The Real Deal on Film Distribution Deal

The increase in independent films has created a buyer's market. Industry observers estimate that there are now 800-1,000 independent pictures made each year in the United States – a dramatic increase from a decade ago.

Filmmakers often don't realize how difficult it is to obtain distribution for their films. Many believe that if they can just make a good film, distribution will take care of itself. Unfortunately, this is not the case. Indeed, many veteran filmmakers will tell you that the biggest hurdle is not producing a film, but distributing it.

Acquisition agreements can be negotiated before, during or after production. Often distributors become interested in a film after viewing it at a film festival and observing audience reaction. It is not difficult to let acquisition executives know about your film. Once a start date has been announced, don't be surprised if they begin calling. If you want alert acquisition executives to your film, send a press release announcing your project to the trade papers. They will include you in their weekly listing of films in development and production. Likewise, call Film Finders at 310-657-6397, which is company that tracks films for distributors.

From the filmmaker's point of view, you will get the best distribution deal if you have more than one distributor interested in acquiring your movie. That way you can play one off the others as you make them compete for the film. But what if one distributor makes a pre-emptive bid, offering a $300,000 advance, and you have only 24 hours to accept or reject their offer? If you pass, you may not be able to get a better deal later. Indeed, it is possible you may not receive any subsequent offers. On the other hand, if you accept the offer, you may be foreclosing the possibility of a more lucrative deal down the road. Consequently, it is important to orchestrate the release of your film to potential distributors to maximize your leverage. Here are some guidelines:

1) NO SNEAK PREVIEWS
Don't show your film to distributors until it is completed. Executives often ask to see a rough cut. They will befriend filmmakers and be quite enthusiastic about the possibility of their company acquiring the film. They will say, "Don't worry. We are professionals, we can extrapolate and envision what the film will look like with sound and titles." Don't believe them. Most people can't extrapolate. They will view your unfinished film and think it amateurish. First impressions last. The community of acquisition executives is small and they compare notes.

The only reason to show your film before completion is if you are desperate to raise funds to finish it. The terms you can obtain under these circumstances will usually be less than those given on completion. If you must show a work in progress, exhibit it on a Moviola or flatbed editing table. People have lower expectations viewing a film on an editing console than when it is projected in a theater. If you must send out a cassette of an unfinished film, prominently label it, such as: "Avid output, not color corrected, temp. sound." Always include a contact phone number on all cassettes.

2) SCREEN IT WITH A CROWD
It is usually better to invite executives to a screening than to send them a videocassette. If you send a tape to a busy executive, he will pop it in his VCR. Ten minutes later the phone rings and he hits the pause button. Then he watches another ten minutes before he is interrupted by his secretary. After ten distractions, he passes on your film because it is "too choppy."

You want to get the executive in a dark room, away from diversions, to view your film with a live audience – hopefully one that will respond positively. So rent a screening room at Paramount, invite all the acquisition executives you can, and pack the rest of the theater with your friends and relatives, especially Uncle Herb with his infectious laugh (assuming it’s a comedy).

Perhaps the best venue to exhibit a picture is at a film festival. If the film is warmly received, your bargaining position is enhanced. Another benefit of a festival showing is that it may generate positive reviews. Most publications have a policy of only reviewing films about to be released theatrically. Thus, a filmmaker who has not secured a theatrical distributor often is not reviewed. But the trade papers and other publications may review films shown at major festivals.

Always screen at a convenient location familiar to those in the industry. You will want to screen your picture in Los Angeles, and possibly New York.

When you prepare an invitation list, do not invite distributors inappropriate for your film. If foreign rights are taken, don't invite foreign sales companies. You are wasting their time and being inconsiderate. Likewise, don't invite an arthouse distributor to view your beach blanket babe movie. As soon as the acquisition executive realizes the film is not right for him, he is out of there. Do you think that a dozen people walking out of your screening might have a bad effect on others in the audience?

When arranging a screening, book a theater big enough to hold everyone expected to show up but not so large that your viewers are sitting in a sea of empty seats. Mail out invitations so that they arrive on the desk of executives about a week before the screening. If you are represented by a well-known producer rep, have him/her send out the invites or mention his name. Always mention any name cast or a well-known director or producer. If you have a professionally-made one-sheet, send it with the invite.

If you invite 75 busy executives to a screening of a low-budget, no-name indie film, expect about a dozen to show up. At the screening, have someone at the door collecting business cards or taking names.

3) MAKE THE BUYERS COMPETE AGAINST EACH OTHER
Screen the film for all distributors simultaneously. Some executives will attempt to get an early look – that is their job. Your job is to keep them intrigued until it is complete. You can promise to let them see it "as soon as it is finished." They may be annoyed to arrive at the screening and see their competitors. But this will get their competitive juices flowing. They will know that they’d better make a decent offer quickly if they hope to get the film.

It takes some diplomacy to orchestrate a bidding war and not alienate the losers. You want to firmly push each of the potential buyers to offer the best terms possible while maintaining cordial relations. After all, you may want to do your next project with one of the losers.

4) DON'T GIVE AWAY YOUR PREMIERE LIGHTLY
Carefully plan a festival strategy. I have seen filmmakers give their premiere away to minor festivals and thereby disqualify themselves from major ones. You can play in the lesser festivals later. If you get turned down by an important festival, the worst that happens is that your suffer a small delay in your release plans. No one will know which festivals turned you down.

5) SELL YOUR FILM WHEN BUYERS ARE HUNGRY FOR PRODUCT
Distributors that acquire films for foreign distribution plan their activities around a market calendar. The major film markets are

• American Film Market (AFM) in February,
• Cannes in May, and
• MIFED (Mercato International Film e Documentario, one of the larger international film and TV program marketplaces, scheduled annually in Italy.) in October.
• Some distributors sell at the Berlin market which is known for art films.
• There are also television markets that many distributors attend. These include NATPE (The National Association of Television Program Executives which organizes an annual program conference, the largest marketplace for syndicated TV programming), MIP (Marche International des Programmes de Television, the large international programming festival and marketplace scheduled every spring in Cannes, France) and MIP-COM (the Marche International des Films et des Programmes pour la TV, la Video, le Cable et les Satellite held annually in the fall).

Distributors are hungriest for product when a market is rapidly approaching and they don't have any new inventory. A distributor may spend $100,000 or more to attend Cannes, and if they have nothing new to sell, they are in a panic. This is the time to approach them. But don't approach them too close to the start of a market. Assuming they acquire your film, you must give them enough time to prepare the necessary materials to sell it: trailer, one-sheet, poster, screeners and advertising. The bumper editions of the trade papers usually have an ad deadline of 3-4 weeks before a market. These large editions contain product listings for all the distributors, as well as extensive advertising. Give your distributor enough time to include your film. Moreover, many distributors send out mass faxes to buyers before a market, alerting them to new product that will be available. You want to be included in these announcements.

Making a deal with a distributor and not giving its staff enough time to prepare is a big mistake. A movie acquired at the last moment will receive a rushed and often second-class treatment. As a result, it may not sell well at the first market, and at the next market it will no longer be new product. The first market is important because this is the market in which the most sales are made.

You should avoid talking to distributors about acquiring your film at a market. They have spent a large sum of money to attend the market, and they are primarily interested in making sales, not acquisitions. In their sales mode, they are focused on talking to buyers and too preoccupied to spend much time talking to you. Likewise, you should not approach a distributor immediately upon their return from a market. They have been out of the office for two weeks, have a lot of messages to return, and a lot of paperwork to process from the last market.

The best time to approach a distributor is 60-90 days before a major market. Assuming a distributor wants to acquire your film, it may take 30 days or more to negotiate a deal. You should have a distribution agreement finalized and executed at least one month prior to your first market.

7) OBTAIN AN EXPERIENCED ADVISOR
Retain an entertainment attorney or experienced producer's rep to advise you and negotiate your deal. Filmmakers know about film, distributors know about distribution. Don't kid yourself and think even though you are a novice you can play in the other guy's arena and win. There are many pitfalls to avoid. A good negotiator should be able to improve the terms enough to outweigh the expense of hiring them.

An attorney or producer rep who represents many filmmakers may have added clout. The distributor knows the attorney is aware of what the distributor has paid for other films, and the concessions the distributor has been willing to make. The distributor also has an incentive to play fair because the distributor will want to acquire other films from the rep.

An attorney or rep can assist a filmmaker in other ways. If the representative has relationships with film festival directors and acquisition executives, the representative can often draw attention to a film that might otherwise get lost in the clutter.

8) INVESTIGATE THE DISTRIBUTOR
Always check the track record and experience of potential distributors. As an attorney who represents many independent filmmakers, I am amazed at how many distributors refuse to abide by the clear terms of their own distribution agreements. The savvy filmmaker will carefully investigate potential distributors by calling filmmakers who have contracted with them.

Those who have worked in the film business for some time know the reputations of distributors. But there is always a new wave of filmmakers who can't discern the good from the bad. These filmmakers are easy prey for unscrupulous distributors. It makes no sense to spend a year or two of your life, spend your life savings, take a mortgage on your house, beg from your friends, all in order to make your film, and then just sign it away to some distributor simply because the person has a nice manner, a professional-looking office and he is enthusiastic about your film. Some of the worst sharks appear to be the most charming, soft-spoken, friendly people you will ever meet.

A good contract is important, but if the contract is with a dishonest character, the only thing you have is the right to sue, or arbitrate, after you are cheated. You will experience great aggravation, considerable expense and the most you can expect to recover are rights to your film and damages for the wrongdoing – damages which you may not be able to collect if the distributor goes bankrupt. If your film has already had one distributor, you will find it difficult to attract another distributor. Most distributors do not want to represent second-hand merchandise.

The only thing positive I can say about the predators who inhabit this industry is that they are consistent. They screw everyone. That is why it is not hard to find out who they are. Ask the distributor to send you their press kit filled with one-sheets from the films they distribute. Look at the credits. Track down the filmmakers. If this doesn't work, simply ask a potential distributor for a list of all the filmmakers they have done business with over the past two years. Call them. Ask them specific questions: Did they receive producer reports on time? Have they been paid on time? Did the distributor spend the amount promised on promotion?

I have recently established the Filmmaker's Clearinghouse, a web site devoted to disseminating information about distributors. This will provide filmmakers with a source of information about distributors similar to what consumers can obtain about merchants from the Better Business Bureau. This clearinghouse will enable filmmakers to share information on their experiences with distributors. A filmmaker who has had a bad experience can complain; a filmmaker who has had a positive experience can recommend the distributor to others.

The clearinghouse is co-sponsored by Film Arts Foundation, the Association of Independent Video and Filmmakers, and MovieMaker Magazine. The survey form, and the compilation of data, can be found on my web site at: Entertainment Law Resources: http://www.marklitwak.com