NEGOTIATING DISTRIBUTION RIGHTS FOR MAJOR MOTION PICTURES

[Please note that the Nissenbaum Law Group does not serve as an entertainment agency, nor does it shop its clients for production or distribution deals.]

The distribution rights for major motion pictures are not always intuitive. A film can lose money on domestic theatrical sales and yet may be able to more than make up for that through other distribution vehicles. It is critical that those involved in the various aspects of bringing a major motion picture to fruition be aware of the various distributive models that are used to optimize their profit generation and the legal aspects each one entails

A typical film distribution model includes the following elements, among others:

• Domestic and international theatrical release. This revenue sharing model will vary according to the theatre chain and the particular country involved.
• Traditional television release. Distribution via traditional television is generally monetized differently, insofar as these deals often feature a flat fee for the rights to air the film on a television network. This is separate and apart from the additional opportunities that may be presented to create a derivative or spinoff television series that may serve as a subsequent production of the film. It is also worth noting that the model can work in reverse; there have been many successful films that have been produced as derivations of television shows.
• SVod (streaming video on demand). This is usually centered on a subscription model and can involve packaging a portfolio of the studio’s films with a schedule of successive release dates.
• AVod (advertising based video on demand). This is generally not subscription based and involves a second revenue stream based upon advertising that accompanies the film.

Some of the questions that frequently come up in these transactions are

• How narrowly-defined should the distribution channel be?
• Is the distributor acquiring the rights to some of these channels or all of them for the promised fee(s)?
• Is the distribution license limited to the original work or does it extend to subsequent productions?
• Does the transaction contemplate a complete assignment of all intellectual property relating to the work, or is it more narrow with articulated reserved rights?

Another aspect of profit generation from a film distribution model is the re-release of a new cut of the film—usually a “director’s cut”—which is generally done after the distribution license expires. It is a way of repackaging most of the same intellectual property and squeezing out more revenue without duplicating the concomitant expense of producing the film itself.

The Nissenbaum Law Group welcomes inquiries from clients involved in any aspect of major motion picture production, including film studios, producers, directors, performers, talent agents, distributors, financers, publicists, cinematographers, soundtrack composers and engineers. The firm not only practices entertainment law from its offices in New York, New York; Philadelphia, Pennsylvania; Dallas, Texas; and Union, New Jersey, but also handles matters in other states in accordance with the local multi-jurisdictional rules.