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Distribution Advances and Broadcast License Fees |
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Samantha Traub
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Page 1 of 4 A production may be financed through an advance from a distributor or sales agent who has committed to distribute the production, or through a broadcast license agreement with a broadcaster who has committed to air the production. When such arrangements are entered into before the production is completed, they are commonly referred to as “presales”.
The monies payable under the distribution agreement, sales agency agreement or broadcast license agreement will depend, among other things, on the perceived value of the production and the breadth of the rights granted by the producer to the distributor, sales agent, or broadcaster. The producer has a bundle of rights that it can license to one or more distributors, sales agents, or broadcasters, which can be divided on the following bases, with some examples:
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Example
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• The producer may licence the right to distribute the production in North America to one distributor, and license the European rights to a sales agent.
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Time
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• The producer may grant a “first window” license to one broadcaster for a period of five years commencing on completion of the production and grant a “second window” license to another broadcaster for a period of three years commencing at the end of the first window license period. Generally the pay-per-view / video-on-demand window precedes the pay television window which precedes the network television window.
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Medium
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• The producer may grant the right to distribute or broadcast the production in various media, including: theatrical, home video (video cassettes and DVD); all forms of television (pay cable, pay per view, basic cable, syndication, satellite and free TV); video on demand, non-theatrical (airlines, ships, oil rigs, hospitals, hotels and Armed Forces bases); online (Internet, web casting, telephoning and video streaming rights).
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Ancillary and Related
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• The producer may grant a distributor the right to distribute the music included in the production, any merchandise related to the production (action figures, games, clothing) or grant the right to distribute any prequel, sequel, remake or related production.
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Distribution and Sales Agency AgreementsA number of distributors are involved in the distribution of feature films. The most prominent in Canada are Alliance Atlantis (through its affiliate, Motion Picture Distribution LP), Mongrel Media, ThinkFilm and Maple Pictures. Sales agents are also involved in the licensing and marketing of films, particularly in European and other foreign territories. From a legal standpoint, the distributor is an independent contractor which enters into agreements in its own name and collects revenues on its own behalf. Sales agents act on behalf of the producer, which is the principal in the relationship. Unlike the distributor, the sales agent will enter into contracts on behalf of its principal, or, if required by the producer, arrange for agreements to be countersigned by the producer directly. Like a distributor, the sales agent may provide advances or minimum guarantees and, in some cases, will pay a flat amount to “buy out” all distribution rights to a particular geographic territory.
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