Negative Pickup Deal
A negative pickup deal is a type of film financing arrangement in which a production company sells its completed film project to a studio or distributor for a fixed price before the film is actually made.
This financing model allows filmmakers to secure a guaranteed distribution deal, which provides a measure of financial security during the filmmaking process.
How Negative Pickup Deals Work
- Pre-Selling the Completed Film: In a negative pickup deal, the studio or distributor commits to purchase the completed film at a pre-negotiated fixed price. This commitment provides the production company with a degree of financial certainty, as they know they will receive payment once the film is delivered and accepted.
- Financial Security During Production: The negative pickup deal can offer financial security during the filmmaking process. Filmmakers can use the commitment from the studio as collateral to secure additional funding from banks or investors to cover the film’s budget.
- Distribution Rights Transfer: Upon completion of the film, the production company transfers the rights of the film to the studio or distributor, who then assumes responsibility for marketing and distributing the film to audiences.
- Budgetary Challenges: While a negative pickup deal provides financial security, it also comes with challenges. If the film’s budget ends up exceeding the agreed-upon fixed price, the production company must cover the additional costs. This risk is an essential consideration when budgeting and managing the film’s expenses.
- Completion Guarantees: In some cases, studios or distributors may require a completion guarantee from a third-party completion bond company. The completion guarantor ensures that the film will be completed on time and on budget, offering further assurance to the studio.
- Negotiating the Deal: The terms of the negative pickup deal are subject to negotiation between the production company and the studio or distributor. Key aspects to consider include the fixed price, delivery schedule, distribution rights, marketing commitments, and any contingencies for the completion of the film.
Negative Pick Up Deal Requirements
A Negative Pick-Up deal is a contract entered into by an independent producer and a movie studio where the studio agrees to purchase the movie from the producer at a given date and for a fixed sum. While this type of deal can be beneficial to filmmakers, obtaining one requires a few key elements:
- Finished Film or Near Completion: The film needs to be completed, or very close to completion. In other words, the “negative” - referring to the developed film in traditional terms, or the complete digital footage in modern terms - should be nearly ready to be “picked up.”
- Proven Track Record: It helps if the filmmaker or the production team has a proven track record of making successful films. A studio is more likely to enter a Negative Pick-Up deal if it has confidence in the filmmaking team’s ability to deliver a commercially viable product.
- Clear Rights: The producer must have all the rights to the film, including script rights, talent agreements, music rights, etc. The studio needs to be sure that there will be no legal issues after the purchase.
- Budget and Schedule: The filmmaker must present a detailed and accurate budget and production schedule, demonstrating that the project is financially viable and can be completed in a reasonable time.
- Quality of the Film: The quality of the film is crucial. This not only includes the technical aspects but also the film’s marketability. The script, the cast, the directing, and other creative aspects will all come into play.
- Sales Projections: Filmmakers should also provide realistic sales projections for different markets, which will help the studio understand the potential return on investment.
- Insurance: The producer needs to have completion insurance to protect the studio’s investment should anything prevent the completion of the film.
Keep in mind that Negative Pick-Up deals have become less common in recent years with the rise of new financing and distribution models, but they do still exist, especially in the context of international sales and distribution.
Where to find organizations that offer pick up deals
Finding organizations that offer Negative Pick-Up deals often requires networking and establishing relationships within the industry. Here are a few places to look:
- Major Film Studios: Major studios like Warner Bros., Sony Pictures, Paramount Pictures, or Universal Pictures sometimes offer Negative Pick-Up deals, although they are often more selective and prefer established filmmakers.
- Independent Film Studios: Independent studios such as Lionsgate, A24, or IFC Films may be more open to Negative Pick-Up deals, especially for unique or niche projects.
- International Sales Companies: These companies specialize in selling distribution rights to international territories. Examples include Wild Bunch, Fortissimo Films, or The Match Factory. They might offer Negative Pick-Up deals, especially for films with potential international appeal.
- Film Markets: Events such as the Cannes Film Market, the American Film Market (AFM), or the European Film Market (EFM) are places where producers and distributors meet and negotiate deals. These events can be excellent opportunities to find organizations willing to offer Negative Pick-Up deals.
- Entertainment Lawyers and Agents: Lawyers and agents who specialize in film and entertainment often have extensive networks and knowledge about who might be interested in a Negative Pick-Up deal.
Remember, a Negative Pick-Up deal involves selling the rights to your film, which may include creative control. Always consult with a legal professional before entering into such a contract.