HOLLYWOOD UNAPOLOGETIC! - “Filmmaking Essentials: The Negative Pick-Up Deal?”

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For many of you, you’ve probably never heard of the Negative Pick-Up Deal before. It is not at all surprising if this is the first time you are hearing of it. As a content producer and creator, it is in your best interest to learn and understand as much as you can about this.

When a script is developed away from a film studio, whether hired by an independent producer or working on his or her own, sometimes it ends up joined with other elements. This can be a director for the project or one or more members of the cast. Then it can be presented to one of the studios for financing and distribution.

For most filmmakers, their films are often developed and produced away from the studio that distributes them in the end. These independently produced films are usually financed by the pre-sale of distribution rights and may also have private investors. The film enters the acquisition agreement phase. At this point, the producer and film distributor agree on the details of the distribution rights. This is called a negative pick-up deal.

In most cases, the studio that is distributing your film will pay for your marketing and advertising costs in a negative pick-up deal. The studio and producer will share the profits. There can be a 50/50 split between the studio and producer without a distribution fee for the studio.

Also, as part of a negative pick-up deal, the distributor in many cases will offer to give the producer an advance. This is based on what is estimated the profits may be. Producers will want to get as large of an advance they possibly can acquire, knowing they may never see any payment on the back end. That's based on the film doing poorly and there are no profits to share.

On the other hand, the distributor will want to pay as little as possible as an advance of his share of the projected profits. I’ve seen many first time filmmakers brag about how inexpensive it cost for them to produce the film, before their distribution deal is secure. This is a HUGE mistake. It’s common for the distributor to not want to offer more than the cost of production. One thing to always keep in your mind: the distributor has no right to look at your books. So keep your mouth shut!

A tricky thing that may happen at this point is a distributor may offer a pre-emptive offer, and it’s good for a dedicated amount of time. For example, you were offered $250,000 as an advance, but you must decide on whether to except it or not within 24 hours. This is tricky because you may feel compelled to hold out for a better offer. On the other hand, a better offer may never come along and your offer is gone. This is why it is important to plan the release to potential film distributors to maximize your possibilities.

I’ve seen many filmmakers get burned at this stage. Some distributors have been known to be “creative” with their accounting. I can’t stress enough how important it is to go through the terms and fully understand them. Too often, profit participants don’t see any return. The terms of “net profits” may be defined in such a way that is not in the best interest of the producer.

Another mistake I’ve seen first time filmmakers do is show the film when it’s not completed. I cannot stress enough how easily opportunity will walk away. Regardless of how many times the distributor may say they are “professionals . . .” blah, blah, blah . . . if the film isn’t ready, it’s simply not ready. Your first impression is your ONLY impression!

The purpose of ‘Hollywood, Unapologetic!’ is to positively empower one another and to empower our industry. It is important to engage in discussions that will initiate constructive lines of thought in the hopes to get young people to become thought leaders and to create a positive voice for themselves, their communities, and one another.

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Gearhead Kevin MacLeod (incompetech.com)
Licensed under Creative Commons: By Attribution 3.0


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