Thinking The Unthinkable: Contracts Tell How An Oscar Delay (Or Scratch) Would Work

It now seems reasonably certain that this film awards season will be remembered for delivering the “Oscars With An Asterisk.” On Tuesday, governors of the Academy of Motion Picture Arts and Sciences, bowing to coronavirus-induced theater closings, approved a temporary rules change allowing Academy Awards consideration for movies that are streamed without having first been exhibited in theaters. That brings disadvantage to any contender depending on visual scope, dizzying effects, or deep, stomach-churning layers of sound. But the sound editing and sound mixing categories have been collapsed together, so we were pointed toward some shrinkage anyway.

Still, a deeper note of caution crept into a follow-up interview, when Deadline’s Pete Hammond asked Academy officials whether the annual awards ceremony would actually occur on schedule in February.  “We can’t predict what is happening between now and February 28,” said chief executive Dawn Hudson.

For film lovers, a year without the Oscars would be spring without flowers, painfully incomplete. But it could certainly happen. In fact, the Academy’s contracts with ABC, for domestic broadcast rights, and Buena Vista International, for foreign rights, have long included protocols governing delay or cancellation of an Oscar show, the forthcoming 93^rd ceremony included.

As described last February in a document offering $100 million in bonds to support the Academy’s new movie museum, here’s how it works:

In the face of disaster—like, say, a devastating second or third wave of viral infection that makes show production impolitic or impossible—the first option is delay. “In the event the Academy is prevented from producing or presenting the Academy Awards Show by force majeure, which includes acts of war, explosion, bomb threats, fire, etc.,” says the bond document, “then the Academy may postpone the Academy Awards Show to a time when ABC will agree to exhibit” it.

Simple enough. But tougher is what happens if the show is neither postponed nor exhibited, perhaps just scratched. In that case, ABC pays any out-of-pocket costs incurred by the Academy, but is refunded any payments beyond the money spent.

More complicated is a scenario under which the Academy produces a show, yet ABC is somehow prevented from exhibiting it. In that situation, the Academy, says the document, “has the right to specify that ABC exhibit the Academy Awards Show on a one-time basis within 90 days” of the ceremony, while continuing to pay its full guarantee under the contract. Good for the Academy; perhaps less so for ABC, which could be stuck airing a three-month-old ceremony.

If, by contrast, the Academy doesn’t exercise its right to delayed exhibition of a show—perhaps if the ceremony turns into a private dinner, like the Governors Awards?–ABC only has to “pay the Academy an agreed upon amount for the reimbursement of certain but not all costs of production,” and gets to keep or recover any additional fees that may have been paid for the unaired show. That’s a little better for ABC, but not great for anyone.

Under the Buena Vista contract, meanwhile, the Academy is paid its full price for foreign rights if it is forced into a 90-day postponement of the show. But if no show is produced at all, any amounts already paid under the contract are simply credited to the next year (or repaid to Buena Vista if the contract is scheduled to end).

What’s at stake financially is a set of “performance obligations” under which the Academy is set to receive $119,975,000 in 2021, according to its financial statements. (Show-related costs have been a little more than $40 million annually of late.)

But a bigger risk involves the mystique of the awards, and of theatrical motion pictures as a medium. Cancel, or even delay, the Oscars just once, and a cinematic era might end.