If you want to get a snapshot of just how complex an issue this is, try googling film rights for television. The first page or so largely points you to advanced guides for accountants.
It might help to think through how movies recover their sometimes colossal production costs. They are made for cinemas, and that is inevitably where they go first, because there is a perception that this will provide big returns.
The reality about cinema income is rather more complex. Production companies make movies, then hand them on to distribution companies to get them in front of audiences. Distribution companies set up deals with cinema chains, or independent houses, to show the movie.
These deals are normally profit shares. Cinemas, even today in the era of out-of-town multiplexes, are expensive businesses to run, occupying large chunks of real estate, needing staffing and cleaning, and regular re-investment in the latest digital projection technology. A large percentage of the ticket price goes to the distributor.
(Very many years ago I was involved in a top-level project at the beginning of the idea of digital cinema. I remember the VP of Paramount Pictures at the time explaining to me that, in the cinema business, “the shadows on the screen are just a loss leader”)
The distributor subtracts its costs. Thankfully, there is no need for several thousand release prints at $2000 a pop any more. On the other hand, promotional expenditure seems to be continually going up to ensure that everyone is aware of the new movie and the doings of its stars. Remember last year, when there was no-one in the entire world who did not know that Ryan Gosling had learnt to play the piano for his part in La La Land?
The distributor also takes a healthy cut for commission. What is left goes to the production company to pay off the massive loans it needed to make the film in the first place.
Once the movie is launched, the distributor will look for other ways to make money. Video is the answer. Broadcast television, online streaming and other applications like airlines. The distributor’s job is to manage this to maximise revenues for itself (and the production company).
So, it will charge a lot of money for premium channels to show the movie first. And because the distributor is used to the idea of profit sharing, it will try to do the same with movie channels. Often they are subscription services, so it will try to negotiate a fee per view. In some territories it will even try to get a cut of the advertising revenue, so-called barter deals.
The premium channels will have a defined window of exclusivity, in which they will try to maximise the revenues for themselves and everyone up the chain. After that, the movie may be made available for other, juke-box movie channels. This will be at a lower cost, of course, or maybe for a cut of a lower advertising revenue.
Contracts on showing movies are likely to be very extensive, very precise, and backed by very expensive American lawyers. While only the rights management department will be able to love every word of the contract, some terms are relevant to planners and schedulers, so need to be in the asset management system.
You need to know which channels you can show it on, and the precise dates of the window. Remember that the contract may have been negotiated before the movie even had its cinematic premiere, so this information is locked in long before you can actually show it.
To make sensible scheduling decisions you need to know how to maximise the audience (if that is going to result in a revenue benefit for you). Of course, you need to show it the contracted number of times in your rights window. If you run both premium and non-premium movie channels, you will need to ensure you can only schedule it for the appropriate channel at the appropriate time.
All of these rights will be based on territories: if you are a multi-national broadcaster or streaming service, you will probably have separate contracts for each country. To add to the jollity, the European Union’s digital single market proposals suggest that consumers may have the right to buy television channels or streaming services from any country within the EU. If that happens, there will be seismic shifts in the way that contracts are written.
To be honest, all this is complicated stuff, given that you are likely to be dealing with a very large number of movies, all with different contractual terms. It is an ideal application for specialist software support, so if you have read this far, your next step is probably to talk to MSA Focus.
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