Value of television formats continues to grow despite legal uncertainty

American Idol is already conservatively valued at $2.5 billion in its incarnation as a television franchise. It already brings in $500 million a year in TV advertising, plus another $30 – $50 million in sponsorship packages, music sales, live tours etc. The US magazine “Advertising Age” has reported that the owner of the already hugely valuable American Idol format is looking to add yet further value to it. Freemantle Media is trying to eke even more revenue out of what may already be the most lucrative multimedia property of all time.

On the back of the huge viewing figures for the US television show, along with three core partners integrated into the content, American Idol is now seeking new opportunities by streaming the entire programme on AmericanIdol.com after it is aired on television. Apparently, sponsors of the website already include McDonalds and Mastercard. Last season in the US American Idol attracted 570 million votes and 65 million text messages. Sponsors (Ford Motor Company, Coca-Cola and Cingular Wireless) are working ever harder to increase the revenue from American Idol and Ford plans contests which will give regular viewers the opportunity to appear in music videos featuring the final contestants.

All this is good news for Simon Cowell, because in addition to the value of the US franchise (in which he has a 30% interest), its British cousin X-Factor has been valued at £300 million. The valuation company Brand Finances estimates this is the value of the X-Factor franchise taking into account voting revenue, merchandising, TV advertising and music sales. Simon Cowell’s company, Syco, jointly produces X-Factor with Thames Television (owned by Freemantle Media) and shares its profits.

There is no UK or US statute or case yet which specifically grants legal protection to a television format. The first specific recognition by any court of the existence of the format in a broadcast programme (in this case it was a radio programme) was in 2001 by the Supreme Court of Hungary. Since then decisions by courts in a number of countries including Holland and Brazil have confirmed that in appropriate circumstances a court will afford protection to television formats.

However, these are staggering sums of money to ascribe to a format particularly in the US, where in the litigation brought by the rights owners of Survivor against ITV.com, the rights owners of I’m a Celebrity: Get Me Out of Here!, Judge Preska dismissed the claim saying: “the evolution of TV shows … is a continual process involving borrowing liberally from what has gone before”. She clearly recognised that all new formats owe something at least to their predecessors, and to succeed in a claim for infringement you must establish copying rather than mere inspiration.

Organisations such as the International Format Lawyers Association (www.ifla.tv) and the Format Recognition and Protection Association (www.frapa.org) are committed to protecting the rights in programmes which are original and have been developed carefully by substantial investment of time and expertise. Our view is that in the right circumstances both a US or a UK court would protect an original programme format.

However, while a definitive case is still awaited in the UK or US (the principal sources of successful formats worldwide), these sums are still remarkably high valuations for a species of intellectual property which lacks legal certainty. Until then great care should be taken to ensure that if there is a dispute, your format will enjoy the best chance of protection (see www.ifla.tv to obtain details of the IFLA seminar and guide How to Protect Your Format).

Bulletins are for general guidance only. Legal advice should be sought before taking action in relation to specific matters. Where reference is made to Court decisions facts referred to are those reported as found by the Court. Please note that past bulletins included in the Archive have not been updated by any subsequent changes in statute or case law.