Negative pickup deal
Encyclopedia
In film production, a negative pickup is a contract entered into by an independent producer and a movie studio wherein the studio agrees to purchase the movie from the producer at a given date and for a fixed sum. Depending on whether the studio pays part or all of the cost of the film, the studio will receive the domestic, international, DVD and/or TV rights to the film, with net profits split between the producer and the studio.
By selling the rights to distribute the film in territories not covered in the negative pickup ("pre-selling") or making other deals collateral to the production, a producer will usually cover all his costs and make a small profit before production has begun. But financing of the production up until its completion date is the responsibility of the producer—if the film goes over budget, the producer must pay the difference himself or go back to the studio and renegotiate the deal. This happened on the films Superman, The Empire Strikes Back and Never Say Never Again
.
Most negative pickup contracts, either from motion picture studios or television network
s, are bankable at pretty much dollar for dollar (less fees); if you hold a negative pickup contract, you essentially hold a check
from the studio for the cost of your film, post-dated to the day you deliver your film to them. So, while the studio technically doesn't pay the producer until the film negative is officially delivered (thus "negative pickup"), the producer can nonetheless get a bank loan against a negative pickup contract, which helps the producer to pay for production of the film.
Studios, on the other hand, typically don't like their contracts being factored at banks or shopped around to independent investors and financiers, as this ultimately gives the producer significant creative latitude over the production. With the money assured, a producer has a free hand to make the film however he pleases, and he is only answerable to his investors, which in this scenario are unknown to the studio at the time of the contract. If creative disagreements arise between the studio and the producer, the studio has little contractual recourse as long as the film meets certain general contractual requirements, such as duration and technical quality. An example of this is a Terry Gilliam
's Brazil
, a negative pickup for Universal Pictures
produced by Arnon Milchan
. In this particular case, the studio had creative disagreements with the director over choice of star, content and duration, and failed to resolve these issues to its satisfaction, because the negative pickup had essentially granted Milchan final cut
.
The studios and distributors will contain this risk by offering the negative pickup contract only to a production that has financiers, a script, and key creative personnel, particularly the director
and stars
, already attached. Thus the conundrum: unless a film has U.S. distribution, a lot of investors and foreign buyers won't pre-buy a film and unless the film is already financed, the studios don't want to guarantee distribution . This Catch-22
is often resolved by attaching a major actor
to the film; the mere appearance of an American movie star's name on a film's poster is often enough to drive box office to cover distribution in many foreign markets.
By selling the rights to distribute the film in territories not covered in the negative pickup ("pre-selling") or making other deals collateral to the production, a producer will usually cover all his costs and make a small profit before production has begun. But financing of the production up until its completion date is the responsibility of the producer—if the film goes over budget, the producer must pay the difference himself or go back to the studio and renegotiate the deal. This happened on the films Superman, The Empire Strikes Back and Never Say Never Again
Never Say Never Again
Never Say Never Again is a 1983 spy film based on the James Bond novel Thunderball, which was previously filmed in 1965 as Thunderball...
.
Most negative pickup contracts, either from motion picture studios or television network
Television network
A television network is a telecommunications network for distribution of television program content, whereby a central operation provides programming to many television stations or pay TV providers. Until the mid-1980s, television programming in most countries of the world was dominated by a small...
s, are bankable at pretty much dollar for dollar (less fees); if you hold a negative pickup contract, you essentially hold a check
Cheque
A cheque is a document/instrument See the negotiable cow—itself a fictional story—for discussions of cheques written on unusual surfaces. that orders a payment of money from a bank account...
from the studio for the cost of your film, post-dated to the day you deliver your film to them. So, while the studio technically doesn't pay the producer until the film negative is officially delivered (thus "negative pickup"), the producer can nonetheless get a bank loan against a negative pickup contract, which helps the producer to pay for production of the film.
Studios, on the other hand, typically don't like their contracts being factored at banks or shopped around to independent investors and financiers, as this ultimately gives the producer significant creative latitude over the production. With the money assured, a producer has a free hand to make the film however he pleases, and he is only answerable to his investors, which in this scenario are unknown to the studio at the time of the contract. If creative disagreements arise between the studio and the producer, the studio has little contractual recourse as long as the film meets certain general contractual requirements, such as duration and technical quality. An example of this is a Terry Gilliam
Terry Gilliam
Terrence Vance "Terry" Gilliam is an American-born British screenwriter, film director, animator, actor and member of the Monty Python comedy troupe. Gilliam is also known for directing several films, including Brazil , The Adventures of Baron Munchausen , The Fisher King , and 12 Monkeys...
's Brazil
Brazil (film)
Brazil is a 1985 British science fiction fantasy/black comedy film directed by Terry Gilliam. It was written by Gilliam, Charles McKeown, and Tom Stoppard and stars Jonathan Pryce. The film also features Robert De Niro, Kim Greist, Michael Palin, Katherine Helmond, Bob Hoskins, and Ian Holm...
, a negative pickup for Universal Pictures
Universal Pictures
-1920:* White Youth* The Flaming Disc* Am I Dreaming?* The Dragon's Net* The Adorable Savage* Putting It Over* The Line Runners-1921:* The Fire Eater* A Battle of Wits* Dream Girl* The Millionaire...
produced by Arnon Milchan
Arnon Milchan
Arnon Milchan is a film producer, Israeli intelligence agent, and arms dealer. Milchan produced many films such as The War of the Roses, Once Upon a Time in America, Pretty Woman, Natural Born Killers, Under Siege, The Devil's Advocate, The Fountain, Unfaithful, L.A. Confidential and many others...
. In this particular case, the studio had creative disagreements with the director over choice of star, content and duration, and failed to resolve these issues to its satisfaction, because the negative pickup had essentially granted Milchan final cut
Final cut
Final cut may refer to:* The Final Cut , a 1983 album by Pink Floyd** "The Final Cut" , a song included on the above Pink Floyd album* The Final Cut , an industrial music group...
.
The studios and distributors will contain this risk by offering the negative pickup contract only to a production that has financiers, a script, and key creative personnel, particularly the director
Film director
A film director is a person who directs the actors and film crew in filmmaking. They control a film's artistic and dramatic nathan roach, while guiding the technical crew and actors.-Responsibilities:...
and stars
Movie star
A movie star is a celebrity who is well-known, or famous, for his or her starring, or leading, roles in motion pictures. The term may also apply to an actor or actress who is recognized as a marketable commodity and whose name is used to promote a movie in trailers and posters...
, already attached. Thus the conundrum: unless a film has U.S. distribution, a lot of investors and foreign buyers won't pre-buy a film and unless the film is already financed, the studios don't want to guarantee distribution . This Catch-22
Catch-22
Catch-22 is a satirical, historical novel by the American author Joseph Heller. He began writing it in 1953, and the novel was first published in 1961. It is set during World War II in 1943 and is frequently cited as one of the great literary works of the twentieth century...
is often resolved by attaching a major actor
Actor
An actor is a person who acts in a dramatic production and who works in film, television, theatre, or radio in that capacity...
to the film; the mere appearance of an American movie star's name on a film's poster is often enough to drive box office to cover distribution in many foreign markets.