Negative Costs

4. Three stages production, distribution and exhibition

a. Total Productions costs, including fixed expenses for story acquisition, are also called "negative costs"

i. Average costs was about $20 million

b. Distribution

i. Studios that produced or financed a particular movie also distributed it

ii. When producers financed negative costs, they often engaged studios to simply pick up or distribute their films once completed.

1. Studios managed the circulation of movies to theaters, licensing of films to pay and non pay tv, and duplication and distro of vcassetes. Also handled advertising, publicity and promotion for films they distributed. And then collected proceeds from theaters and other revenue sources.

2. Contract allowed distributor to charge distribution expenses and distribution fees, which are deducted from revenue collected from theaters and ancillary markets.

a. These expenses include direct costs of distributing film, and distribution fees were charged to cover the distributors OH and profit.

b. EXPENSESE- represented the costs of advertising (largest, average 10 million) in newspapers and on television, making prints of the film for theaters and videocassettes.

c. FEES- usually a fixed percentage of the proceeds received from theaters and markets to cover OH and profit.