SELLING YOUR FEATURE FILM… (“Securing a Theatrical Distribution Deal or merely Selling Your Film ain’t so simple”) ….. (November 14, 2013) … You’re at Sundance, or Toronto, or Telluride, or Cannes. Your screening was a success. It sold out. There was a clearly defined demographic in the audience. The Acquisition Executives (25 of them) were in attendance. And, most important, when the Rear Title Crawl Credits came up just after “THE END” the audience stood up and applauded and applauded and applauded… It smells like there’s gonna be “BUZZ”…. Your film screened from 4:00-5:30. You get into the lobby at 5:45 and the Festival Director is pushing you out of the lobby for there is some else, just like you, with the 6:00 screening and the theater sold out and the audience is in line and it’s Sundance and bloody cold outside, and you know that once you leave the lobby it’s over. So let’s talk Deals, Distribution Agreements and remember you “Only have 15 Minutes”. Now here’s a good technical article from “Edictive” outlining many of the “Deal Memo Points” that you will negotiate. Distribution Rights Acquisition Agreement The agreement reached between the production company and the distributor will determine how much money you make from your film, so it is important that you get the deal right. The distribution agreement is entered by two parties: the production company and the distributor. The production company looks for a distributor that can effectively license the film in a certain geographical area, known as a territory. Different distributors will have different strengths and weaknesses, and these will need to be assessed by the production company to determine the best fit. The production company can also split the rights between different distributors; for example, one distributor may handle local distribution while another handles international distribution. The distributor will be looking to acquire as many rights as possible for the film, and may need to bring in a subdistributor to fulfill all of its requirements (for example, distribution in different territories). In this case, the distributor also has the ability to offset losses from one market against profits from another, which is known as cross-collateralization. The distribution agreement covers the grant of the distribution rights and specifies the places, length and scope of the copyright license. The terms in the agreement control when and how the producer gets paid; when, where and for how long the distributor has the rights to distribute the film; and what rights you can license to others. Rights granted and rights reserved The rights-granted clause within the agreement outlines the specific rights granted to the distributor. In most cases, it includes the rights to market, exploit, advertise, publicize and manufacture copies of the film. This clause also outlines the media and markets to which the distributor can allocate the film, such as theatrical, free and/or paid television, home video, commercial video, VOD and PPV, the Internet, airlines, hotels (and other hospitality industries), schools and military. In order to effectively promote the film, the distributor will need to have the right to produce trailers, commercials, print advertising and other promotional materials. If the production company has given the distributor the right to distribute the film internationally, it will also need to assign the right to edit the film; however, this clause should be worded to prevent the distributor from making creative changes to the film and only allow it to make changes in relation to a country’s censorship laws or in order to dub the film into another language. Any rights not assigned to the distributor are called the reserved rights, and ensure the producer continues to hold the rights to things such as print publication, radio and stage productions and merchandising. Exclusivity Although you can split the rights to your film between distributors, each distributor will want to be the exclusive distributor of the rights granted within specified territories for the specified term. Some rights, such as Internet, VOD, PPV and streaming video rights, can be granted on a nonexclusive basis. Term of the rights The agreed-upon term is the length of time for which the distributor is granted the rights. Distributors will often push for a perpetual term; however, this is not always in the best interest of the producer, particularly if the distributor is not performing well with the film. Always try to secure an initial limited term of two or three years, during which the distributor must meet certain financial goals from the exploitation of the film. You should have a clause that allows you to cancel the contract if these goals are not met, and also an option to extend the contract for a longer period of time if the distributor reaches the initial goals. Be wary of any rights granted beyond the term of the distribution agreement. A common occurrence is for the distributor to enter an agreement with a subdistributor that exceeds the terms of the original distribution agreement. When this happens, the production company has to enter into an agreement with the subdistributor prior to the expiry of the term with the original distributor. This new agreement may also have a term that extends beyond the original agreement. You can limit the ability of the distributor to enter such agreements by capping the terms of any subdistribution agreements so that they cannot extend by more than a specified number of years beyond the term of the original agreement between the production company and the distributor. Territories The term territory refers to the geographical area within which the distributor may exploit the film. A production company will often split the rights of the film between a domestic and an international distributor. This benefits the producer, as each distributor will be a specialist in its territory, but also prevents a distribution company from cross-collateralizing between a poorly performing domestic market and a high-performing international market. Even distributors who insist on the rights for both domestic and international distribution will often work with subdistributors who specialize in different markets. Production companies are advised to try to set territorial minimums for distributors outlining the lowest agreeable terms. These minimums require the distributor to gain written approval from the producer prior to agreeing to any deal that would bring in less than the agreed-upon territorial minimum. Advertising and promotion The distributor may wish to be in charge of all advertising and promotion, but it is a good idea to negotiate consultation for key artwork used in the campaign. Even in cases where the distributor allows the producer to provide input, the distributor will usually insist on having the final say on artwork. The production company should also negotiate the right to approve, rather than just consult on, the actors’ biographies, images and credits in all paid advertising. This relates to the fact that the production company may have preexisting obligations with the performers and above-the-line personnel in regards to photos, likeness and credits. Recoupable expenses Typically the distributor is allowed to recoup a number of expenses before handing over the producer’s gross. These things include advertising and promotional expenses, such as the production of trailers and posters; expenses for taking the film to market for the first year; and manufacturing expenses related directly to producing copies (i.e., DVDs) of the film. Rather than giving the distributor free rein on these things, the production company should ensure the agreement sets minimum and maximum limits on how much will be spent on marketing and promotion. The distributor’s expenses should be limited to actual, verifiable (i.e., requiring documentation such as invoices or receipts) out-of-pocket expenses, and the fee for going to market should be capped so that you don’t end up paying more than your film’s share of the market expenses. Payment in advance If a film does not perform well, the advance may be the only money that the production company actually receives, so it is very important to ensure this is covered in the agreement. Producers should be wary of signing away any film rights without first receiving a nonrefundable advance from the distributor. Packaging and credits The distributor will often want to package your film with others to make it a more attractive purchase for the broadcaster, similar to a bulk discount. You need to make sure that any agreements specify exactly how much of the package price is attributed to your film and that this amount is calculated reasonably. You should also try to push for a minimum price to be attributed to your film in the case of any package deals. In terms of crediting the film, the distributor is obliged to adhere to all credits as per the producer’s contracts with all third parties — actors, directors, editors, photographers, etc. The distributor will negotiate for the specific language and placement of its own credit. Default and termination As with all agreements, you should ensure there is a termination clause in place in case either party should fail to fulfill its obligations. Prior to termination, it is standard to provide a notice of default to the defaulting party, giving it a period of time (often 30 days) to rectify the issue. Your agreement should state that, if the distributor defaults on the contract and does not rectify the default within the required amount of time, the contract may be terminated and all rights returned to the production company. This frees your production company to liaise with other distributors. The agreement should also include a section outlining all parties involved and their representatives (attorneys, agents, unions, etc.) who must receive all notices. Audit rights Unless an audit finds a discrepancy of more than 5 percent, it will usually be paid for by the production company. Except in special circumstances, the production company is limited to one audit per year and must provide 30-days notice prior to it being conducted. Representations and warranties Each of the parties represented in the agreement is required to confirm a number of representations and warranties within the agreement. The production company must confirm that: 1. It owns the copyright to the film, and there are no instances of copyright infringement within the film. 2. It will safeguard its copyrights and other rights required to exploit the film 3. It is responsible for and has secured all rights, licenses and permissions for all music used in the film, and it has paid or will pay any music-licensing royalties or fees. 4. The film has not previously been distributed or shown within the territory (film festivals are exempt). 5. It will pay for all production costs, including deferred payments, royalties and residuals. 6. It is under no obligations that will prevent it from adhering to the obligations within the contract. 7. It will indemnify the distributor for any breaches of the representations and warranties in the agreement. The distributor must confirm that: 1. It has enough money to pay all of its bills and has no intention to file bankruptcy. 2. It is not involved in any lawsuits or pending claims that would interfere with it performing its duties for the contract. 3. All work undertaken in marketing and promoting the film will be undertaken as a work made for hire. Because the distributor is able to recoup the costs of producing these materials, the production company should request a clause stating that the marketing and ad materials become the property of the production company upon expiration of the distribution agreement. 4. It will adhere to all credit, likeness-approval, photographic and biographical obligations of the production company, as long as it has been provided by the production company with copies of these provisions. 5. It will exploit, promote and distribute the film with its best efforts and intentions. 6. It will indemnify the production company for any breaches of the representations and warranties of the agreement. Deliverables The agreement should list all deliverables required from the production company and the expected dates they will be delivered. The list should be comprehensive and cover both physical deliverables (the film’s completed negative, soundtrack, music and effects, video masters, DVD-master and authoring files, titles sheets, music-cue sheets, copies of the film’s script, etc.) and legal-business deliverables (cast and crew contracts, all copyright documentation, any publicity restrictions, music licenses, insurance, etc.). Copyright and the law In order to confirm your copyright, the distributor may elect to examine your chain of title. In this event, you will need to supply the distributor with a number of documents, including all contracts pertaining to the film property; all service contracts of creative staff, particularly writers, directors, actors and musicians (which should also contain rights of publicity, waivers of defamation, etc., as required to exploit the film); proof of copyright registrations; and documents related to financing of the film. The distributor will also want to check the credits list against the production company’s contractual obligations. Under copyright law the owner of the work has the sole right to distribute the film; without all of the above-mentioned copyright documents, the distributor could be in breach of copyright should it try to distribute the film. The distributor will also require the production company’s permission to deal directly with the film laboratory or video-duplication house responsible for producing copies of the film. If your production company is a SAG signatory, you will need to ensure the distributor signs an assumption deal agreeing to pay performer residuals directly to SAG. Making your film attractive to distributors If you have planned ahead and read all of this information before beginning production of your film, there is one key thing to keep in mind to make your film more attractive to distributors. Choose your cast with care; a well-known actor is likely to garner more attention than an unknown one, regardless of the quality of his or her performance or the film as a whole. If you have already cast your film with unknown actors and are struggling to get recognition from a distributor, you can try submitting your film to festivals or contacting a producer’s representative. Film festivals are fantastic opportunities to get your film in front of an audience. If you win or rate highly at a festival, you should have no trouble at all attracting a distributor. Keep in mind that some festivals will only allow submissions of work that have never been screened at another festival, so establish a plan and a schedule for submitting your film. It is worth weighing up the cost of entering the festival (and any related travel fees) against the amount of publicity you will receive for being involved in the festival; keep in mind that more expensive, well-known festivals will provide more prestige than smaller, lesser-known festivals. Finally, for a fee, a producer’s representative will approach distributors to try to make a deal on your behalf. You gain the benefits of the representative’s industry contacts and negotiating skills, but you should always ensure you have the final say on approving any deals. Hope this Helps & Happy Filmmaking, Dov Simens/Co-Founder/Movie Cloud 2-DAY FILM SCHOOL Presenter… “www .WebFilmSchool ” “www .DovSimensFilmSchool ” ******************************* INDEPENDENTS UNITE…..JOIN MOVIE CLOUD’S REVOLUTION
Posted on: Thu, 14 Nov 2013 17:38:51 +0000
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