This is where we will bring all of the information of a Studio full circle and pull it all together. From the creative and technical input at the beginning of a film, to the flow of money from the Exhibitors.

All of the following sections, viewed together, will give you a working matrix of how a film flows through the motion picture industry:

The chart below shows Production as "P" / Distribution as "D" / Exhibition as "E"

The final output of hard work from talent, creative and technical, flows through to the public, when the film is exhibited.

Before a film is distributed, many long hours and much planning goes into the determination of marketing; advertising and publicity; by the DISTRIBUTOR. The terms of licensing for theaters and all parties involved, from all available markets; domestic; foreign; in flight; cable; Internet; etc. is determined and set in place.

EXHIBITION of the film in a theater; (and other venues) "presentation" of the film. This involves several aspects of the business including cooperative advertising with Exhibitors. Exhibitors through their theaters, are part of an indirect investment in films. When the public pays to see a film the money flows back to the film maker in a specific path. Lets look at the flow of Box Office.

The splitting of the boxoffice between exhibitor and distributor depends on the licensing terms. Was there a second feature or other deductions such as limits on passes or student discounts.

As money flows from the public (1) and other markets (2) it's called called BOX OFFICE GROSS. When the money passes from the Exhibitor to the Distributor it is called FILM RENTAL or sometimes DISTRIBUTORS GROSS (3).

Exhibitors keep their negotiated amount of the Gross Box Office and pass the remaining amount on to the distributor. This money that flows through to the Distributor is called the FILM RENTAL.

Distributors deduct their DISTRIBUTION FEE from the Film Rental and recoup PRINTS and ADVERTISING costs, commonly referred to as P and A. Distributor deducts from film rentals: Distribution fee, but how do you precise define "gross" for the deduction of the Distribution Fee?

Other costs that are deducted from the Film Rental by the Distributor include the costs of any talent that may have GROSS PARTICIPATION (6), the cost of TRAILERS, TAXES, INSURANCE, INTEREST, etc.

After the distributor deducts these amounts the money flows back to the Production Entity and is called the PRODUCER'S GROSS (4). Remember that a studio can be both the Production and Distribution element in this example.

When the money (Producer's Gross) hits the Producer side, it has numerous deductions at that point. The deductions from Producer's Gross include the cost of production, interest, deferments and possibly some participants that have negotiated to share in the producers gross. (5)

Where do the fees charged to the creative talent come out? In this example from the moneys flowing to creative (6) to pay Agents, Managers. Advisors, etc. By law Agents are limited to 10% while a Personal Manager may take 20-30%. Business Manager, Press Agents and Lawyer Fees will vary. These fees may be a fixed or a sliding amount.

A film can be abandoned at different stages in this process of picked up by a completion bond company to be completed, or never find a distributor.

Different creative and technical unions and/or guilds, have jurisdiction over most people in the film making process, outside of top management. Minimum wage/salary conditions are set in place by the collective bargaining agreements of the guilds and unions and the major studios are signatory to the agreement, agreeing to abide by the terms. Anyone who can bargain for more than the minimums is free to do so.

Certain Guilds/Unions are "open" meaning that anyone who can get a job is free to join the Guild/Union. This pertains to performers; writers; directors and musical. Other Guilds/Unions are "closed" where a rigid seniority system prevails. This is usually craft and technical unions. Smaller Producers usually try to circumvent union rules and cut costs approaching the unions on a case-by-case basis for a waiver. If a Major Studio releases an independent feature, nonunion film, often a legitimate "liquidated damages" lump sum payment will be seen by the Guilds/Unions to keep relations.

Financing can be assisted and achieved in different ways with a film. Independent producers may be able to can get bank financing or a loan guaranteed by a major studio, or secured financing by a negative pickup deal. A Film labs might advance credit in the hope of getting release print work. Private financing includes small groups formed for one film, foreign moneys, presold rights, etc.

The big question is how to figure a films breakeven point so you know as a Producer when you will see a return.