Chapter 17
Glossary of Terms
Above-the-Line
When referring to a picture’s budget, it is the budgeted cost for acquisition of rights, writers, producer, director, and principal cast.
Accredited Investor
Investors (1) who are experienced in investments similar in amount and risk of the one being offered and (2) that have a minimum net worth demonstrating their ability to financially withstand the investment’s failure and further evidences their financial sophistication. In the United States, “accredited investor” and “sophisticated investor” are language used by state and federal security and exchange commissions to describe investors according to parameters 1 and 2 in the preceding sentence.
ADR Alternate dispute resolution
or can also be
Additional (or automated) dialogue recorded.
AFM
American Film Market.
Alliance
See The Alliance below.
Ancillary Windows
The successive earnings areas for each motion picture that are not its theatrical window of distribution. The primary ancillary windows are home entertainment, premium cable, network television, and cable/syndicated television.
Antecedents
See Comparables.
Balanced Producer
Gives equal weight to the creative, audience, and investment/profits of each project.
Below-the-Line
All motion picture costs in the budget, excluding above-the-line costs.
Big Boxes
Home entertainment retail stores, such as Target and WalMart.
Campaign Signature
Refers to the analysis and quantification of ad campaigns, especially television commercials. Specific audience emotional beat categories (including comedy, romance, action/adventure, drama, science fiction, horror, and so on) are quantified each time they elicit their unique emotional responses from audience members. These responses are totaled for each emotional category. Then each emotional total is divided by the total emotional beats. The profiles of these emotional category percentages are each commercial’s campaign signature.
Cash Flow Analysis
A motion picture’s forecast of all its income, expenses, and month to month, year to year flow of cash, from all sources.
Collateral
This is all of the license agreements, international sales estimates, production incentives or equity, brand tie-in agreements, talent or vendor offset agreements, private equity, and any other instruments associated with providing direct investments in the project.
Collection Account Manager
A third-party company or individual who monitors and receives in an escrow account all revenue earned by a motion picture, and supervises the allocation and payment of that revenue. Two companies that we recommend are Freeway Entertainment and Fintage House.
Comparables
These are previously released pictures that are comparable to the subject-picture in target audiences, genre, budget, talent, and sales/marketing abilities.
Completion Bond
Issued by an insurance company, a guarantee that the picture will be delivered by the contracted delivery date, within budget, and with the specified creative elements intact.
Consumption Dynamics
The way specific target audiences will consume a motion picture in its various distribution windows.
Cover Shot
Additional produced material that will be uniquely required in one or more territories outside the core territory for which the picture was produced. Examples include altering story elements that are too culturally specific, ensuring that there is less violence in screenings for Europe, limiting profanity for network television and in-flight screenings, and so forth.
CRI
Color reverse internegative, created to make release prints.
CMP
A hybrid of a Chief Marketing Officer and Producer. The duties of a CMP are to develop a strategic marketing plan, locate the target audience, create and manage a team for audience outreach and package social networking, contests, games, videos, PR, key art, website, email lists, sponsors, and promotional partners.
Crowd or Tribe Funding
An alternative financing model that does not include investments and only includes the donations, memberships, or preordering of products, giving none of the funders future profits in the film.
DBO
Domestic Box Office
DDE
Direct distribution expenses—the expenses incurred by the distributor in the process of distributing a picture, which are recoupable by the distributor from the picture’s gross receipts remaining after deduction of distribution fees. Also referred to as P&A (print and advertising).
DGA
Directors Guild of America
Distributor
An intermediary between the content owner and the audience, responsible for marketing, distribution, collections, and distribution accounting and reporting.
EFM
European Film Market.
Estimates
See below Gap Financing.
Exhibitor
A single theater owner or theater circuit or chain.
Film Rental
The share of the gross box office due to the distributor.
Film Rental Agreement
The document setting forth the terms between the exhibitor and the distributor.
Gap Financing/Funding
The financing/funding typically provided by a bank, usually calculated on sales estimates received from a qualified/bankable international sales agent, on the value of each unsold international territory. Typically discounted by the bank up to 50 percent of the territory’s aggregate value.
GBO
Gross Box Office. Sometimes also Global Box Office.
Global Sales Analysis
A global gross and net earnings forecast of the proposed picture for all major windows and ancillary earnings.
Greenlight
See Internal Greenlight Analysis.
Gross Receipts
Box office receipts collected from theater attendees for a picture.
Holding Fee
A small percentage of talent’s negotiated fee used to secure the director or lead cast often used to close financing.
House-nut
The exhibitor’s attributed amount covering the cost to provide and operate each screen.
IBO
International Box Office, typically referring to every territory outside North America.
IFTA
Independent Film and Television Alliance
Impressions
The total number of advertising viewings of a particular audience during a set time.
Income-to-Cost Ratio
An analysis estimating the producer’s gross income compared with the project’s projected production costs. A 1:1 ratio is break-even of these two amounts.
Internal Greenlight Analysis
A feasibility study starting with comparable pictures and ending with cash flow projections to evaluate the potential loss/profits before undertaking extensive development costs.
Interparty Agreement
An agreement that spells out the payment priority among the lending bank, the producer, presale distributors, production incentive and all other collateral, discount, and deferral participants, plus the completion guarantor.
ISA
International Sales Agent.
JOBS Act
The Jumpstart Our Business Startups Act is an Act designed to increase American job creation and economic growth by improving access to the public capital markets for emerging growth companies.
LC
Letter of credit.
LIBOR
London Interbank Offered Rate.
Library Releases
Pictures that have previously been released, for which one owns the copyright and governs the continuing distribution.
License Fee Escalator Clause
This clause calls for the license fee to increase if the picture’s gross box office earnings or another benchmark exceed a certain minimum.
License Income
Earnings that come to the licensor from all sources: typically, from advance/minimum guarantee or profit participation or overages.
Licensing Agreement
An agreement that fully addresses all the terms and conditions relative to the license relationship.
Literary Release Letter
A legal letter/document generated by the producer or production company when accepting manuscripts directly from writers and before accepting their script(s).
LLC
Mash-Ups
Edits or re-edits, typically of pre-produced video and sound elements made available to the general public for editing.
MG/Minimum Guarantee
Flat fee amount to acquire certain rights in a picture. The guarantee amount is usually paid in installments as indicated on the deal memo and is most often 10 percent to 20 percent of the total paid upon execution of the deal memo. The balance of the payment is triggered by delivery of the picture or by access to specific elements of the picture by the licensee.
NATO
National Association of Theatre Owners.
Negative Cost
The actual total costs of creating the picture, which include above-the-line and below-the-line costs, delivery items, the completion bond fee, and a contingency that is usually 10 percent of the above-the-line and below-the-line costs, but excluding financing costs.
Negative Pick-up
A distributor agrees to acquire certain rights, typically at least all rights in a given territory, for a fixed amount payable upon delivery to them of the picture.
One-Sheet
A theater-frame size movie poster.
P & A
Once referring to Prints and Advertising, this now refers to Picture delivery and Advertising—or PR and Advertising, plus the cost of secure picture delivery via satellite or hard drive.
Participations
Contingent payments to talent based on a percentage of the project’s earnings.
Pay or Play
A contractual provision providing that if the talent is not used in a motion picture for any reason, he or she will be paid a fixed percentage, up to 100 percent, of their production performance compensation (other than the participation payment).
Points
Investor and talent’s profit participation in the film.
PPM
Private placement memorandum or offering.
Preproduction
The preparation activities that go on before the commencement of principal photography.
Presale
A sale concluded before commencement of principal photography for motion picture right(s) for a fixed payment due upon delivery, plus overages.
Private Equity
Cash, CDs, treasury bills, securities, and the like from private sources for financing a picture.
Producer’s Gross
Typically, the distributor’s net less the production financing expense and the picture’s negative cost.
Producer’s Share
The profits remaining for the producer after all production, distribution, and financing expenses have been deducted and talent has received their profits.
Production
The physical creation of the motion picture, usually comprising its preproduction, principal photography, and postproduction
Promotional Tie-in
A relationship in which an existing brand with similar target audiences engages a relationship with a picture to unilaterally exploit its products/services during the picture’s release, using the picture’s title and some of its footage/pictures in its campaign.
Royalties
Contingent profit payments owed to investors, producers, and talent.
SAG
Screen Actors Guild.
SEC
Securities and Exchange Commission.
Step Deal
A deal structure, usually with the screenplay writer such that the writing process is compartmentalized into progressive steps. Each step has a fixed fee value and provides for evaluation and complete pre-agreed-upon exit remedies that allow the producer to terminate the relationship following the review of each initial step.
Street Date
Release date of a motion picture into theaters or on DVD.
Studio Share
The amount of the producer’s net in which the studio participates for its share as a partner of the producer in making the production and distribution of the picture a reality.
Talent Current Quote
What the talent was last paid for either a studio-level picture or an independent picture.
Talent Participation
Contingent payments in the film’s profits that are due to the key talent participants, typically the director and one or more key cast members.
Target Audience
The audience that will be more interested in a picture than any other defined audience segment.
The Alliance
Independent Film and Television Alliance.
Theatrical Distribution Fee
The fee earned by the distributor and calculated as a percentage of the film rental. The percentage for studios is typically 25 percent to 35 percent of the film rental.
Theatrical Exhibitors
Theater chains such as AMC Entertainment, Regal Entertainment Group, Cinemark USA, and Carmike Cinemas.
Trailers
Movie previews of upcoming releases.
TVQ
Television quotient. Most talent and many entities have a television quotient. This has to do with popularity, and the person or entity may have no relation to TV.
UPM
Unit production manager.
Waterfall
Financial projections of the global revenue and expenses for a making and releasing a film.
WGA
Writers Guild of America.