|
Motions Picture Distributors
What is a Distribution Company?
The motion picture industry is very much dominated by large and very
diversified conglomerates, such as The Walt Disney Co., News Corp., Sony Corp.,
Time Warner Inc., and Viacom Inc. which finance the development of new products,
in this case motion pictures, own vast libraries of older products, and often
own distribution channels for bringing these new products to the public.
Sometimes the distributor will finance the movie from beginning to end and other
times, they provide a portion of the finances and subsequently receive a cut of
the profits.
According to the Motion Picture Association of America (MPAA), films financed
by major distributors cost $53 million in 1998, almost triple the price tag of
10 years ago. Some films such as Titanic may cost in the range of $100 million
while others, such as The Blair Witch Project, may be produced for $15 million
or less, especially when they generate box office sales of nearly $140 million
as this one did.
Where do Distribution Companies get their
finances?
According to Standard & Poor’s, 20% is derived from domestic theater
rentals (the movie theater renting a copy of the film of a new movie), 20%
coming from foreign theaters, 40% from home video, and television provides the
remaining 20%. The distributor’s portion of the theater rentals usually comes
to about 50% of the box office total.
They consolidate their costs by taking on the marketing functions for more
films produced by other companies. However, they also may have a lower payoff if
the movie should have extraordinary success.
Where is the power of the industry concentrated and
what are its sources?
The power of the industry is very much dominated in the distribution
companies, for the product, the film, can not be completely produced without the
finances and influence of the distribution company. These vast entertainment
conglomerates very much dominate the industry because they do have more clout
with theater owners and TV networks, if they do not own their own subset within
the very conglomerate. They can offer brand name recognition to the viewer, and
have more connections to the creative talent and experience with effective
management. Having copyrights to any popular characters or brand names may
seriously affect the success and thus the power of the distribution company, as
seen in MTV, CNN’s Larry King Live, and of course Walt Disney. Access to
capital is also a very significant factor in a distributor’s potential power.
By examining the operating cash flow and the severity of debt as well as the
ease with which the company may repay its debt is often an indicator of possible
power. A basic distribution agent
agreement.
The following is only an example and is not legal advise, nor is
the only agreement for distribution that may be used. It is only for an
example of an distribution agreement. For more information
of Distribution and a full list of film distributors see www.hollywooddistributor.com
|
