Acquisition

As films are creative works - intellectual property rather than physical goods - their copyright is owned by the people or organisations that produce or finance them. Copyright systems enable creators to receive a fair return for their innovation and investment. In bringing films to market, distributors act under license on their behalf.

Where and how do UK distributors obtain the films they release? From one or more of various sources:

• A third-party sales agent, acting on behalf of a producer

• A continuous flow of new content from a parent studio

• A studio or production company with whom the distributor has negotiated an output deal covering a slate of titles

• A single title acquired at any stage before, during or after production

As in other countries, the UK has half a dozen major distributors (directly affiliated to the Hollywood studios) and many independent (unaffiliated) distributors who tend to handle films made outside the major studios. Any local distributor of whatever ownership may compete to pick up a film with available rights, so competition to sign a hot property can be fierce.

When considering acquiring a new film, distributors will look for something fresh, original or outstanding. Is there an imaginative idea or 'hook' that could be a springboard for a marketing and publicity campaign?

Distributors recognise the importance of local product. British audiences naturally warm to good quality British films, Irish audiences to Irish stories, and so on.

A film's marketability (how it can be promoted to its particular audience) and playability (how it actually performs in the market place) are not necessarily the same thing. Who is the audience - who does the film 'speak to'? Do the story, characters and situation grip the intended audience? Does the film 'deliver' and justify the cost and risk of a theatrical release?

A distributor's opinion on a film's marketability may, and ideally should, be sought before it goes into production. Generally it's preferable for a distribution deal to be in place before principal photography begins. This may be viable on the basis of a hot script and anticipated cast. In practice, producers tend to seek finance from multiple sources, including:

• Pre-sales to various territories via a specialist sales agent

• Bank loans (subject to prevailing economic conditions)

• Institutional investors

• Private individuals

• Beneficial tax schemes

• Public subsidies (in the UK, most of the available grants and funds are coordinated by the UK Film Council, the government's strategic agency for film).

The distribution contract

Distributors sign a formal agreement with the producer, sales agent or studio, specifying the rights they hold in respect of the title. These normally include the right to release it in UK cinemas and promote it in all media before and during its release. There may also be provision for the film to be edited locally (or not) in order to secure a particular classification. The contract will set out how the income from the release is to be apportioned and accounted for, and set a date on which the distribution license expires.

Importantly, in addition to the theatrical window, the agreement usually extends to the ancillary markets including the further right to license the film to UK broadcasters. Distributors normally seek to acquire all available rights in their particular territory, spreading the risk and opportunity across multiple platforms. Some theatrical distributors do not handle distribution in other formats, but they will have sister companies or business partners that do so.

Stuart Williams: On how a distributor approaches the release of a film Play clip >

The earlier a distributor is involved, the better

No fixed formulae apply to film financing or advances. Each case is affected by variables such as the film property itself, the script, cast and market conditions. Today, the greater use of digital technologies is bringing change to traditional models throughout the film and cinema industry.

The larger the production budget, the more likely a film is to have a distributor attached before all its financing is confirmed. No distributor pre-sales may make it harder to finance a new production from other sources.

Often a distributor becomes a partner in a project, contributing to its development/ production costs and later bringing it to market. In some cases, the distributor may pay an advance/minimum guarantee against future earnings to the producer or sales agent. The advance commitment is for the distribution license rights plus the costs of theatrical prints and advertising (P&A).

If a broadcaster has contributed to the financing of a feature film, it is likely to have pre-secured TV rights as part of the deal. In such a case, the rights available to an incoming distributor would extend only to theatrical, DVD/Blu-Ray and downloads.