Film Courage: Red flags of a film distribution deal?
Mark Heidelberger, producer: Red flags of a distribution deal?
You saved one of the toughest [questions] for last.
Film Courage: Sorry.
Mark: Actually maybe not.
So a lot of the pictures I do are home entertainment titles.
They are not necessarily pictures that will go to theatrical.
If they do they’ll go limited theatrical.
And I think a lot of times when I look at a contract, I’m looking at the marketing
and how much they are saying the marketing is going to cost.
A lot of the distributors that I try to avoid are these guys that put in the contracts that
well they’re going to spend $50,000 or $75,000 or $100,000 on P&A [Prints and Advertising]
and Marketing.
And I’m like Well what exactly are you going to spend that money on?”
Because to get the guy (the average guy) just walking down the street to see your movie,
like you need 5 million dollars minimum.
I mean you need huge amount of P&A just to get that random guy walking down the street
to even know what your movie is.
The amount of money it takes to market, billboards and bus shelters, and bus sides and TV spots
and online and getting that banner on IMDB and front page…it costs millions and millions
of dollars to do a campaign to literally draw those kinds of eyeballs.
Home entertainment is such a different beast.
A lot of it is done now through social media, free publicity and getting junkets with your
actors or getting reviews written up and that sort of thing.
Or for other creative, non-expensive forms of marketing for instance going onto Xbox
or Netflix that says “You might also like…”
Getting high up on that algorithm where you film is listed with some big “You might
also like this little film…”
That means so much more to a smaller film or just getting an end cap in Walmart is huge.
It may not cost you a lot but if you have a distributor that has a relationship that
can do that, that’s what happened with NINJA APOCALYPSE, we got an end cap in Walmart and
and in Best Buy and that didn’t cost anything but that was sort of smart, a distributor
using relationships and that sort of thing.
That’s how you get your premiering in a festival that’s got a really good promotion,
sponsorship and press behind it.
We premiered NINJA APOCALYPSE at Comic-Con in San Diego.
So instead of spending millions and millions of dollars it’s more things like that I
look for.
So when I see a distribution contract that says I’m going to spend $75,000 on marketing,
I’m like “On what?
What are you spending it on?”
And they are like “Well, I’ve got to cut trailers.”
And I’m like “I can cut trailers.
I can get a trailer cut for a grand.”
And they’re like “Well we’ve got to get new posters.”
I’m like “Same thing.
I’ve got a designer that can get new posters.”
I would rather do those things and instead of having the distributor bill some tremendous
mark up and a lot of times if they have that $75,000 marketing expense built in you are
not going to see any of that money until that $75,000 is recouped.
It’s not like they are going to say “Well, I’ve only spent $10,000 of it so we’ll
start cutting you checks now.”
No, there are going to say “We haven’t hit that $75,000 mark yet.”
So I really look at that number (how much they are spending) and it should be a smaller
number and honestly want to know what it is where we actually have a chance at making
some getting some recoupment here, not you have to make $75,000 or a $100,000 before
you make see first dollar because on a million dollar picture you are not going to be out
there in theaters making 30 million dollars so the economic are different and how that
money is spent is different.
So things like going to film markets, that’s a reasonable, justifiable distribution expense.
And then marketing expenses, there are certain…cutting trailers can be reasonable as long as I know
what they are spending on it.
And I have the ability to approve any expense over a certain amount so I know they are going
to be reasonable and you know there could be working meals, lunches with buyers, things
like that which are reasonable but up to a certain amount.
So I’m usually looking for that number to be curtailed somewhat.
And then in terms of the term of the distribution contract you know 7 years is pretty standard,
I would almost never do anything in perpetuity.
Sometimes you see contracts that are 10 years, 12 years that might seem excessive.
In terms of fees, like for me I’m kind of looking around the 20% range in terms of what
I like to pay a distributor.
Some charge as much as 30% or more so red flags to me are typically terms, fees, marketing
expenses and then other than that you are kind of looking at an onerous language that
ties you to something that you don’t want to be tied to like “Oh, we want rights to
all future sales.”
Like unless you are willing to invest money in those future sales we are only talking
about this picture right here.
So yeah and then I think you can tell reputable distributors too just by the language in their
contracts.
A lot of times too if you start to see little things like if you start to see things like
typos and spelling mistakes and grammar mistakes and this is a distributor you are not familiar
with to me that’s a red flag because any legitimate distributor is going to have a
legitimate attorney drafting those contracts and are going to see those mistakes.
I typically don’t deal with distributors that I’ve never heard of.
Usually they come to me by way of someone I know who has worked with them.
You know, they’ve been around awhile, I know their work.
So I start to stick with distributors who I know have a good reputation, I know people
who have worked with them and say good things about them so I don’t have to worry about
a lot of those issues.