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Lawyer Linda
Lawyer Linda, Attorney
Category: Business Law
Satisfied Customers: 12
Experience:  Corporate attorney for 5+ years; also a CPA
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Advice on Sirius/XM Contract for New Radio Show

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Please take a look at the following contract and offer your thoughts. Notes from my friend:


 


This contract concerns a radio show that I developed for XM Sirius where I work. I just feel like this was a half-assed write up by the lawyer, but maybe I'm being pessimistic. Contracts make me distrustful and I'd rather someone who can look at it objectively give it a once over


 


You can download the contract here: https://www.yousendit.com/download/WUJic0wrZ2p3NUlLSk1UQw


 


You can sample the test run of the radio show here: https://www.dropbox.com/s/20x7fgztuc1kpzc/Estrogen%20Advocates-09-19-12.mp3 Looking forward to your thoughts!


 


I'd also appreciate any thoughts you have on the sample show. Is it Boring/Helpful/Interesting/Confusing?


Lawyer Linda :

I gave it a quick review and it appears to be a fairly straightforward contract. The only real concern I would have from your perspective is that you are essentially giving your concept to MKR. As written, after you have signed the agreement they will have the rights to it and they will be the sole decision makers as to whether it will be produced. Really all you are guaranteed is that they will work with it for 3 months.

Lawyer Linda :

You run the risk that after 3 months they give up on it and you have nothing to take with you.

Lawyer Linda :

Other than that, was there anything in particular that concerned you that you would like reviewed or explained?

Customer:

Thanks for your initial review! I shared it with Scott and here's how he responded.

Customer:

You're pretty much crystallizing what's been itching me on the contract. When this started, the idea was to pay me a per-show fee to produce each show, and I was fine with that. Then Michelle got concerned with paying out so much before money could start rolling in. The trade off became that I would wave my fees in return for 33.3% ownership. That's not what's written up, and that's the part I need to adjust.


The random renewal stuff is also incredibly vague. I can correct the initial 3 month interval easy enough (rather than be a 90 period, I want it to be 90 days or until the project turns a profit. We've got a sharp sales guy who's lined up clients before there was a product, so if in three months we're in the red, I'll want out), but I'll need a longer contract length.


I also need some jargon that defines who is getting paid off of our show. I can't tell for sure yet, but it feels like there's potential for too many hands. I need to figure out how to nail that down. There's a weird line in there about 10%, and I don't know if that's an umbrella for these 'hands'. Can you advise?


Last thing is minor, but I'm going to change my title to executive producer. Means nothing now, but in the event this gets spun into a bigger production than the potential I'm seeing for it, then I'll need the bigger name for protection in case other parties are brought in to help.

Lawyer Linda :

It sounds like you're on the right track and just wanted to make sure you weren't missing anything glaring.

Lawyer Linda :

Regarding the 10% language you specifically asked about, here is how the compensation to everyone will work: The calculation starts with the gross advertising revenue generated from the project. They will then deduct from that revenue: i) 10% of the revenue that will retained by MKR as a supervisory fee; ii) all actual out-of-pocket development costs, production costs, distribution fees and other expenses (which would go back to MKR to reimburse them for paying these); and iii) and any 3rd party costs MKR has paid for the Project (which would also go to MKR). From what is left, Eads receives 33 1/3%, Pitek receives 33 1/3% and MKR gets 33 1/3%.

Lawyer Linda :

If your original agreement was that you'd get a straight 33 1/3%, then you're correct that the contract does not read like that. Because MKR is getting 10% of the revenues as a "supervisory fee" before any of the expenses are covered, they will likely pocket significantly more than you. Just as an example - imagine the revenues are $100 and all the expenses total are $25. Based on your understanding of a straight 33 1/3% you would expect to receive $25 (($100-$25 = $75 / 3). However, with their 10% fee built into the calculation, you'd actually only receive $21.67 ($100 * 10% = $90 -$25 = $65 / 3 = $21.67), while MKR would clear $31.67 ($100 *10% = $10 + $21.67 = $31.67).

Lawyer Linda :

Let me know if I can clarify anything else; if not, I'd appreciate a positive rating.

Customer:

The 10% breakdown was a big help, thanks for that and everything else that you wrote!

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