Widely used is the net deal that allows for the distributor to
deduct his distribution fees off the top then recoup all expenses before sharing
the remainder of the revenues with the producer. The net deal delays the point
at which the producer sees any revenue, although it potentially provides a
producer with a high return on a very successful film.
Distribution fee percentages vary from studio to independent distributors and
between territories. Studio distributors charge a lower rate in the
United States and Canada and slightly higher rates in Europe and other
territories. Independent distributors usually charge a lower fee in the
United States and Canada, and a slightly higher percentage for all other
territories. Thus, an independent producer may be better off with an independent
distributor because of lower distribution fees. Moreover, independent
distributors with distribution rights in one territory will try very hard to
sell the film regardless of how the film did in other territories.
Studio distributors that usually own all foreign rights to
a movie may write-off a film in other territories if it did not do well in one
territory. Even worse, the studio could put its efforts in distributing studio
films rather than independent films. With that said, studio distribution does
have its advantages due to the studiosí prominence abroad. Studio distributors
have the financial power and influence over foreign exhibitors due to the
exhibitorís need for Hollywood blockbusters. With the wide variation in
distribution methods and fees in foreign distribution, it is crucial for the
independent producer to assess the benefits and costs of using an independent
versus a studio distributor to exploit his or her film abroad.
Author acknowledges the contributions of Donald C.
Farber; and David Nochimson.
BLAKE & WANG, P.A. ENTERTAINMENT LAWYER SERVICES. ALL RIGHTS RESERVED.
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