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• Licensing in and Sublicensing including Holdbacks/Windows
and New Media
• Duplication, Warehousing and Physical Distribution
• Merchandising, Publishing and Music
A producer may decide to exploit his film directly - that
is to say enter into agreements with distributors himself,
territory by territory and, possibly, right by right, particularly
for his own country and the United States and Canada. However,
normally producers do not have either the necessary time or
expertise to do anything more than this, so they engage a
sales agent to do it for them.
A. Distributors
The theatrical distributor will create a marketing campaign
aimed at the public, will book theatres to exhibit the film
and negotiate the sharing of receipts, will arrange for prints
of the film to be manufactured and delivery of the prints
to exhibitors, it will obtain reports of takings for the film
and will bill and collect the appropriate share of receipts.
The video distributor will create a marketing campaign aimed
not at the public generally, but at that section of video
retailers that specialises in rental. It will have a sales
force which will sell units to rental stores, it will arrange
duplication of units, the warehousing of units, the despatch
to retailers, and collection of the sale price of units.
For sell-through, the distributor will prepare a marketing
campaign aimed at the consumer, and will carry out similar
functions but selling to a different category of retail shops,
eg. Woolworths, WH Smiths, Virgin etc., who sell, but do not
rent, cassettes or DVDs of films.
Television - These rights may be sold by the Producer direct
to broadcasters or by distributors who have taken them as
part of a multi-right licence. There is normally little marketing
effort since, in virtually every territory, there are few
broadcasters to whom a film can be offered.
In addition, other elements derived from the film such as
merchandising, records, books, will all be available for exploitation
during the film's initial release.
B. Sequence of Distribution
The normal sequence of exploitation of feature films is as
follows:
Theatrical - ie. the film is exhibited to paying audiences
in film theatres, often starting in one or two select cinemas
in London and then "going wide" countrywide. The
normal theatrical "window" (ie. the period when
no other exploitation is permitted) is 6 months.
Non-theatrical - ie. exhibition to a "captive",
sometimes non-paying, audiences eg. showings on airlines,
in film clubs etc. Normally starts with theatrical, but is
not perceived as competing with other media.
Video rental - after the theatrical window, cassette and
DVD copies of the film will be available for renting by the
public from renting outlets; the normal video rental window
is 12 months.
Pay Television - after expiry of the video window, the film
is normally available to pay television (ie. BSkyB in the
UK) which transmits the film for reception by its subscribers.
The normal pay television window is 12 months.
Video Sell-through - after expiry of the pay TV window, cassette
and DVD copies of the film may be bought at a low price as
distinct from rented. Normally, there is no particular video
sell-through window, and copies of the film are available
for sale for many years.
Free Television - this is transmission after the pay television
window has expired by the BBC, ITV companies or Channels 4
and 5, which normally insist upon a window against further
pay television exploitation for 5 to 7 years.
New means of viewing films such as pay-per-view and video-on-demand
are evolving fast and will cause the above patterns to change.
C. Important Provisions in a Distribution Agreement
1. Rights: this will define the distribution rights eg. all
rights or, say, video only.
2. Territory: this defines the countries in which the distributor
may exercise the rights. It may be simply the distributor's
country or others as well. Some countries are traditionally
grouped together eg. Germany Austria and German speaking Switzerland.
3. Licence: the producer will actually grant rights to a
distributor (this is not the case with a sales agent).
4. Advance: the amount the distributor will pay as an advance
against the producer's royalty. Sometimes it is all paid on
delivery of the film to the distributor, sometimes part is
paid on each of signature, delivery and, for example, video
or television availability (see Sequence of Distribution).
5. Royalty: this will differ depending upon the type of exploitation
eg. a royalty on the dealer price of video units sold or a
share of theatrical revenue after deduction of distribution
expenses.
6. Cross collateralisation: frequently, distributors will
not agree to pay royalty from one medium or territory until
all its expenses from exploitation in other media and territories
and all it's advances have been recouped. This has a significant
effect on when "producer's gross" arises (see 5.
Royalty Management / Net Profits below) where distributors
are granted a multi-territory or multi-right licence.
7. Term: this will be for anything between 5 years and the
full period of copyright depending upon the level of advance
paid by the distributor.
8. Accounting: accounting means reporting and payment of
amounts due to the producer. Distributors normally account
quarterly within 60 days. Thus, a statement of receipts and
expenses is prepared to the end of March, June, September
and December, and is rendered by the end of May for the March
statement and by the end of August for the June statement
etc. The producer should have rights of inspection and audit
of the distributor's financial records.
D. Important provisions in a Sales Agency Agreement
1. Term: this is the duration of the sales agent's appointment;
because most film sales are done in the first 18-24 months
from completion of the film, an agent may be appointed for
that period with the right to enter into agreements for specific
periods.
2. Territory/rights: this will define the rights that the
agent is to represent i.e. theatrical, non-theatrical, video
and/or television and the countries for which the agent is
authorised to secure sales and licences.
3. Engagement: rights in a film do not pass to an agent in
a sales agent's agreement; the agent is simply given authority
to seek, negotiate, secure and then service distribution agreements;
the agent is, in effect, simply the party through whom rights
pass to the distributor.
4. Minimum Prices: agents should be required to attach to
the agreement a list of "minimum prices". This list
details the minimum advance that the agent must obtain for
the licence of rights in a given territory; if the agent is
unable to conclude a sale at or above the listed price, it
must obtain the producer's approval to a sale below it.
5. Commission: the agent will be permitted to deduct a fee
of the agent's gross receipts as remuneration for its work.
The level of fee may vary between territories.
6. Expenses: the agent will be authorised to incur (and will
thus have to advance) expenses in marketing the film eg. in
attendance at film markets, purchasing advertising space at
markets, designing and printing marketing materials, preparing
physical materials, stills, show prints, receptions at film
markets etc.
7. Accounting: accounting means reporting and payment of
amounts due to the producer. Agents normally account quarterly
within 60 days. The producer shall have rights of inspection
and audit of the Agent's financial records.
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