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TOPIC: What? Distribs. will renegotiate terms AFTER the movie show

What? Distribs. will renegotiate terms AFTER the movie show 21 May 2002 13:45 #23265

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I've been soaking up as much as I can from bigscreenbiz's archives, especially regarding transactions between exhibitors, bookers, and distributors. I've read something over again several times and I hope I'm misreading it: Do distributors really renegotiate rental terms AFTER the film's run is done in your theater? Talk about having your cake and eating it, too! Is this someone's idea of a bad joke? It's like the casino allowing you to place your bet AFTER the roulette wheel has spun to a stop! It changes the deal. It sounds as if it doesn't mean anything to them that you're holding the boxoffice gross in your hands. What happens if you refuse to renegotioate; do you never see a film from them again?

Sheesh! Someone please help explain this to me. I'm troubled!
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Re: What? Distribs. will renegotiate terms AFTER the movie show 21 May 2002 19:18 #23266

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Don't worry, renegociation of a film contract is never in the distributors favor. The only reason a contract is renegociated is that the film flopped and the distributor realizes that it would be good relations to cut the theatre a deal.

Small theatres just usually wait until the big chains do the renegociation and then get the deal themselves.

But a few of the distributors are "firm terms" and will never renegociate a contract no matter how badly the film did.
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Re: What? Distribs. will renegotiate terms AFTER the movie show 21 May 2002 19:42 #23267

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I am not the best source of information on this one but I will give you my experience. We have a booker who negotiates for us and a pool of theaters. We do receive "corrected adjustments" on our films at final settlement. This does depend upon the performance of the film in the marketplace and can be either positive or negative for us. Either write another check now or use up the credit the next time a film is booked with that particular distributor. I am not party to these negotiations and do not know whether the terms are actually set before the film opens or not. (Roxy help out here).

I am not fond of this system because I don't like surprises, but the big exhibitors have actually fought the studios over the studios attempt to get firm terms upfront. Regal did not book Rush Hour 2 in any of its theaters last August because New Line wanted firm terms. My feelings to the contrary, exhibitors are supposed to favor flexible terms so that a movie that turns out to perform poorly will give a break to exhibitors while a surprise boxoffice hit can cost more than expected. So far the exhibitors have not won - the studios have prevailed in every battle I have been aware of. If Regal, which is the biggest exhibitor and has a lot of clout, can't get the studios to bend then I don't think that any of the rest of us will.

At this point in time, I think that 3 or 4 exhibitors use firm terms: New Line, Warners and Dreamworks? I know that Buena Vista is on flexible terms as I have been getting a flurry of credits from The Count of Monte Cristo and Return to Neverland after receiving a huge bill for Monsters, Inc. I couldn't tell you about anyone else at this time.

Sometimes this whole industry is like gambling. Every Friday night that a film opens we hope that our gamble will pay off. We are all nervously watching our boxoffices wondering whether we have made the right choices.

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Re: What? Distribs. will renegotiate terms AFTER the movie show 22 May 2002 14:12 #23268

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Thanks, Large & BECKWITH1.

I guess I jumped the gun. I assumed the only reason why a distributor would want to renegotioate terms is that it works out to more money out of the exhibitor's pocket. But you suggest that they may do this for future goodwill with exhibitors. Are they really that kind?
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Re: What? Distribs. will renegotiate terms AFTER the movie show 22 May 2002 20:05 #23269

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Most of my re-terms have been in my favor. But if you think for a moment if they quoted you 35% and you grossed 10,000 that they wouldn't be chatting you up you are nutso. I don't sweat the terms and rarely have I felt asbused. Most often we don't even talk terms as I'm mopre intent on the pic and the "deal" is always an opening # anyway. Except for the firm terms. Like they say: it's firm. Saves a lot of haggling! But in my case with 3 screens on the edge of the tundra they always seem to be fairly light handed.

Michael Hurley
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Re: What? Distribs. will renegotiate terms AFTER the movie show 22 May 2002 22:44 #23270

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Yes it does work both ways. Although it has been my experience that most terms adjustments after the run have been in the exhibitors favor. The only company that I have found that makes a regular policy of asking for higher terms is Miramax. As a matter of fact, I find it difficult to get them to quote any terms at all before opening a picture. The answer I often get when asking for terms is: "I don't know, we'll settle that later". Often when the payment is due I will call and ask for the settlement terms and will be told to just send in something on account as we don't know yet what they will be. Most settlements are based upon past performance. If you paid 50% on a $5000 gross before, then they will accept that this time, but if you grossed $6000 or more this time they will want 60%. It varies from theatre to theatre depending upon your grossing capability, and what that theatres average grossing history is. As you either build up your business or loss some of it to competition, you can over a period of time prove what is just average business and what is excellent business and get your settlements adjusted accordingly.

Warners is a firm term company, yet with subrun I will often be told that terms are firm and will be 50% for a big picture, only to receive the confirmation quoting 35%. When I send in 35% the cashier will call to remind me that the terms were 50%, at which time I will tell him to check the confirmation which says 35%. He then accepts the 35%. I believe it's a case of one hand not knowing what the other hand is doing.
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Re: What? Distribs. will renegotiate terms AFTER the movie show 23 May 2002 10:37 #23271

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Thanks, all of you, for the insights.
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