What is a Negative Pickup Deal in Film?

One of the greatest challenges in the entertainment industry is in the fact that films face major struggles in financing. Production costs are incredible. Without financing or funding of some sort, even the best scripts can go unproduced. Finding the right investors can take time. And when immediate capital is necessary, time is certainly not on the producer’s side. As such, producers often receive funding under a negative pickup deal in film. But what does this mean?

What is a Negative Pickup Deal in Film?

The negative pickup deal in film represents a unique agreement. In which independent producers and studios enter into contracts. Stating that at a certain date, the studio will pay a specified amount to the producer for the negatives of the film. 

Negative pickup deals essentially represent the agreement by a studio. To purchase a movie from the producer once it has been produced. It represents the distributor’s guarantee or agreement to pay for the rights to distribute a film upon delivery of the completed production.

However, the distributor is not required to pay for the production. Should the producer deliver past the due date. Or should the film be delivered outside of the original agreement.

Under a negative pickup deal, film rights are granted to the distributor in exchange for the selling price. So long as they adhere to the terms of agreement.

Why is a Negative Pickup Deal in Film Important?

If the negative pickup deal doesn’t actually provide funds for the film’s production, you’re probably wondering why this is such an important deal? Negative pickup deals in film provide a guarantee that the film will be purchased for distribution once it’s completed.

This guarantee, the actual signed negative pickup deal, can be used as collateral to obtain a bank loan or other financing. In order to actually produce the film.

Without a distribution deal, such as a negative pickup deal, financiers and banks may have trouble seeing the value of a production. Especially before it’s been produced.

Therefore, the negative pickup deal represents a key area of contract importance. That can provide for easier financing and other funding through banks to handle all necessary production expenses.

Key Areas of Importance in Negative Pickup Deals in Film

Before you enter into a negative pickup deal for film, make sure that you’re fully aware of the key areas of importance. All of the details of the agreement must be outlined clearly and fully for your protection.

Additionally, it’s important to understand that if you do not finish the production. Or if the production is not finalized according to the terms of the agreement (including dates and times specified). Then you could risk losing the distribution deal.

It’s always a good idea to have a negative pickup deal for a film reviewed by an attorney prior to entering into any such agreement.