In fickle marketplace, dealmakers need strong gameplan

The past six months have seen strong sales in the indie market, but many features are still seeking distribution, alongside hundreds of Berlinale and European Film Market titles. Producers have never had a wider variety of deals and distributors to choose from, yet, given how many outfits have disappeared over the past few years, there’s seldom been more uncertainty.

So what is the most efficient way to make the best deal, find the right distributor and safeguard a film against the pitfalls of the current marketplace? We asked the veterans.

The Art of the New Deal

Aside from the Weinstein Co. nabbing “The Details” and (with Ron Burkle) “My Idiot Brother” with hefty minimum guarantees and P&A commitments, the other biggest Sundance deals hovered in the low seven figures, and even more sacrificed upfront cash for back-end participation.

“Sometimes my advice is to leave some of the advance (money) at the table if it means you’ll get more money towards P&A, or if it allows you to negotiate better distribution fees in different media,” says Gray Krauss Des Rochers attorney Jonathan Gray.

So how are producers making up for smaller upfront checks? One way is by getting their money back faster. “There are a million different constructions where people see overages while the movies are performing and take more performance risk,” says WME Global head Graham Taylor.

Sellers with hotter properties are more frequently taking gross corridor positions, says Gray, in which they get a chunk of the first box office or ancillary dollar at the same time the studio is recouping its P&A, marketing and advance expenditures, instead of waiting for the studio’s full recoupment. A similar arrangement is an adjusted-gross position, where producers’ distribution fees are reduced as their film hits higher gross levels. Bonuses for hitting box office thresholds are also offered.

In an industry filled with murky accounting, it also helps to know exactly what there is to recoup. “You should be focused on getting into VOD, Netflix, all the download-to-own and online rental methods of delivery, because these are very tangible,” says sales agent Cassian Elwes. “The studio knows exactly how many buys they’ve gotten, so you can know … just how much (money you’re going to get).”

Producing Results

Few producers know more about the triumphs and pitfalls of indie distribution deals than Celine Rattray. As a former Plum Pictures partner and current Mandalay Vision prexy, she’s shepherded a dozen films through Sundance and scored some of the fest’s biggest deals: Plum’s “Grace Is Gone” and “Dedication” to Weinstein Co., “The Winning Season” to Lionsgate, and last year’s top sale, “The Kids Are All Right” to Focus. The first three sold overnight, but she took an extra night with various marketing departments to find who was the most passionate about “Kids,” had the best release plan and had an open spot in its schedule.

“They didn’t have anything on their slate for the summer, so the whole company was focused on our movie,” says Rattray, who just sold “Salvation Boulevard” to IFC and Sony Pictures Worldwide Acquisitions (SPWA). She notes that some films that may look good on paper don’t suceed at the B.O. because perhaps a distributor had 15 movies being released during one period or “three films that month before yours, so the marketing and publicity departments aren’t focused day-in, day-out on your film.”

Having the initial contract include a release date, the number and location of markets, the amount of P&A spend and even a clause that the film must be released that calendar year, Rattray says, can be crucial if you have the leverage to get them.

She agrees with Gray’s suggestion of approaching distribs with your own marketing plan in mind, and with Elwes’ overall take: “You want a distributor who has a proven track record releasing the kind of movie you’re trying to sell them, and ideally deep pockets to support the movie if it starts to work,” Elwes says. “But your first thought should be: How excited are they about the movie? And they need to have a real plan.”

Lawyering Up

A good sales agent will ensure solid contract advice — Elwes suggests a “key-man clause” stating that the distrib signing the contract will be the same one releasing your film — but often the devil in the details will be tamed by an experienced film lawyer.

Gray, who handled legal duties for 17 Sundance titles and numerous EFM films this year, says true safeguards come after negotiating the basics. “The termination and default provisions, representations and warranties, often considered pro-forma boilerplate, are almost invariably the most important once a default occurs or distributor hasn’t lived up to what they promised,” he says. “These can range from not expending the guaranteed P&A commitment, not distributing the film theatrically or in the markets that were promised, not adhering to the DVD drop date — there are a million things.”

Creating an escrow account to safeguard even a $500,000 advance or P&A fund may sound reasonable, but it isn’t an option for many cash-poor indie distribs. However, setting up a low-fee collection account management agreement (CAMA) through an agency like Freeway Entertainment or Fintage House is a way to ensure accurate tracking and accounting. You should also arrange a payment schedule — missed deadlines can often be red flags — and “under no circumstances should a distributor be allowed to release a film prior to full payment of the advance,” says Gray.

Of course, a CAMA can’t collect from a bankrupt studio, but Gray has some tricks up his sleeve. “There are ways we characterize the deal and transaction such that we can get your film back if the company goes into receivership,” he says. “That’s a worst-case scenario. A lot of companies don’t go bankrupt — they just shut down and operate on fumes.”

Here’s where a sales agent can work some magic. After co-repping the 2009 Sundance sale of “Brooklyn’s Finest” to Senator and SPWA, William Morris and CAA moved it to Overture when Senator ran into financing troubles (Overture shuttered a few months later).

“You have to make sure the person representing you has a good enough relationship with the people selling and producing the movie to be honest if the deal’s not going to work out, and then to work together so someone else can pick up the film,” Elwes says.

So here’s the bottom line for safeguarding yourself when choosing a distributor: “Part of it is (analyzing their) capitalization — who are the operators? — and part of it is, it’s a risk like any business,” says WME Global’s Taylor. “You can try putting in things like liquidated damages (a fixed fine) and other protective measures, but the reality is if someone doesn’t want to pay you, you’re gonna have to sue ‘em anyway.”

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