Exhibit 10.1
EXECUTION COPY
THIRD AMENDED AND RESTATED PROGRAM
LICENSE AGREEMENT
This THIRD AMENDED AND RESTATED
PROGRAM LICENSE AGREEMENT (this “Agreement”) is entered
into as of January 22, 2009 by and between Televisa, S.A. de
C.V., a Mexican corporation, as successor in interest to Televisa
Internacional, S.A. de C.V. (hereinafter “Licensor”)
and Univision Communications Inc., a Delaware corporation
(“Licensee” or “UCI”), and amends and
restates that certain SECOND AMENDED AND RESTATED PROGRAM LICENSE
AGREEMENT (the “Second Amended and Restated Program License
Agreement”) made as of the 19th day of December, 2001 by and
between Televisa Internacional, S.A. de C.V. and
Licensee.
WHEREAS, Licensor has or will have
rights in the United States of America, including all territories
and possessions thereof including Puerto Rico (the
“Territory”), to license certain television programs in
the Spanish language or with Spanish subtitles produced by and to
be produced by Licensor and other entities controlled by Grupo
Televisa, S.A.B. (“GT”) (GT and all of the companies it
controls, including Licensor, being hereinafter referred to
collectively as “Televisa”).
WHEREAS, Licensee operates the
Networks and the Stations.
WHEREAS, Licensee desires to acquire
the right to broadcast in the Territory over the Networks, programs
produced, to be produced or otherwise marketed by Televisa and
Licensor is willing to grant such a license upon the terms,
provisions and conditions herein set forth.
WHEREAS, Venevision International
Corporation (“Venevision”) previously entered into a
Second Amended and Restated Program License Agreement, dated as of
December 19, 2001 (the “Venevision Agreement”),
with the Licensee to license certain television programming for
broadcast in the Territory, and nothing herein is intended to, or
does, alter or limit any rights or obligations of Venevision or
Univision (as between it and Venevision) under the Venevision
Agreement or the Participation Agreement, dated October 2,
1996, by and among Licensee, A. Jerrold Perenchio, GT, Gustavo A.
Cisneros, Ricardo J. Cisneros and Corporacion Venezolana de
Television (Venevision) C.A. (to the extent still in
effect).
WHEREAS, Licensor acknowledges that
Licensee has agreed to provide certain benefits in this Agreement
in consideration of the releases provided in the Mutual Release and
Settlement Agreement, as of even date herewith, by and among
Licensee, Licensor and Telefutura Network.
NOW, THEREFORE, in consideration of
the mutual promises and covenants herein contained, the parties
hereto agree as follows:
1. License of Programming
.
(a) Pursuant to the terms and
conditions hereof, Licensor hereby grants Licensee and its
subsidiaries the exclusive license to broadcast in the Territory
all Programs throughout the Term on the Networks.
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(b) Licensee shall not broadcast any
first-run Program (other than news) on any of the Networks between
the hours of 1:00 a.m. and 9:00 a.m. unless Licensee reasonably
believes that it is commercially reasonable to broadcast such
Program during such period.
1.2 For purposes of this Agreement
only:
(a) “Programs”
means
(i) programs initially produced in
the Spanish language or programs with Spanish subtitles, produced
by third parties or co-produced by Televisa with third parties to
which Televisa owns sole television broadcast rights in the
Territory (and which is not a Co-Produced Program (as defined
below));
(ii) except as otherwise expressly
provided in this Agreement, all programs initially produced in the
Spanish language or programs with Spanish subtitles, previously
produced directly or indirectly by or for Televisa and to be
produced directly or indirectly by or for Televisa for broadcast at
any time to which Televisa owns television broadcast rights in the
Territory and which are available for broadcast including, without
limitation, in the following categories: novelas, musicals, variety
shows, situation comedies, game shows, talk shows, children’s
shows, news shows, cultural and educational programs, and sports
programs; and
(iii) movies produced by Televisa or
third parties or co-produced by Televisa and a third party(ies) (in
the case of movies produced by third parties or co-produced by
Televisa and a third party(ies), only if Televisa has obtained from
such third parties (and did not previously have) the rights to such
movies in the Territory after the date hereof) and for which
Televisa owns the television broadcast rights in the Territory,
from and after the time that such movies become available for free
television broadcast in the Territory.
If Licensor only owns such
television broadcast rights to a Program in a portion of the
Territory and not some other portion (e.g., Puerto Rico, Guam,
etc.), the license granted under Section 1.1 shall be limited
to only that portion of the Territory as to which Licensor holds
such rights for such time as Licensor holds rights only in a
portion of the Territory.
Each Program shall be available for
license to Licensee in the Territory pursuant to the terms of this
Agreement upon the first to occur of (x) the date when such
Program is initially broadcast by Televisa or (y) the date
when such Program is first made available for broadcast by any
third party.
Except as provided in
Section 1.2(a)(iv), if Licensor or Televisa shall produce
directly or indirectly any Spanish Language or Spanish subtitled
programming for broadcast in the Territory it shall be deemed a
Program subject to the terms and conditions of this
Agreement.
(iv) The term “Programs”
does not include Special Programs (other than Televisa Produced
U.S. Special Programs) or Co-Produced Programs (each as defined
below) or soccer games played by teams in the Mexican Soccer
League.
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(b) “Co-Produced
Programs” means programs originally produced for broadcast in
the Spanish language or with Spanish subtitles, previously
produced, or to be produced, by Televisa for broadcast pursuant to
co-production agreements with unaffiliated third parties or
produced by unaffiliated third parties (in each case, other than
any co-production agreements directly or indirectly with any
broadcaster in and to the Territory):
(i) under which Televisa does not
own the right to permit the broadcast of such program in the
Territory and/or
(ii) under which Televisa is
required to share with such third parties the revenue derived from
the broadcast of such program in the Territory.
No program that would otherwise be a
Program under Section 1.2(a)(ii) shall become a Co-Produced
Program solely because Televisa licenses or sells distribution
rights in the Territory prior to or during production of such
program and Televisa shall not enter into any agreement to the
contrary.
In order for a program to be a
Co-Produced Program, some material property right underlying such
program must be provided by such unaffiliated third party described
above and such unaffiliated third party must participate in the
development and production of the program in exchange for such
third party’s distribution rights in the Territory or
participation in distribution revenues from the
Territory.
If Televisa intends to enter into an
agreement or arrangement with respect to a program that it believes
will be a Co-Produced Program under this Agreement, Televisa will
provide UCI with written notification of such intention at least 20
days prior to entering into any such agreement or arrangement,
along with the basis for Televisa’s belief that such program
should be characterized as a Co-Produced Program solely for the
purpose of permitting UCI to monitor compliance by Televisa with
the provisions contained herein relating to Co-Produced Programs,
it being agreed that UCI and its Affiliates shall keep confidential
such notice information contained therein, shall not use such
notice or information for its own account and shall not contact or
engage in discussions with any Person other than Televisa with
respect to such agreement or arrangement.
Subject to the following paragraph,
nothing contained in this Agreement shall prevent Licensor or
Televisa from licensing broadcast rights (in exchange for cash or
other in-kind services or property other than Programs) for
territories other than the Territory to programs initially produced
in the Spanish language or programs with Spanish language subtitles
that are developed and produced in the Territory by unaffiliated
third party producers located in the Territory, including
broadcasters, provided that neither Licensor nor Televisa has
participated in any way in the development or production of any
such program.
In the case of novelas, if Licensor
or any of its Affiliates, (a) enters into an agreement or
arrangement with respect to the co-production of a novela or
(b) sells or transfers a novela script or format to any third
party, and (x) Licensor or any Affiliate owns or obtains
Mexican broadcast rights to such novela during the Term and
(y) broadcast rights in the Territory exist during the Term,
then Licensor must cause such novela to be a Program
hereunder.
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Televisa agrees that it will use
good faith efforts not to structure arrangements or agreements with
respect to programs in a manner intended to cause such programs not
to be considered Programs hereunder.
(c) “Affiliate” of a
person means any person that directly or indirectly controls, is
controlled by, or is under common control with the person in
question. For the purposes of this Agreement,
“control”, when used with respect to any person, means
the power to direct the management and policies of such person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise. Affiliate shall not mean
(i) any television station that has entered into an
affiliation agreement with the Networks but is otherwise not an
Affiliate of UCI, (ii) any Person that controls GT,
(iii) any person under common control with, but not directly
or indirectly controlled by, GT, (iv) any one of the investor
groups that own the equity interests in Broadcast Media Partners
Holdings, Inc. or any person that controls any one of such investor
groups, or (v) any person controlled by any of such investor
groups other than (x) Broadcasting Media Partners, Inc.,
Broadcast Media Partners Holdings, Inc. or UCI, (y) any
subsidiary of or other person directly or indirectly controlled by
Broadcasting Media Partners, Inc., Broadcast Media Partners
Holdings, Inc. or UCI or (z) any person formed by such
investor groups to own a direct or indirect interest in
UCI.
(d) “broadcast” means
all electronic forms or other means now known or hereafter
developed of transmission and re-transmission, including but not
limited to over-the-air television, cable television, low power
television, multi-point distribution systems, wire, fiber optics,
microwave, and satellite, except for purposes of delivery of the
Programs pursuant to Section 3.
(e) “Galavision Network”
means the Galavision Spanish language television network of
affiliated cable television systems and other affiliated broadcast
outlets broadcasting the Galavision Network in the
Territory.
(f) “Networks” means the
Univision Network, the Galavision Network, the Telefutura Network,
and any Spanish language television network of affiliated
television broadcast stations, cable systems and other affiliated
broadcast outlets broadcasting over the Stations in Puerto Rico as
set forth in clause (ii) of the definition of
“Stations” (in each case, for so long as it is owned by
Licensee or any of its subsidiaries).
(g) “Stations” means,
without duplication, (i) those television broadcast stations,
cable television systems and other broadcast outlets affiliated
with the Networks that are now or hereafter directly or indirectly
majority owned and operated by UCI or a direct or indirect
subsidiary of UCI or with respect to which UCI or a direct or
indirect subsidiary of UCI has the right to designate a majority of
the board or similar governing body, and in each case, which
broadcast in the Spanish language format; and (ii) WLII and
WSUR in Puerto Rico.
(h) “Telefutura Network”
means the Telefutura Spanish language television network of
affiliated television broadcast stations, cable systems and other
affiliated broadcast outlets broadcasting the Telefutura Network in
the Territory.
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(i) “Univision Network”
means the Univision Spanish language television network of
affiliated television broadcast stations, cable systems and other
affiliated broadcast outlets broadcasting the Univision Network in
the Territory.
1.3 Licensor and its Affiliates
shall have the right and ability to, and to permit others
to:
(a) transmit or retransmit via
satellite which receives its signal from any earth station or other
facility in Mexico (or any substitute or back haul facility outside
of Mexico but serving Mexico, so long as such signal is encrypted)
to any television station in or cable system serving Mexico, any
Programs which may also be covered by this Agreement,
notwithstanding the fact that such transmissions or retransmissions
may be incidentally viewed in the Territory;
(b) transmit or retransmit from any
television station located in Mexico any Programs which may also be
covered by this Agreement, notwithstanding the fact that such
transmissions or re-transmissions may be incidentally viewed in the
Territory;
(c) transmit via satellite to any
direct-to-home subscribers located outside the Territory, any
Programs which may also be covered by this Agreement,
notwithstanding the fact that such transmissions may be intercepted
by unauthorized recipients in the Territory;
(d) transmit via the Internet
(x) Licensor’s national network evening news broadcast
and up to a 15 minute sports program, both of which in the
aggregate last no more than one hour per day, (y) religious
service telecasts, and (z) charitable and non-commercial
specials (e.g., telethons and presidential speeches).
Notwithstanding the foregoing
exceptions, neither Licensor nor its Affiliates shall consent to,
and each shall use its commercially reasonable efforts to
prohibit,
(i) The transmission or
retransmission of such Programs by
(x) any television station in the
Territory,
(y) any cable system in the
Territory that is located beyond 35 miles from the community of
license of any transmitting television station in Mexico
transmitting the Programs (any such cable transmission or
re-transmission within such 35 mile limit being hereby expressly
permitted) or
(z) any other means of broadcasting
in or into the Territory, and
(ii) the sale of any direct-to-home
or similar services, or any mechanical device, authorization code
or other access devices, to persons located in the Territory for
the purpose of receiving Programs in contravention of this
Section 1.3.
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To the extent that Licensor has the
right to transmit or retransmit under clause (b) and
(d) above, Licensor shall have the right to market and promote
and otherwise generate revenues (including, but not limited to, the
sale of advertising time) attributable to the ability of viewers in
the Territory to receive Programs contained in such transmissions.
Licensor and Licensee acknowledge and agree that this
Section 1.3 is intended solely to insure that Licensor will
not be in violation of this Agreement merely because transmissions
or retransmissions from stations located in Mexico or transmissions
or retransmissions from satellite signals intended for television
stations, cable systems or direct-to-home subscribers outside the
Territory, and over the Internet as provided above, may be
incidentally viewed by unauthorized recipients in the Territory,
and is not intended to give Licensor any right to broadcast, or
license others to broadcast, Programs intended for viewing or which
may be viewed in the Territory other than in accordance with the
other provisions of this Agreement. The Program License Agreement,
dated as of May 31, 2005, by and between GT and Licensee is
hereby terminated and shall have no further force or
effect.
2. Notification, Acceptance and
Licensing of Programming . Not less than once in each calendar
quarter during the term of this Agreement, Licensor will deliver a
written notice (an “Availability Notice”) to Licensee
specifying all Programs which (a) have become available for
license by Licensee since the delivery of the preceding
Availability Notice or (b) may no longer be available to
Licensee for license hereunder. Upon the request of Licensee,
Licensor shall deliver to Licensee whatever materials are
reasonably available with respect to any Program available for
license, at Licensee’s expense to the extent Licensee
requests more than a videotape pilot or representative episode with
respect to a new Program. If Licensee desires to license any
Programs, it shall notify Licensor of its acceptance in writing (an
“Acceptance”) at any time. Such Acceptance shall
specify the name of the Accepted Program and such other information
as may reasonably be requested by Licensor. An Acceptance shall
constitute the acceptance of the license by Licensee of the
Program(s) and upon receipt by Licensor of such Acceptance, the
Program(s) covered by each such Acceptance shall without further
action be automatically licensed to Licensee on the terms and
conditions of this Agreement and be an “Accepted
Program.”
3. Delivery, Expenses And Use Of
Programs .
3.1 Following Licensee’s
sending an Acceptance with respect to a Program pursuant to
Section 2 of this Agreement, Licensor shall deliver to
Licensee, at Licensee’s expense, a visual and aural
reproduction of each such Program either (at Licensee’s
election and subject to Licensor’s reasonable ability to
comply with such election) via satellite (at Licensee’s risk
of loss if delivery via satellite is requested less than 48 hours
in advance of scheduled broadcast) or on such form of videotape,
disc or other device as reasonably requested by Licensee, formatted
and suitable for broadcast in the Territory as reasonably requested
by Licensee in accordance with its broadcast standards and
practices, as soon as available. Programs will be deemed delivered
by Licensor when transmitted to the satellite, when actually
received if shipped by freight, or when made available through
permission to re-transmit the signal of an affiliate of Licensee.
Licensee shall inform Licensor when it intends to undertake
up-conversion of Programs to HD or down-conversion of Programs from
HD, and will specify the HD format and up-conversion and/or
down-conversion methods and standards that it intends to use. In
the event Licensee uses as a basis for converting programs to HD
format the standards
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determined, from time to time, by
the National Television System Committee or Advanced Television
System Committee (or one of their successors), Licensee shall not
require approval from Licensor for the up-conversion or
down-conversion described in this paragraph; otherwise, Licensee
shall require approval from Licensor, which shall not be
unreasonably withheld or delayed. Once format(s) and conversion
method(s) have been established by the procedure set forth in the
immediately preceding sentence, Licensee may use such format(s) and
conversion method(s) to up-convert or down-convert
Programs.
3.2 Licensee agrees that as soon as
practicable following receipt of delivery of any Program via
satellite or on video tape, disc or other device, it will examine
such delivery to determine whether it is physically suitable for
broadcast and notify Licensor immediately upon detecting any defect
rendering such delivery unsuitable for broadcast. In such cases,
Licensor shall promptly re-deliver such Program at its own expense
either (at Licensee’s election) via satellite or on a
physically suitable videotape, disc or other device designated by
Licensee.
3.3 Licensee agrees to return to
Licensor each video tape, disc or other device of a Program
delivered by Licensor on the reels and in the containers in which
it was shipped, in the same condition as received, reasonable wear
and tear through proper use excepted, as soon as practicable after
Licensee and its subsidiaries has made all broadcasts of such
Program that it plans to make within the next 12 months. Licensee
shall pay all costs of returning the videotapes, discs or other
devices to Licensor. Should Licensor request that the video tape,
disc or other device be sent to a location other than
Licensor’s warehouse, Licensor will bear responsibility for
shipping costs above those which would have been applicable for
shipping to Licensor’s warehouse. Licensor agrees to
re-deliver to Licensee any Program previously returned to Licensor
that Licensee or any subsidiary of Licensee desires to re-broadcast
during the Term.
3.4 The videotapes, discs or other
devices shall at all times remain the property of Licensor subject
to Licensee’s rights as herein provided. The risk of loss,
damage, destruction or disappearance of any tape shall be borne by
Licensee from the time of delivery to Licensee until the return
thereof to Licensor or Licensor’s designee and as to any
video tape, disc or other device or part thereof lost, stolen,
destroyed or damaged after delivery to Licensee and before the
return thereof, Licensee shall pay Licensor the cost of replacement
thereof, which payment shall be limited to the cost of replacing
the raw video tape, disc or other device.
3.5 Except as provided herein,
Licensee will not, and will not authorize others to copy, duplicate
or re-license any Program unless necessary for Licensee’s or
its Affiliates own exploitation of broadcast rights as permitted
hereunder. Any duplicate or copy of any part of the Program
(including trailers) made by Licensee for its own purposes will be
erased following all anticipated broadcasts as permitted hereunder
of the Program within the next 12 months. Upon receipt of written
request from Licensor, an officer of Licensee shall certify in
writing the destruction of all such copies.
3.6 Licensor will furnish to
Licensee glossy prints of still photos, synopses, cast lists and
all other promotional material for the promotion and exploitation
of the Programs, if available. Licensor grants (and will cause its
Affiliates to grant) to Licensee and its Affiliates the right to
use and license others to use Licensor’s name and, unless
Licensee is advised by
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Licensor that rights of Licensor are
limited (in which case, to the extent not limited), to use and
license others to use the name and likeness of, and biographical
material concerning, each star, featured performer, writer,
director and producer in the Programs and the titles of each
Program and fictitious persons and locales therein, for advertising
and publicity, of the Programs, and any broadcaster or sponsor
thereof, but not for direct endorsement of any product or service,
provided that any such use will protect the copyrights of Licensor.
To the extent available to Licensor or its Affiliates after
reasonable efforts, Licensor will furnish Licensee with music cue
sheets for the Programs and the information necessary for
administration of rights payments and compliance with
Section 507 of the Federal Communications Act of 1934, as
amended concerning broadcast matter and disclosures required
thereunder, insofar as that Section applies to Persons furnishing
program material for television broadcasting (“Section
507”). Subject to the foregoing and subject to
Licensor’s reasonable prior approval, Licensee shall have the
right to produce its own promotional material for or from the
Programs. Televisa shall permit Televisa’s proprietary
artists to appear on or for Licensee or its Affiliates for
promotional or programming purposes at mutually agreeable times
(which agreement shall not be unreasonably withheld), at
Licensee’s expense, it being agreed that Televisa may not be
able to require an artist to appear, all requests to and contacts
with artists shall be made through a Televisa representative
designated by Televisa (provided that if the designated
representative of Licensee for these purposes has requested in
writing to the designated representative of Televisa for these
purposes to be informed as to whether an artist is under contract
with Televisa and Televisa has not responded to Licensee within
seven days of receipt of such request, Licensee may try to contact
such artist without going through Televisa), and Televisa shall not
be required to approve any appearance which would interfere in any
material respect with Televisa’s operations or
productions.
3.7 Except as provided in
Section 3.8 below, Licensee agrees to include in its broadcast
of Programs all copyright notices and all credits made part of each
Program including but not limited to stars, directors, producers
and writers.
3.8 (a) When
requested by Licensee, Licensor in consultation with Licensee shall
edit episodes of Programs in order to (i) end novelas by
creating recaps on a limited basis to cause the final episode to be
broadcast at strategically competitive times (i.e., Thursday and
Friday) and (ii) reduce the length of credits so that the
opening credits are no longer than 90 seconds in length and closing
credits are no longer than 30 seconds in length.
(b) Licensee shall have the right to
edit and make changes, additions and deletions to Programs in order
to (i) eliminate internal credits when episodes of a Program
air back-to-back, (ii) adjust Program length to standard U.S.
format lengths (i.e., 30-60-90-120 minute lengths) by changing
starts or finishes (with other desired edits for such purpose to be
provided under paragraph (a) above), (iii) insert
commercials during natural breaks in the Program and
(iii) comply with applicable government rules and regulations,
including FCC regulations and Licensee’s broadcast standards
and practices from time to time in effect.
(c) When requested by Licensee,
Licensor in consultation with Licensee may (in its discretion which
must be reasonably exercised) edit episodes of Programs in order to
(i) eliminate or consolidate episodes that contain more than
15 minutes of recap
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material, (ii) eliminate any
material that is not relevant to U.S. Hispanic audiences (i.e.,
phone numbers, addresses, contest rules, etc.), and
(iii) facilitate wind-up of cancelled Programs.
(d) When requested by Licensee,
Licensor in consultation with Licensee may (in Licensor’s
sole discretion) edit episodes of Programs in order to
(i) eliminate storylines and segments in good faith deemed by
Licensee to be undesirable or unacceptable to U.S. audiences (e.g.,
strong sexual content) and (ii) reformat Programs to a maximum
of 2 hours per episode.
The editing rights hereunder shall
be subject to applicable law and applicable contractual rights of
unaffiliated third parties of which Licensor informs Licensee in
writing at the time of delivery to Licensee of such Program
(provided that Licensor agrees to use (and to cause its Affiliates
to use) good faith efforts not to permit to exist any such
contractual restrictions). Licensee will pay for editing performed
by Licensor at Licensor’s incremental cost.
3.9 (a)
Licensor and Licensee intend to cooperate effectively in order to
exploit reasonable opportunities for product placement and
integration in Programs to be broadcast in the
Territory.
(b) Each of Licensor and Licensee
shall appoint a single person to act as point of contact for such
efforts. Such persons shall cooperate to make each party aware of
commercial opportunities for product placement or integration in
Programs to be broadcast in the Territory.
(c) The parties will work together
so that, to the extent technologically feasible, Licensee, with
prior approval of Licensor (which may be withheld in its sole
discretion), may substitute products sold by Licensee in exchange
for products placed by Licensor in recorded Programs, so long as
such substituted placement does not adversely affect in any way, as
determined by Licensor in its sole discretion, the artistic quality
and/or integrity of the Program. By way of example and not in
limitation, Licensor may determine not to approve such
substitutions in the relevant recorded Programs if any person or
entity, including but not limited to any director, producer or
actor in or of such recorded Program, in his, her or its sole and
absolute discretion does not want the substitution, or if Licensor
believes that proposing such substitution would harm its
relationship with such director, producer or actor. For the
avoidance of doubt, none of Licensee or its Affiliates shall
substitute products in Programs aired simultaneously, by Licensor
and Licensee. An Affiliate of Licensor which is capable of
effecting such substitution will have the right of first offer to
perform such substitution. For the avoidance of doubt, revenues
with respect to substitution as provided in this paragraph shall be
included in the Royalty Base.
(d) Licensor will consider in good
faith requests of Licensee, made from time to time, to effectuate
product placement and/or integration by Licensee’s
advertisers in Programs during their production and/or
post-production stage. However, Licensor shall have no obligation
to effectuate such product placement and/or integration and
Licensor shall make the determination as to whether to comply with
such requests in good faith. By way of example and not in
limitation, Licensor may determine not to comply with such requests
if any person or entity participating during the production and/or
post-production of the Program in question,
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including without limitation, any
director, producer or actor in or of such Programs, in his, her, or
its sole and absolute discretion does not want the product
placement and/or integration, or if Licensor believes that
proposing the product placement and/or integration would harm its
relationship with such director, producer or actor. In the event
that Licensor does effectuate product placement and/or integration
during production or post-production of any Programs by
Licensee’s advertisers, Licensee will pay the costs for such
placement and/or integration (which such costs will need to be
agreed between Licensee and Licensor prior to effectuation of the
product placement and/or integration) upon provision by Licensor of
appropriate documentation evidencing such costs. For the avoidance
of doubt, revenues with respect to placement and/or integration as
provided in this paragraph shall be included in the Royalty
Base.
3.10 Subject to Section 7.1 and
Licensee’s remedies for a breach thereof, Licensor may, at
its sole and absolute discretion, withdraw any Program and
terminate any license with respect to such Program if Licensor
reasonably determines that the broadcast thereof is likely to:
(i) infringe the rights of third parties, (ii) violate
any law, court order, governmental regulation or ruling of any
governmental agency, (iii) otherwise subject the Licensor to
any material liability. In addition Licensor reserves the right to
withdraw any Program prior to the conclusion of the applicable
Broadcast Period if, for any reason, the Program is no longer being
produced by or available to Televisa, provided that, Licensor may
not withdraw such Program pursuant to this sentence to the extent
it has already been produced in its entirety (on an
episode-by-episode or season-by-season basis, as applicable). In
the event of any such withdrawal or termination, Licensor shall
give Licensee as much notice as possible, and the parties shall
have no obligations to each other with regard to Programs not
produced, subject to Section 7.1 and Licensee’s remedies
for a breach thereof.
3.11 Notwithstanding anything herein
to the contrary, any incremental cost or expense of Licensor
relating to this Section 3 that would not have been applicable
prior to December 19, 2001, shall be borne by
Licensee.
4. Royalties and License Fees
.
4.1 (a)
Licensee shall pay Licensor henceforth (and retroactively between
January 1, 2009 and the date hereof) a royalty (the
“Royalty”) in cash in an aggregate amount equal
to
(i) 9.36% of the Royalty Base,
plus
(ii) 2.02% of the excess, if any, of
the Royalty Base over $1,548,500,000.
(b) Licensee will, and will cause
its Affiliates to, ensure that the pricing of vignettes and other
similar short-form programs included in the Royalty Base is
expressly identified and set forth in a written agreement or
invoice with the applicable advertiser or sponsor.
(c) Licensee agrees that it will,
and will cause its Affiliates to, use good faith efforts not to
structure arrangements or agreements in a manner intended to cause
revenues of transactions or series of related transactions that
would otherwise be included in the
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Royalty Base not to be included in
the Royalty Base and will ensure that each of the Packaged Sales
Transaction Process, Vignettes Transaction Process, and Allocations
are made at arm’s length and in good faith.
(d) For purposes of this Agreement
only:
(i) “Allocations” means
allocations made by Licensee or its Affiliates of revenues from
transactions, or series of related transactions, that are both
(A) excluded in part from the definition of the Royalty Base;
and (B) included in part in the definition of the Royalty
Base.
(ii) “Audience
Deficiency” means the failure of Licensee or its subsidiaries
to deliver the total number of rating points, thousands of viewers
and/or impressions guaranteed to an advertiser by Licensee or its
subsidiaries, determined on an Excluded Match by Excluded Match
basis (but not a game by game basis) and advertiser by advertiser
basis by deducting the actual audience delivered (based on the
audience demographic specified in the related advertising contract)
for the Excluded Matches, as determined by Nielsen or a similar
independent rating service from the audience guaranteed for the
Excluded Matches (based on the audience demographic specified in
the related advertising contract).
(iii) “Audience Deficiency
Units” means advertising spots aired by Licensee or its
subsidiaries on the Networks or (to the extent Licensee is subject
to contractual obligations to provide such spots on Stations and
Licensee has a system to track such obligations) Stations to
satisfy, make up or compensate for an Audience
Deficiency.
(iv) “Duration” shall be
the airtime used (calculated based on seconds) for exhibiting a
commercial, sponsored promotional material or any other type of
advertising (other than up to an aggregate of 10 seconds of a
billboard or bumper for which such 10 seconds Licensee or its
Affiliates do not charge and which is part of commercial
advertising time for which Licensee or its Affiliates do charge
with respect to at least 30 seconds in the aggregate).
(v) “Excluded Matches”
means (a) the World Cup, Copa Oro and Copa America soccer
games (including the opening and closing ceremonies of each of the
foregoing) and programming immediately preceding, immediately
following, or during half-times or other scheduled breaks of such
games and (b) the World Cup Draw Ceremony (provided that, for
the avoidance of doubt, an Excluded Match may include less than a
full soccer game if the broadcast of the game is interrupted for
other broadcasting, including another game, for no more than 45
minutes or the airing of the game commences no more than 45 minutes
after commencement of the actual game, in each case so long as such
broadcast is initially intended to run through completion of such
game, and clips or vignettes are not Excluded Matches).
11
(vi) “Excluded Matches
Advertising Revenue” means all revenues (whether or not such
sources of revenue are now or hereafter in existence) billed or
billable by or on behalf of Licensee to any third party in
relation, directly or indirectly, to any type of sale of
advertising (including, but not limited to, revenue from times
sales for advertising, product placements or integration,
in-program sponsorships and similar revenue) contained in any
broadcast, rebroadcast, use, transmission, delivery or other
distribution (whether such broadcast, rebroadcast, use,
transmission, delivery or other distribution is on an advertising
basis, subscription basis, or otherwise and by whatever name,
categorization or characterization thereof) of the Excluded Matches
substantially in full (as described in the definition of
“Excluded Matches”) on the Networks and the Stations,
less advertising agency commissions, volume discounts, and prompt
pay discounts actually paid to or retained by third parties or
incurred and deducted by third parties. It is agreed that Excluded
Matches Advertising Revenue shall not include any advertising
revenue derived from any programming other than the Excluded
Matches, such as but not limited to, (A) any advertising time
provided as an incentive or inducement for any third party to
purchase time during Excluded Matches, (B) any advertising
time or vignettes sold as a package with advertising on Excluded
Matches but to be aired during any programming other than the
Excluded Matches, or (C) any Audience Deficiency Units arising
out of the exhibition of Excluded Matches. The calculation of any
advertising revenue referenced in the immediately preceding
sentence will be based on the Unit Rate and Duration of the
applicable advertising, and determined on an Excluded
Match-by-Excluded Match basis (but not a game-by-game basis) and
advertiser-by-advertiser basis. For the sake of clarity, any
Audience Deficiency Units that are provided due to an Audience
Deficiency with respect to an Excluded Match other than an Audience
Deficiency Unit provided in an Excluded Match shall be included in
the calculation of the Royalty Base. For purposes of calculating
“Excluded Matches Advertising Revenue,” media for media
barter shall be valued at 100% of fair value determined by
reference to the Unit Rate, and all other barter transactions will
be included at 100% of fair value of the goods or services received
by Licensee in consideration for the advertising time.
(vii) “Grandfathered
Programs” has the meaning given to such term in the Amended
and Restated International Program Rights Agreement, dated as of
December 19, 2001, by and between Licensee, GT, and
Venevision.
(viii) “JSA Income”
means income received by any of Licensee and its subsidiaries under
joint marketing and sales agreements for stations owned, but not
operated, by Licensee or any of its subsidiaries, and affiliated
with one of the Networks.
(ix) “National Representation
Commissions” means fees charged by any of Licensee and its
subsidiaries to their non-owned and non-operated affiliates for
acting as a national television advertising sales
representative.
(x) “Net Advertising
Revenue” means all revenues (whether or not such sources of
revenue are now or hereafter in existence) billed or billable by or
on behalf of any of Licensee and its Affiliates to any third party
in relation, directly or indirectly, to any type of sale of
advertising (including, but not limited to, revenue from times
sales for advertising, product placements or integration
(including, but not limited
12
to, product placements or
integration as contemplated by Section 3.9), in-program
sponsorships and similar revenue) attributable to the
contemporaneous or delayed viewing (by whatever name,
categorization or characterization thereof) of any program
(including without limitation Programs, Special Programs,
Co-Produced Programs, Grandfathered Programs and/or other programs)
on the Networks and/or Stations, less advertising agency
commissions, volume discounts, and prompt pay discounts actually
paid to or retained by third parties or incurred and deducted by
third parties; provided that for purposes of calculating Net
Advertising Revenue, media for media barter shall be valued at 100%
of fair value determined by reference to the average unit price for
advertising sold for cash to third parties in the programs in which
the barter is aired and all other barter transactions will be
included at 100% of fair value of the goods or services received by
any of Licensee and its subsidiaries in consideration for the
advertising time; provided , further , that for the
avoidance of doubt, the use of unsold inventory by Licensee or its
subsidiaries or Licensor as provided in Section 6 or by
Venevision shall not be considered advertising revenue for the
purpose of or be included in calculating Net Advertising Revenue.
Notwithstanding the foregoing, if Licensee or its subsidiaries
sells or acquires a business or assets to or from a third party
(that is not a subsidiary of Licensee) in which Network or Station
advertising time is committed to such third party in the case of a
sale or all or a portion of the consideration is advertising time
in the case of an acquisition, Licensee will provide Licensor with
its reasonable determination of the relative fair value (as such
concept is described in Emerging Issues Task Force Issue 00-21 or
any successor issue or standard) of such advertising time and the
basis of such determination. If Licensor disagrees with
Licensee’s determination, Licensor may require Licensee to
engage a nationally recognized appraisal firm to determine the
relative fair value of such advertising time; provided that
Licensee will not be required to engage such an appraisal firm if
its determination in the immediately preceding sentence had been
based on an appraisal of such a nationally recognized appraisal
firm. The value of such advertising time as calculated pursuant to
the two preceding sentences shall be included in the calculation of
the Royalty Base. Nothing in this definition is intended to or
shall be deemed to modify Section 1.1(a) hereof or the license
granted pursuant thereto or to in any way permit any use of
Programs other than the broadcast of Programs during the Term on
the Networks.
(xi) “Net Subscriber Fee
Revenue” means all revenues (whether or not such sources of
revenue are now or hereafter in existence) billed or billable by or
on behalf of any of Licensee and its subsidiaries in relation,
directly or indirectly, to the distribution of any of the Networks,
Stations, Programs, Special Programs (other than Special Programs
produced by Licensee and Special Programs produced by a third party
the rights for which were obtained by Licensee without any
assistance or efforts by Licensor and/or its Affiliates),
Co-Produced Programs and/or Grandfathered Programs (whether such
distribution is advertising-based, subscription-based, or otherwise
and by whatever name, categorization or characterization thereof,
including, but not limited to, payments from multiple systems
operators characterized as a fee for insertion of commercials in
the Networks, Stations, Programs, Special Programs
