(2) Home Video revenue is generated from sales to about 125,000 outlets such as BLOCKBUSTER video and
other non-dedicated outlets such as ACME food markets. Each video cassette retails for about $50 to $60 (for
independent films) and about a third of the dedicated outlets each purchase about 2 or 3 cassettes. For major
releases, each video cassette retails for about $80 and virtually all of the outlets each purchase anywhere from
5 to 25 video cassettes. Home Video revenue is calculated as a percentage of Theatrical Box Office revenue
and at this time is about 215% of Theatrical Box Office. "Home Video" includes revenues generated from the
sale of video cassettes to video outlets for rentals and sales made directly to customers.
(3) Cable revenue includes all "Pay Cable" services and "Pay-per-View" and is calculated as a percentage of Theatrical Box Office revenue. At this time a Cable sale earns about 20% of Theatrical Box Office revenues.
(4) TV/Syndication revenue includes Free Network TV (such as ABC, CBS, NBC, UPN and FOX channels) and the thousands of independently-owned (Corporate and Mom & Pop) TV stations to which a Picture is sold, or syndicated. Syndication typically generates about 50% to 200% of Theatrical Box Office over the long-term. The figure of 100% has been used for our projections.
(5) Total US/CANADA revenue is the sum of the gross revenues generated from all media, i.e. Theatrical Box Office, Home Video, Cable, TV/Syndication and ancillaries ("All Media") in the United States and Canada which are collectively known as the "Domestic Territory or just "Domestic."
(6) Total Foreign revenues include All Media in all territories outside the Domestic Territory (known, from
the point of view of the U.S., as the "Foreign Territories" or just "Foreign") and earn about 48% to 105% of the
revenues generated in the Domestic Territory, the basis differing depending on whether the release is from a
major or an independent production company. Revenues generated in the pacific rim (China) and India (part
of the Foreign Territories), are expected to increase by as much as 9% per year in the coming decade.
(8) Theatrical Exhibition Fee is the aggregate fees all Domestic movie theater owners charge to exhibit the Picture on each of their respective screens. This sum is typically 50% of Theatrical Box Office revenues.
(9) Theatrical Distribution Fee is the fee the Domestic distributor of a Picture charges to book and deliver that Picture to all the (multiplex) theaters in the U.S. and Canada. This is typically 30% of the monies remaining after the Theatrical Exhibition Fee has been deducted from Theatrical Box Office revenues.
(10) Theatrical Expenses (P&A) are the Domestic theatrical distribution expenses connected with the Picture and include, but are not limited to, prints & advertising, publicity, taxes, guild payments, trade association dues, conversion/transmission costs, collection costs, checking costs, re-editing, foreign version prints, transportation, shipping, legal costs, insurance and royalties. Theatrical Expenses are calculated at 20% of the monies remaining after the Domestic Theatrical Exhibition Fee(8) has been deducted from the Domestic Theatrical Box Office
revenues(1). When a Picture has been independently financed, it may be easier to negotiate a deal to cap
Theatrical Expenses at agreed-upon amounts, thus Producer's Net may have a greater significance.
(1) Theatrical Box Office revenues are those sums collected at the box office window from movie ticket sales
throughout the United States and Canada. Tickets generally cost $6.50 and there are approximately 26,000
screens, as distinguished from multiplex theaters, in the U.S.which exhibit feature-length movies ("Picture").
(7) Total Revenues are the aggregate gross sums collected from all All Media and Territories (the "Worldwide Market"), without any reductions due to Exhibition Fees, Distribution Fees or Distribution Expenses.
(12) Home Video Expenses are the home video distribution expenses connected with Picture to distribute the Picture to all or part of the 125,000 Home Video outlets across the U.S. and Canada. These distribution expenses are about 55% of the revenue generated from Home Video(2). Once the Home Video Distribution Fee (25%) and the Home Video Expenses (55%) are deducted from the Home Video revenue, the Production Company is left with about 20% of the retail value of each video cassette sold to the Home Video outlets.
(13) Cable Distribution Fee is the fee a distributor charges to distribute the Picture to all or part of the cable carriers in the Domestic Territory and works out to about 25% of the revenue generated from Cable sales(3).
(14) Cable Expenses are the cable distribution expenses connected with Picture for distributing the Picture to the cable carriers in the Domestic Territory and are about 15% of the revenue generated from Cable sales(3).
(15) TV/Syndication Distribution Fee typically works out to 10% to 25% of the revenues generated from Free Network TV, and 30% to 40% of the revenues generated from the thousands of independent TV stations to which a movie is syndicated. The average of a 26% TV/Syndication Distribution Fee on TV/Syndication revenues(4) has been used for our scenarios.
(16) TV/Syndication Expenses are the distribution expenses connected with Picture to distribute the Picture to all or part of the Free Network TV and to the thousands of independent TV stations to which the Picture is syndicated. These expenses are about 20% of the revenue generated from TV/Syndication sales(4).
(17) Foreign Theatrical Exhibition Fee is the aggregate of all fees the movie theater owners in the Foreign Territories charge to exhibit the Picture on their screens. This sum is typically 50% of Theatrical Box Office revenues generated from Foreign Territories.
(18) Foreign Distribution Fees are the distribution fees charged to distribute the Picture to All Media (i.e., the theatrical box office, home video, cable and TV/syndication and ancillaries) in all the Foreign Territories. We have used an averaged fee of 33% for the scenarios.
(19) Foreign Expenses are the distribution expenses charged to distribute the Picture in All Media in the Foreign Territories. We have used an averaged rate of 28% of Total Foreign revenues(6) for the scenarios.
(20) Total Expenses are the aggregate sums of all Exhibition Fees, Distribution Fees and Distribution Expenses, All Media, both Domestic and Foreign Territories, in connection with the Picture.
(21) Producer's Gross (sometimes known as "Studio Gross") is the royalties the Production Company and the Production Financiers retain after Total Expenses(7) have been paid from Total Revenues(20).
(22) Cost of Production is known as the "Budget" before the Picture has been produced and "cost of production" after the Budget has been allocated. Such allocations include, but are not limited to, fees for
producers, writers, director, cast ("Above-the-Line Expenses"); and crew, film stock, laboratories, camera, sound,
lights, special FX, offices, publicity, locations, studios, permits, editing, music, titles, fringes, completion bond,
interest, insurance and all other expenses in connection with the Picture ("Below-the-Line Expenses").
Repayment of Development Money is also included in the Cost of Production as a line-item in the Budget.
(23) Net Profits are what remain after the Production Financiers have recouped the money they invested in the Cost of Production.
(24) Production Financiers' Share of Net Profits is the profit participation the Production Financiers receive from the Net Profits generated from the Picture.
(25) Production Company's Share of Net Profits is the profit participation the Production Company receives from the Net Profits generated from the Picture. These profits are retained earnings of the production company after the Production Financiers are paid their share of profit participation, also know as "Producer's Net" or "Points."
(26) Development Money Investors' Profit Participation is the profit participation the Development Money Investors receive from the Production Company's Share of Net Profits generated from the Picture. Other Producer's Net profit participants or "Pointholders" participate here as well.
and this NOTE is not removed.
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