THE FIVE MOST COMMON
	FILM FINANCE/DISTRIBUTION SCENARIOS

	By John W. Cones, Attorney

	Considerations regarding the manner in which the three major stages in a film's
life: (1) acquisition/development/packaging, (2) production (including pre-production,
principal photography and post-production) and (3) distribution, may be separately
financed are sometimes difficult to distinguish in many real world transactions.
The combinations typically used in the industry today tend to fall into one of
the following five distinctive film finance/distribution scenarios (or some variation
thereof):

	1.  In-House Production/Distribution--The selected studio/distributor to which
the project has been pitched or submitted, provides the acquisition/development
financing,  develops the project at the studio under some level of supervision of
studio creative executives, gives a "green-light" to studio production funding and
distributes the completed film with the studio- affiliated distributor using the
distributor's funds to cover P&A expenses.  An independent producer (or screenwriter,
director, actor or actress) may have originally submitted the idea, concept, underlying
property, outline, synopsis, treatment or screenplay to the studio, but rights to
produce as a motion picture were then acquired by the studio. If the producer or
others remain attached, they do so as employees of the studio or project.

	2.  Production-Financing/Distribution Agreement--The independent producer provides
the acquisition/development financing (or raises such funds from investors) and
takes the deal to a studio/distributor with a fairly complete package (i.e., significant
elements are attached). The studio/distributor's money is then used to produce and
distribute the picture.  The distribution agreement is entered into (theoretically)
prior to the start of production, or at least before the end of production.

	3. Negative Pickups (and other forms of lender production-money financing)--The
independent producer provides acquisition/development financing (or raises such
funds from investors) and obtains one or more distributor commitments and guarantees
to purchase the completed picture (for the worldwide, domestic or international
markets, or individual territories) if the finished film meets specified delivery
requirements (as set forth in detail in the distribution agreement).  The producer
takes this or these commitment(s) to an entertainment lender to secure production
funds using the distributor's contract(s) as effective collateral.  In this instance,
the only part of the financing provided by the distributor relates to distribution
expenses (i.e., the so- called P&A monies).  The negative pickup and other forms
of these distribution/finance agreements associated with lender financing are typically
entered into prior to the production of the film.  Other variations on lender production
financing include foreign pre-sales, gap financing, so-called "super-gap" financing
and partly- or wholly-insured sales estimates.

	4.  Acquisition Deal--The independent producer raises acquisition/development as
well as production monies, probably from investors, but distributor funds are used
to distribute the movie.   The distribution agreement is entered into after the
film is produced (i.e., the film is already "in-the-can").  Some in the industry
still erroneously use the term "negative pickup" to describe this transaction which is
clearly different from the true "negative pickup" described above.  This approach to film
finance and distribution generally provides the producer and creative team with the most
creative control (over scenarios 1 - 3), but involves greater risk.

	5.  Rent-A-Distributor--The independent producer raises acquisition/development,
production and some or all of the money needed to distribute the film.  This type
of distribution agreement is generally entered into after the film is produced.
 Distributor fees are generally at their lowest with this transaction, (e.g., 15%).

	In any given year, these five film finance/distribution scenarios will typically
be represented on the film slates of each of the so-called major studio/distributors,
although in terms of numbers, the P-F/D, negative pickup and acquisition deal combinations
probably generate most of the films appearing on such slates.  On the other hand,
almost all of the majors will have one or more in- house productions each year (typically,
their hoped-for blockbuster/"tentpoles") and the rent-a- distributor scenario is
probably the least commonly used.  The major studio/distributor sales representatives
tend to use their coming blockbusters as leverage to gain favored treatment from
exhibitors for the mediocre to poor films on their annual slates, thus partially
explaining why many independent features of equal or superior quality get squeezed
off theatre screens in favor of major studio product.