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Initiating the deal structuring process requires all parties involved to state: Their stance on the negotiation; Observable latent risks and how they could be managed; How much risk they can tolerate; and. Conditions under which negotiations may be canceled.
In the leasing model, the distributor agrees to pay a fixed amount for the rights to distribute the film. If the distributor and the studio have a profit-sharing relationship, on the other hand, the distributor gets a percentage (typically anywhere from 10 to 50 percent) of the net profits made from the movie.
The movie industry involves many jobs including directors, actors, producers, designers, screenwriters, mixers, cinematographers, and editors. Films go through four major phases of production: development, pre-production, production, and post-production.
Deal structuring is the organizational hierarchy in which a deal is acquired, funded, managed, and eventually, held. Most importantly, it determines how profits are divided and how cash flows are allocated.
Sales agents, or sales companies, act on behalf of the producer to sell the rights to an independent film or TV drama to distributors, who then release films on different platforms (cinema, TV, DVD, Blu-ray, streaming platforms like Netflix or Amazon).
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For foreign distribution, a filmmaker will typically contract with an international distributor or foreign sales agent, who will receive a distribution fee in the range of 15-30% of gross revenues. The sales agent will be allowed to recoup certain distribution expenses after deducting its fee.
The Investors Share is typically defined as 50% of the total Net Proceeds. The other 50% of the Net Proceeds goes to the producer (the Producers Share). Any talent and other non-investor third parties who have been promised a back-end share in the movie are paid their percentage out of the Producers Share.
The deal structure outlines a set of terms that will help guide a smooth transfer of business ownership, and will usually reference whether the transaction is leveraged, unleveraged, a joint venture, or will include convertible/participating debt, or a traditional debt transaction.

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