Under the joint venture agreement, CBS Corp. has acquired an ownership stake in Kapital Entertainment. CBS will provide co-financing for Kapital projects and will serve as worldwide distributor.
Kapital will continue to operate as an independent production company run by Kaplan which will be completely separate from CBS Television Studios and CBS Television Network and have no first-look or any other agreements with any of them. The company will have a four-person board of directors led by Kaplan and CBS Corp. CEO Leslie Moonves.
Under the setup, Kapital Entertainment will introduce a new model, operating as a hybrid. It will have the co-financing capabilities of a studio, which will be applied in some cases, like sought-after projects the company develops and packages internally. The plan is for Kapital to co-finance, not solely finance shows, entering co-productions with the networks’ respective studios as Kaplan stresses the value of having an in-house studio partner.
“The good news is with Aaron, the other networks still can own a major chunk of (the show), our joint venture shouldn’t get in the way of that,” Moonves said. Some series also may be distributed by a third party, not all of them will go though CBS.
Meanwhile, Kaplan also will continue to be able to work as a producer for hire on projects, including those that are already set up at a studio or collaborations with writers who are under overall deals.
The first project under the agreement is Dana Klein and Mark Feuerstein’s 9J, 9K and 9L, Kapital’s multi-camera family comedy for CBS which the company co-produces with CBS Television Studios. It is one of six broadcast pilots Kapital has this season at three networks and five studios, including three at CBS, and the sole one with CBS Studios. “It was the first pilot delivered to us we loved it,” Moonves said of the sitcom starring Feuerstein. “It was an early favorite and remains that way.”
Kaplan, who has produced pilots and series for all major broadcast networks, as well as HBO, Showtime, Netflix, Freeform and Nickelodeon, plans to continue to produce for all networks and sell projects where they would have the best chance.
“We will continue to be 100% destination specific and continue to work side by side with writers, actors, directors and other producers to preserve their creative vision,” he said.
Added Moonves, “Aaron truly will have not only the freedom but the support on our part to be developing for everybody.”
Since its 2009 launch, Kapital Entertainment has produced 19 series while being completely self-financed by Kaplan with his own money. His success had attracted a slew of suitors over the past five years. He had turned down numerous offers for studio overall deals or private equity financing until he was approached by CBS.
“Aligning with the CBS Corporation on this venture gives me four key opportunities: the ability to continue to run Kapital, both network and studio agnostic, allowing us to always focus on the ideal home for a project, the capacity to co-finance content, a top notch and sophisticated distribution business and a partner in Leslie Moonves, whose knowledge and understanding of the power of content is unrivaled,” Kaplan said.
Getting Kaplan wasn’t easy and took long conversations to hone in a model that would appeal to him, Moonves said.
“At his core Aaron is an entrepreneur, and it was important to him that he owns his own business, so clearly it was not going to be a traditional overall deal with a producer because of what he is aspiring to — he wasn’t an able to be in business with everybody.”
CBS is making an investment in Kapital that would enable Kaplan to build it (Moonves would not disclose the size of the investment). Beyond that, the two sides have agreed to a fairly complicated formula that sets different terms of CBS participation depending whether CBS or a third party is distributing a show. “It’s a real partnership,” Moonves said.
How involved will Moonves be in the new venture? “I will have creative input, certainly more on CBS shows, and I’m sure I’ll see other projects since we are in a joint venture together, but Aaron will be the driver on creative issues,” Moonves said.
Unlike ABC, Fox and NBC, whose studios also produce series for other broadcast networks, CBS TV Studios had been focused solely on CBS and sibling The CW. The partnership with Kapital doesn’t necessarily signal a move by CBS to producing shows for rival broadcast networks. “It’s become more difficult because more networks — like us — are doing more of their own projects.” But “I think what it says to the community is we are open to doing all sorts of different deals.” Also, “It’s reflective of the analysis by a company like ours that the back end of these shows are becoming as important as the front end.”
While he has the resources, Kaplan does not plan to expand the company beyond likely hiring a business affairs executive as he wants to keep Kapital small and nimble. Until five months ago when Kaplan brought in former 20th TV head of comedy Dana Honor as an executive producer, Kapital only had a couple of assistants working alongside Kaplan.
The company also has never had agency representation, with Kaplan, former worldwide head of scripted television at WMA until the WMA-Endeavor merger, packaging and selling the projects and negotiating deals with networks and studios.
Kapital has production deals with former CBS head of comedy Wendi Trilling’s TrillTV, which has pilots 9J, 9K and 9L and Hannah Royce’s Questionable Choices, both at CBS; and Tracy Katsky’s KatCo., whose projects though Kapital include the Netflix series Santa Clarita Diet and the pilots Brown Girls (Freeform), Linda from HR (Fox) and the animated comedy Rusted Justice (Fox).
Additionally, Kapital has a joint venture with the London-based Merman (Catastrophe), founded by Catastrophe co-creator and star Sharon Horgan. which produces the HBO comedy series Divorce, created by Horgan.
Kapital’s current series include Life In Pieces on CBS, Santa Clarita Diet (Netflix), Divorce (HBO), American Housewife (ABC), Secrets and Lies (ABC) and the upcoming The Chi (Showtime). Kapital has seven pilots currently in pre-production and production, across broadcast and cable networks: 9J, 9K and 9L at CBS via CBS TV Studios, Me, Myself & I at CBS via Warner Bros. TV, Hannah Royce’s Questionable Choices at CBS via Sony TV; Linda From HR at Fox via 20th TV; Charlie Foxtrot and Losing It at ABC via ABC Studios and Brown Girls at Freeform. They bring the number of pilots made by Kapital to 45, with the previous 38 leading to 19 series.
The deal with CBS was negotiated by Kaplan’s long time lawyer Jamie Mandelbaum and Eric Weissler at JTWAMM and Venable.