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The Distribution Wars: What I Learned in the Trenches

The Distribution Wars: What I Learned in the Trenches

Articles - Directing

Michael Cox and Andrew Divoff in Crossfire (1998).

When my partner, Gary S. Lipsky (Goosed,
and the upcoming Peppermint Lounge) and I ventured out to
make our first genuine feature film, Crossfire, on 35mm
with SAG actors, we knew we’d have to overcome the challenges faced
by all independent moviemakers. Although we eventually won those
difficult battles, (which consisted of, for starters, an 18-day
production schedule which required the wrangling of boats, helicopters
and children in three states with very little money), little did
we realize the actual fight had not even begun.

I’m referring, of course, to the war with the film’s
distributors. Before continuing, let me explain that I am not an
entertainment attorney, and prior to our movie’s completion I had
no experience with dis­tribution contracts. I’m simply a moviemaker
who’s been learning the hard way, in the trenches with nearly a
half dozen distributors for two years trying to find our movie
a friendly home. And although I employed the services of good lawyers,
I now realize that lawyers in no way insulate you from unscrupulous
distributors.

One of the first things I realized after completing Crossfire and
embarking on my search for distribution was that no distributor
is ever going to be as passionate about your movie as you are.
No matter what vision you had for your movie when you embarked
on the project, your distrib­utor’s vision will always be clouded
by dollar signs.  Whatever it takes to put dollars into his pocket
(though not necessarily in yours), he will do. It’s the nature
of the beast. Bottom line, don’t ever forget that distributors
are salespeople. And boy, do

THEY HAVE A CAR TO SELL YOU.

Despite exhibiting millions of dollars of production
value throughout our movie- such as the aforementioned helicopters,
boats and ample locations, and in spite of the superb perfor­do
battle. mances by the likes of David Gianaopolous (Under Siege
II
, Candyman II) and Robert LaSardo (Drop Zone, Hard
to Kill
) to name a few, sales had not been to our expectations.
There was, I discovered, an underlying reason.

At the 1997 American Film Market in Santa Monica,
CA, we had a friend privately visit our distributor’s booth. He
overheard the dis­tributor claim to a foreign buyer that the distributor’s
own independently produced movie was of much higher quality than Crossfire.
The distributor is entitled to his opinion, but obviously a good
salesman would never say something like that unless he had ulterior
motives. It became clear that the distributor had picked up our
film as fall-back material in case his own projects didn’t sell.

Zimmerman: Ready to do battle.

It wasn’t long afterward, while the distributor tried
to rationalize Crossfire‘s lack of business to us, that
the company’s front men insisted one of their upcoming in-house
productions was likely to be a huge hit and they would supposedly
help us by packaging it with our film to ensure Crossfire‘s
sales. In truth, that meant they were going to sell their film
at full price and offer ours as addi­tional product at a discount.

The packaging of movies can come in many shapes and
forms, and sometimes without your knowledge. One domestic broadcast
distributor representing us tried to convince us to "give" our
film away for free to air on digital cable. If we agreed, he said,
our movie "would qualify us to move up to pay-per-view and
eventually HBO or Showtime." Don’t buy it. If you’re going
to sell the movie for nothing, then it’s worth nothing-because
nothing is what you’ve received. The guy was prob­ably offering
another one of his films to the cable station for a fee and packaging
ours as a freebie to make his sales. Have you ever wondered how
such crap gets aired on late-night cable television?

You just don’t know. Nothing prevents a distributor
from calling all the first-time filmmakers he’s handling and simply
asking if they’d be willing to sell their films for $40 to get
it on the air as a jumpstart to a more lucrative medium. If he
can convince two or three of his clients to do this, then he’s
just picked up two or three movies he can package with his existing
products, offering more for less at your expense. No matter how
nice your distributor may seem, I’ve been burned enough times to
know that this kind of thing happens routinely.

Crossfire eventually jumped from one foreign
distributor to another; we left one who declared "
Japan
would
never purchase Crossfire" for another distributor who
imme­diately informed us "Crossfire was the only action
movie
Japan
bought from
us." Although reports like this seemed promising, little did
we know we had stepped out of a frying pan and into an inferno.
With front cover ads in Variety celebrating five years of
growth, handling films with name actors, the new company seemed
to be very promising.

But it didn’t take long for the corruption to commence,
and that’s really when

OUR NIGHTMARE BEGAN.

Withholding and effectively stealing tens of thousands
of dollars from our film sales, this distributor not only showed
no accountability for reporting the film’s income, they didn’t
even feel the need to return phone calls or respond to letters
and faxes, even from our lawyer. But experience did provide me
an enormous lesson regarding contracts: signed documents are meaningless
to some people. In one instance during February of ’99, as I sat
in front of this company’s CEO, with his lawyers on both sides,
while he casually declared: "Yes, we’ve stolen your money
and broken the contract, but that’s spilled milk. If you want to
sue us, be my guest because although we’re still in busi­ness,
everything you see around us, computers, tables, etc… is owned
by the bank. It will be a waste of your time."

Despite the ample supply of devious dis­tributors
throughout the industry, you can bolster your position. First of
all,

PROTECT YOUR RIGHTS.

Review distributors’ work as much as possible. Stay
on top of them. And contact as many other moviemakers who have
used them in the past as you can. If possible, demand your contract
include a clause allowing you to pre-approve promotional material
and artwork before it’s completed, because odds are you’re paying
for it anyway.

After seeing our distributor’s final "one sheets," which
contained an incorrect syn­opsis of our film and other grammar,
spelling and typographical errors, the response was, "Oh,
sorry about that, but we’re dealing with foreign buyers who’ll
never know the difference. Besides, you can’t afford to have this
done over." One of our recent domestic video distributors
was no different. Only after the video was released did we see
the final art product. If someone’s name had been misspelled or
positioned in the wrong place, we would have been out of luck.
Mind you, as producers we are contractually obligated to position
cast and crew credits in a certain manner, but were unable to confirm
that any of this would happen.

Don’t wait until after the fact. Take steps to ensure
your distributor is abiding by the contractual terms during distribution
sales. As noted earlier, send a friend to the distributor’s booth
at one of the film markets to verify just how hard the company
is pushing your film. Check the position of your movie’s poster
in the booth. Upon entering one distributor’s room to find a row
of about a half-dozen large movie posters, most of which were not
even in production, I was stunned to find Crossfire‘s poster
virtu­ally hidden to the side. Crossfire‘s announcement
was not even visible from the entrance. These are some of the games
you will likely (inad­vertently) be caught up in if your distribution
company is also producing and selling movies of its own, which
many do.

No matter how hard you try to reduce your risks with
a distrib­utor, it will nevertheless absolutely be a battle to

SAFEGUARD ALL YOUR INTERESTS.

MORE THAN ANYTHING, follow your gut instincts. Besides
never signing a supplied "dummy" contract (standard contract
from the distributor), wherever possible add clauses to your agreement
that will save your butt in case things don’t work out. Try as
hard as you can to include something stating what the distributor
has to do for you, as most stan­dard contracts will be geared to
what you must provide for the distributor. An example clause would
be: "DUTY OF DISTRIB­UTOR: Distributor shall have the duty
to take reasonable steps and make "best efforts" to distribute
the picture in accordance with the rest of the contract." Something
as simple as this line may one day give you the leverage you might
need to get out of a bad situation.

That earlier domestic distributor I mentioned had
locked up Crossfire for nearly a year without attempts to
represent us in good faith. This lengthy waste of time not only
decreased the film’s value, but turned away revenue in the form
of a cable deal. Although I brought up the fact that the distributor
had missed two major opportunities to coordi­nate our release with
two very high-profile films (Air Force One and Wishmaster),
which both starred our lead actor, the distributor did absolutely
nothing to market our film until legal action was threatened.

Stay cautious. If possible, put in a performance
clause in the con­tract so that you’re not locked into a non-performing
distributor forever. The contract should state if the distributor
has not brought in a significant amount of sales by a certain period
of time (let’s say a year or two), the producers (you) shall have
the right to terminate the contract concerning all territories
not yet sold. Otherwise your dis­tributor can (unintentionally,
or not) tie up your film for years.

Try to have the distributor participate in some of
the risk and reward. Persuade him to take a lower commission on
sales until you’ve regained a certain amount, then reward him with
higher commissions. I’m not talking about mean sales on paper,
but rather money that is deposited into your bank account. Note
that sales come in two forms-cash and paper. A sales report on
paper declaring $200,000 in territory sales doesn’t necessarily
mean ‘ you’ll soon be cashing a check. Pieces of paper can most
often turn into a waiting game that could take years before you
see any- 3 thing that resembles cash, if at all. Be realistic when
you’re quoted sales numbers by the distributor.

As for bargaining with a distributor to downsize
his commission… An example of how to do this is simply to ask
that the distributor only take five percent or 10 percent commission
until a you have recouped 100 percent of your budget, at which
time the distributor could then be allowed to take his 20 percent,
or what ever his standard fees are. Not only is this a modest request,
it adds a little spark of motivation on his part to reach a certain
number which would make him happy. Of course, you will also be
reaching your desired return faster. Just think of it like this ­you’re
not saying no to his fees, but simply asking him to "earn
it."

Remember, the best way to deal with salesmen is to
know their game. That takes experience, of course. But for the
first-time moviemaker in the trenches with a ques­tionable distributor,
I suggest you never leave out the option of locking up your master
film print and denying the enemy lab access if it comes down to
dirty war tactics.

As for Crossfire, it’s presently being repre­sented
by foreign distributor "AmSell Entertainment" and domestic
distributor "Tapeworm Inc." Have we finally won the war?
Only time will tell. MM

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