Who owns distribution rights

By: Jeff Tyson Updated: Feb 17, It has been said that making a movie is not nearly as difficult as getting it distributed.

Because of the enormous amount of cost in money and time involved in distributing a movie, a distributor must feel confident that they can make a sufficient return on their investment. Having the backing of a major studio or a well known director or star can greatly improve the chances of securing a good distribution deal. Independent filmmakers often use film festivals as an opportunity to get the attention of distributors.

Once a distributor is interested in a film, the two parties arrive at a distribution agreement based on one of two financial models:. In the leasing model, the distributor agrees to pay a fixed amount for the rights to distribute the film.

If the distributor and the studio have a profit-sharing relationship, on the other hand, the distributor gets a percentage typically anywhere from 10 to 50 percent of the net profits made from the movie. Both models can be good or bad, depending on how well a movie does at the box office. The goal of both the studio and the distribution company is to predict which model will benefit them the most.

Most of the major studios have their own distribution companies. For example, Disney owns Buena Vista, a major distributor. The obvious advantages of this are that it is very simple to set up a distribution deal and the parent company doesn't have to share the profits with another company. The big problem is when an expensive movie is a flop -- there's no one else to share the costs.

That's the main reason several studios have partnered on major movies in recent years. The next big step occurs once the distribution company has rights to the film. Thus, most pre-sales involve a foreign distributor committing to pay a fixed dollar amount referred to as an advance or a minimum guarantee upon delivery of a film in exchange for specified rights in the film in a given country for a limited term.

In most cases, no ancillary rights are acquired e. Rent-A-System: In a rent-a-system deal, a producer licenses certain film rights to a distribution company, typically a studio, for a limited term, but the distribution company is not required to pay an advance to the producer to either finance production or take delivery of the film. In fact, in some cases the producer pays all distribution expenses relating to the film.

In exchange for the absence of fixed payments by the distribution company, the distribution company agrees to a very low distribution fee, and the remaining revenues are remitted to the producer. In essence, the distribution company avoids any risk of loss relating to the film, particularly if the distribution company does not pay distribution expenses, and the producer bears the full risk and reward of the success or failure of the film.

Because of the absence of financial commitment by the distribution company, and the limited upside from the low fee, distribution companies have little incentive to adequately market and push a rent-a-system film, so such films often flop. License: In common usage, a license refers to any limited grant of rights to a film, with the owner retaining other rights to the film.

For example, a pre-sale is merely a license entered into prior to completion of a film. Thus, licenses encompass a broad array of grants of rights, ranging all the way from a one-day pay-per-view television license to a grant of all worldwide rights for a term of 25 years.

Thus, there is no grant of rights from the owner to the sales agent. However, if the sales agent is exclusive and has the authority to enter into licenses for and on behalf of the owner, then the sales agent resembles a licensee. Output Agreement: An output agreement commits a licensee to acquire particular rights to a specified number of films produced in the future by a production company.

In effect, an output agreement is a pre-sale agreement for a number of unspecified films. Typically, the output agreement governs the overall arrangement, and a separate license is entered into with respect to each film once the film is designated. The distributor will usually pay the producer a minimum guarantee for the licence. This fee will vary depending on the status and perceived commercial potential of the film, and on the range of rights that the distributor chooses to exploit.

A distributor will usually be offered theatrical rights, for showing the film in cinemas; video rights, for video and DVD exploitation; and TV rights, if the distributor is able to sell the film to a broadcaster. In addition to paying a fee to secure the film, the licence will stipulate that the distributor will also pay royalties to the producer, taken from the profits that the film generates.

Once the licence has been agreed, it is then the distributor's job to launch the film. In the UK, feature films are released initially theatrically in cinemas. A theatrical opening is seen as the most effective way to create interest in a new film. The big screen is still the optimum setting for a film for both audiences and the filmmakers.