the first day of each Picture’s First License Period, as set forth in Section 3(a)(i)3(a)(i)below.
(e)“Digital Cinema” shall mean the playback by a theatrical exhibitor of a digital file embodying a motion pictureon a digital projection system from an on-site projection booth, which playback requires activation from an on-site location.
(f)“Exhibition Day” shall mean with respect to each Picture and each channel of the STE Services a period of twenty-four (24) consecutive hours during which such Picture may be exhibited up to [three (3)] times, provided, that only one exhibition per Exhibition Day may commence between the hours of 7:00 p.m. and 11:00 p.m. and in no event shall two exhibitions in an Exhibition Day be scheduled on a back-to-back basis. Exhibitions on separate channels of the STE Services shall count as separate Exhibition Days. The following shall not be counted as incremental Exhibition Days:
(i)Exhibition of a Picture on different time zone feeds of the same channel of the STE Service;
(ii)Exhibition of a Picture on MOVIEplex, so long as MOVIEplex continues to be programmed and operated in substantially the same manner as it is as of the date hereof; or
(iii)Viewings on a Subscription-On-Demand basis.
(g)“Feature-Length” means a running time of not less than 75 minutes, inclusive of credits.
(h)“Film Rentals” shall mean [all sums billed and received by, owing to or credited to the account of the theatrical distributor from its exploitation of the Picture in the Territory as tabulated periodically on the theatrical distributor’s regular domestic film rental report during the period commencing on such Picture’s Initial Theatrical Release and continuing until the first anniversary of such Picture’s Initial Theatrical Release (the “Film Rentals Measurement Period”); provided, that with respect to any amounts billed for which Licensor accepts a settlement of less than full payment, the settlement amounts actually accepted by Licensor, rather than the amounts originally billed, shall constitute “Film Rentals” for purposes of this provision. Film Rentals shall include all monies due from the exploitation of the Picture via direct projection means, regardless of whether such direct projection involves physical print materials or Digital Cinema, (but specifically excluding Home Theater, Home Video and Television); provided, that, with respect to all exhibitions on a “four wall” basis, all box office admission amounts received by the theatrical distributor shall be included in “Film Rentals” and all costs of operating such theater which are paid for or assumed by the theatrical distributor in connection with its taking over of such theater for such “four wall” engagement shall be deducted from “Film Rentals” and any transaction with an affiliate of Licensor shallbe on an arms-length basis. Film Rentals shall not include any monies (A) owed to, retained by or paid to a theatrical exhibitor, other than monies otherwise payable to the theatrical distributor but rightfully retained by such exhibitor for co-op advertising incurred and actually spent on behalf of such theatrical distributor; (B) received for Television broadcast, including but not limited to, Home Theater, Pay-Per-View, Video-On-Demand, free Television, Pay Television or subscription Television or Internet transmission; (C) attributable to any sales, admission or similar taxes or governmental fees deriving from or otherwise imposed upon Licensor’s use of the Picture or its positive prints thereof; (D) received from Non-Theatrical Exhibition; (E) received from Licensor’s exploitation of subsidiary rights from the Picture, such as (without being exhaustive) merchandising, music, music publishing, publishing, soundtrack and recording rights and (F) earned and retained from Licensor’s exploitation of the Picture after the Film Rentals Measurement Period.][AL to get Theatrical Finance’s input.]
(i)“General Theatrical Release” of a Picture shall mean the first day on which the Picture has been released cumulatively on 100 or more screens within the Territory. Test and marketing previews, so-called “sneak” previews and releases made in order to qualify for award consideration (e.g., Academy Awards) shall not be taken into account in determining whether a General Theatrical Release has occurred, regardless of whether an admission fee is charged.
(a)“Home Theater” shall mean the transmission of a motion picture directly to homes or other non-public venues by either VOD or PPV, which PPV or VOD transmission occurs (i) from as early as 4 weeks prior to the Initial Theatrical Release for such motion picture until as late as the conclusion of the 4th week after Initial Theatrical Release for such motion picture for a retail price equal to at least 300% of the of Average Theatrical Admissions (as defined below), or (ii) from as early as 60 days prior to the Initial Home Video Release for such motion picture until as late as [______] [Chris and Thanda to determine end date] for a retail price equal to at least 200% of the Average Theatrical Admissions. For purposes hereof, "Average Theatrical Admissions" means the average non-discounted retail price of theatrical admissions during the first week of theatrical exhibition of first-run motion pictures in [New York City, Los Angeles, Providence, RI, Atlanta, Dallas, Detroit, Denver, Greensboro, NC, Fresno, CA and Spokane, WA] [Chris and Thanda to update, if necessary] (as measured as of January 15 of the Year in which occurs the earlier of such motion picture’s Initial Theatrical Release or such picture’s Initial Pay-Per-View Release or Initial Video-On-Demand Release).
(b)“Home Video” shall mean the exploitation of a motion picture embodied in a video device which is a physical entityphysical medium (including, without limitation video cassette, laser video disc and standard and Blu-ray DVD) that is rented or sold for the sole purpose of private viewing where no admission fee is charged with respect to such viewing. In addition, Home Video shall expressly include Sell-Through Video, Manufacture-On-Demand, and In-Store Digital Download.
(c)“Initial Home Video Release” of a Picture shall mean the first day of its initial standard DVD rentalHome Video release to the general public within the Territorynot in connection with a stunt or promotion conducted with any of Licensor’s affiliates.
(d)“Initial Pay-Per-View Release” of a Picture shall mean the first day of its initial residential Pay-Per-View release to the general public within the Territorynot in connection with a stunt or promotion conducted with any of Licensor’s affiliates.
(e)“Initial Theatrical Release” of a Picture shall mean the first day of its initial theatrical release anywhere within the Territory, but specifically excluding film festivals, test and marketing previews, so-called “sneak” previews and releases made in order to qualify for award consideration (e.g., Academy Awards), regardless of whether an admission fee is charged, free and/or charitable screenings and private, limited screenings.
(f)“Initial Video-On-Demand Release” of a Picture shall mean the first day of its initial residential Video-On-Demand release to the general public within the Territorynot in connection with any stunt or promotion conducted with any of Licensor’s affiliates.
(g)“In-Store Digital Download” shall mean the transmission or distribution of a motion picture by any means in any intangible, digital or electronic form now known or hereafter devised from a storage apparatus (e.g., a kiosk) in a fixed location outside of a customer’s residence (e.g., in a retail store) to any video or storage device now known or hereafter devised, including without limitation portable media devices, flash drives, memory sticks and portable storage devices, that enables the customer to view such program on such device or on any other viewing device now known or hereafter devised, including without limitation televisions, computers, cell phones, personal or digital assistants and game devices.
(h)“Internet” shall mean [the non-licensed, open access, open to the general public (as opposed to an intranet), and free of charge to the consumer (other than common carrier charges) data delivery network or networks for point-to-point or point-to-multipoint transfer of digital information (including but not limited to video, audio and text) using open protocols (e.g., TCP or IP) to any device capable of accommodating open protocol, including TV’s, PC’s, set-top boxes and other Internet-enabled devices.] [AL to check definition of Jill Cohen.].
(i)“License Period” for each Picture shall mean each of the the First License Period and Second License Period of such Picture, collectively, as set forth in Section 33 below.
(j)“Major Studio” shall mean any of the following entities: (i) Warner Bros., New Line, Paramount Pictures Corporation, Twentieth Century Fox Film Corp., Sony Pictures Entertainment Inc., Walt Disney Company, Universal Studios, Inc., Dreamworks, Metro-Goldwyn-Mayer, Inc., The Weinstein Company and Lionsgate, and any successors thereto if operating in substantially the same manner as such entities operate as of the date hereof, and (ii) any future MPAA member company; provided, that with respect to any entity covered by the foregoing clause (ii) (and not clause (i) above) (a) no such entity shall be considered a “Major Studio” unless in the Year prior to the Year in which the applicable determination of Major Studio is required under this Agreement such entity had gross domestic box office revenues of at least $250 million but, (b) with respect to any such entity that is newly created, such entity shall qualify for “Major Studio” status hereunder (even if it doesn’t otherwise qualify under the foregoing clause (a)) during the calendar year in which it commences operations and the calendar year following immediately thereafter, so long as such entity is party to an Output Agreement with any of STE, HBO or Showtime.
(k)“Manufacture-On-Demand”means any service whereby a physical medium (including, without limitation, videocassette, laser video disc and standard and Blu-ray DVD) embodying video programmingdevice which is a physical entity (including, without limitation, videocassette, laser video disc and standard and Blu-ray DVD) is manufactured upon a customer’s order and purchase of such video device physical medium and then delivered either to the customer directly or to a retailer for in-store pick-up by the customer.
(l)“Minimum Requirements” with respect to a motion picture means that such motion picture:
(i)has P&A Expenses equal to or in excess of $250,000 and an Initial Theatrical Release on 20 or more screenscontemporaneously within the Territory; or
(ii)has production costs [Should we define “production costs” (broadly)?]equal to or in excess of $4,500,000. [Matthew please review]
(m)“Negative Cost” means[, with respect to a motion picture, the aggregate sum of all direct costs and expenses paid or fixed payment obligations incurred by any person in connection with the development, preparation, production and completion of such motion picture]. [Matthew please review.]
(n)“Non-Theatrical Exhibition” shall mean the exhibition of a motion picture in educational and institutional facilities, airlines in flight, oil rigs, public transportation, corporate locations, ships-at-sea, U.S. military bases, nursing homes, hospitals, hotels, motels, prisons and other similar locations or forms of transportation, regardless of the technology used for, and the origin of, such delivery, in public, common areas of such locations and forms of transportation and in non-public, non-common areas of such locations and forms of transportation.
(o)“P&A Expenses” means[, with respect to a motion picture, all direct costs incurred or accrued by any person in connection with the theatrical release of such motion picture in the Territory, including, without limitation, the costs of creating and implementing a marketing campaign for such motion picture, costs of advertising such motion picture in various media and of printing and distributing promotional materials, and costs of making, packaging, shipping, insuring, delivering and storing release prints and other film and sound materials]. [Matthew please review.]
(p)“Pay-Per-View” or “PPV” shall mean the viewing of a single motion picture, whether transmitted via digital, analog, over-the-air, cable, optical fiber, closed circuit, Internet, satellite, telephony, microwave, laser, cellular/mobile or any other means devised, on a linear pre-scheduled basis where the start time is scheduled by the distributor and not by the consumer and for which a transactional charge is made to the consumer for the privilege of viewing the particular motion picture on a per-exhibition basis. PPV may be offered on a multiple channel basis with varying scheduling patterns and may offer multiple exhibitions of a single motion picture over a period of time not to exceed 72 hours, but not on a negative option basis (i.e., a fee arrangement whereby a consumer is charged alone, or in any combination, a service charge, a separate Pay-Per-View charge or other charge but is entitled to a reduction or series of reductions thereto on a program-by-program basis in the event such consumer affirmatively notifies the PPV distributor of such consumer’s determination not to receive or have available for reception such particular program). In addition, special limited promotional offers by a PPV distributor (including two-for-one discounts, give-away coupons, extended viewing opportunities and the like) shall nevertheless constitute PPV;provided, that no such offer may be made available to any individual consumer for more than 60 days per year. For this purpose, PPV does not include operating on a subscription basis and, therefore, shall not include any service for which a consumer is charged a “club” or other similar “access” fee(which shall not, for clarity, be deemed to include anybasic cable fee or digital/data plan fee charged by a cable, satellite or mobile/cellular service provider) solely for the privilege of being able to view motion pictures via PPV, unless such “club” or similar access fee is a nominal sum (i.e., an annual fee not to exceed $10)that is non-creditable against any per exhibition consumer transaction fees. However, PPV may include a service where a consumer is required to pay an equipment rental fee or to purchase equipment in order to obtain such service, provided, that no partof such equipment rental fee or purchase price, as applicable, is credited or paid directly or indirectly to Licensor, and provided further that Licensor, when acting as a retailer and not a wholesaler, may receive an equipment rental fee or purchase price, as applicable, and such equipment rental fee or purchase price shall not count as a “club” or similar access fee, if a majority of Major Studios, when acting as a retailer and not a wholesaler, are also receiving an equipment rental fee or purchase price. For purposes of clarification, Licensor shall not be deemed to have “indirectly” received an equipment rental fee or purchase price if such equipment rental fee or purchase price is received by an affiliate of Licensor that is not an SPE Group Member, including without limitation Sony Corporation of America and Sony Electronics. PPV shall not include transmissions on a Sell-Through Video basis. For purposes of clarification, (i) the 72 hour period shall commence at the time the motion picture is exhibited for more than five continuous minutes (and not at the time the motion picture is received by the recipient) and (ii) if the recipient is able to make a copy of the applicable PPV transmission of the motion picture, the fact that such recipient may be able to view such copy beyond the expiration of the aforesaid 72 hour period shall not cause such mode of exhibition to fall outside this definition of “PPV.” Home Theater exhibitions shall not constitute “PPV” hereunder.