February 9, 2015

Less than Everything you Wanted to Know About Distribution

Dear Editor,

I am writing in response to the article in the November 2002 issue written by Mitchell W. Block regarding distribution. This article contains a great deal of good advice; in fact, the “Rules” he has listed are quite well stated and should be of great help to any filmmaker learning to navigate through the development and distribution jungle.

Block is clearly qualified to inform our readership of the finer points of home and educational video and producing documentaries, but his foggy overview of “agents, producer’s representatives and distributors” is confusing and misleading.

To clarify, an agent or producer’s representative seeks his commission by selling the work directly on behalf of the producer. A successful sale will result in the broadcast agreement being placed in the name of the producer and the broadcast entity. The agent is paid directly by the producer, and the producer is expected to shoulder all the marketing expenses. An agent or producer’s representative usually doesn’t maintain an inventory of programming, but works on specific sales, hopefully the larger ones. Agents or producer’s representatives rarely attend international broadcast markets such as MIP, MIPDOC and MIPCOM, although may do so in their other capacities as attorney, writer, etc.

A distributor also makes the sale on behalf of the producer. However, the license agreement is made between the broadcaster and the distributor. The money is paid to the distributor, who, in turn, pays the producer. The distributor represents an inventory of programming and, more important, maintains a working relationship with broadcasters around the globe. I am sure that Devillier Donegan Enterprises, Films Transit, CS Associates, Solid Entertainment, RDF International, Cable Ready, TVF Intl. and many others do not describe themselves as agents, but as distributors. All of these companies sell to the worldwide broadcast marketplace. This is the rule, not the exception, as Block incorrectly points out.

Block has suggested that the commission should be a function of the license fee paid; my advice would be, take it if you can get it, but most distributors won’t agree to those terms. Consider this: license fees have come down and marketing expenses have gone up. Distributors will sell to countries like Thailand for $300 per hour and to the UK for $150,000 per hour, and will work to sell as many territories as possible. The collective license fees and commissions make it worthwhile to continue selling your documentary. Take away the incentive by reducing the commission in the larger territories and distributors are less inclined to represent your documentary.

Block also seems to have a problem with a flat-rate commission. How about this alternative, then: if your documentary fails to sell in two years, you, the producer, reimburse the distributor for the eight festivals he attended to sell your work, the 15-20 magazine advertisements placed for your program, the 75-150 videocassettes duplicated, the postage to get them out, the “urgent” FEDEX packages that had to be sent to certain broadcasters, the telephone calls and the staff time. Yes, some of the costs are balanced with the rest of a distributor’s catalog, but there are also many title-specific costs. Would you like to be handed the invoice after two years of marketing? Expect between $7,000 to $30,000 for these marketing costs. A flat-rate commission allows the producer to know exactly how much he/she will receive when the payment arrives. No extra deductions are allowed.

Many distributors would find Block’s notes on broadcast distribution either sloppy or poorly researched. Since many IDA readers will undoubtedly use this article as a basis for seeking out representation, it is important that they understand the differences.

Respectfully submitted,

Richard Propper
Director of International Licensing
SOLID ENTERTAINMENT

 

A Response from Mitchell W. Block:

I agree with Richard Propper that the distinction I made between “Agents”, “Reps” and “Distributors” is confusing. The term “distributor” can be traced to describe companies who rented or “distributed” prints to theaters—almost ALL of the companies in my article are linked to this lineage. The companies listed by Propper, including Films Transit, CS Associates and Solid Entertainment, are primarily broadcast distributors and do not sell or rent copies of films. These companies represent a respected business niche, to be sure, but unlike the 100-plus companies listed, they generally only market rights to broadcasters, satellite and cable companies. I should have called them “Broadcast Distributors”; instead, I called them “Agents” or “Reps” to differentiate them from the other companies included in the “Guide to Documentary Distributors.” “Broadcast” distributors are a relatively recent sub-specialization in the world of distributors. I did not mean to confuse the reader. The broader intent was to let the readers know they have a choice: (1) They can work with a “Film and Video Distributor” or “Studio Distributor” and let them handle ALL or most of their rights; (2) they can work with a “Broadcast Distributor” or “Agent” or “Rep” and split up the rights; (3) they can make the broadcast sales themselves.

On far more important issues, Propper disagrees with my suggestion that filmmakers negotiate commissions that relate to the license fee paid. Fees should relate to the risk and cost of doing business. As Propper points out, Thailand pays $300 for an hour and the UK $150,000. He claims that broadcast distributors “work to sell as many territories as possible. The collective license fees and commissions make it worthwhile…” I do not agree. Some combination of sales to the UK, Germany, Canada, France, Australia, Italy, Scandinavia and Japan will generally produce 85 percent of global broadcast revenue for most documentaries. Thus, if these countries produce most of the revenue for a film and all of the other countries produce just some, I am unclear why a filmmaker’s few large sales should subsidize a distributor’s cost of small sales. How does a 30 percent fee for a single large sale (or two) make sense?

I’d bet that filmmakers would rather pay 10 percent (or less), or a flat fee for these few large sales and 30 percent or more for the small ones. A scaled commission based on income received makes sense. To pay $15,000 to $45,000 (plus costs) of the $150,000 sale is a lot to pay to make a bunch of $300 sales. Nor does it suggest that the $300 sales are even worth making. The buyer will either buy or pass on the work based on how it fits their needs, and they do not “low ball” filmmakers who do not have “distributors” making the deal.

Filmmakers might consider making major sales directly since buyers of English language docs can and do work with individual filmmakers, attend major documentary festivals and seek to acquire the best works that are being produced. Why would it take any distributor “two years” to find out if a show will sell? Most buyers can tell from a short description if a work is of interest. Also, many American independent documentaries do not have valuable broadcast markets in either the US or abroad.

Broadcast agents and distributors attend festivals and markets, but that is a cost of doing business. This applies to advertising, phone and mailings, etc. As a distributor and acquisitions person, I never make deals based on a promotion; I look at a copy of the film. Duplicating copies of a work, sending a press kit and mailing them to the 50 or so major buyers worldwide costs less than $1,000. If one does $100,000 in sales, this amounts to less than one percent of the cost of making those sales. I am unclear why a filmmaker should pay a broadcast distributor’s cost of a booth at MIPDOC, an ad in a MIPCOM program, catalogue or sell sheet or other direct business expenses. Shouldn’t the commission (fee) cover these costs? Don’t these booths make it effective to work with the few hundred small buyers who do not cover festivals?

Festivals such as Sundance and the IFP Market will pay costs of filmmakers attending with their films; these are excellent opportunities to sell directly to international broadcast buyers who ALSO attend these festivals and make deals for new works. Broadcast distributors can sell films that need “selling,” but the filmmaker should be in touch with the key global buyers before making the film. No one can sell an unsellable work. If the work is going to sell, it is likely that it will screen at the numerous broadcast- related and other festivals that take place, and buyers will contact filmmakers for copies. Logic suggests that if no broadcaster is interested in buying a documentary, one could engage a broadcast distributor. These companies are all excellent sales agents. Advice on the broadcast “deal” can be obtained from consultants (lawyers, etc.) on a fee basis; this is cheaper than paying flat commissions, and could help first-time filmmakers.

Mitchell Block

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