ABSTRACT
The business affairs executive is the one charged with negotiating deals with lawyers or agents. Stephen M. Kravit, Executive Vice President, Business Affairs at The Gersh Agency, details the intricacies of negotiating complex deals. The work can begin when a studio (or other financing source) is interested in a property and its business affairs exec prepares profit-and-loss calculations based upon expected and hypothetical levels of negative cost, marketing expenses and distribution revenues, factoring in various possible gross and net participations. The chapter then turns to steps taken when business affairs negotiates a typical talent deal; oral agreements; direct employment agreements; cofinancing agreements; government tax rebates and tax subsidy programs; the pickup deal; the overall deal. Special attention is paid to the PFD (production, financing, distribution) agreement between a studio and a production company, including development steps and payments attached; turnaround; pay or play; the decision to greenlight (to proceed to production); MPAA ratings; dailies; unions; overhead; breach of contract; gross receipts, “the picture pot;” film rental or distributor’s share of gross receipts; recouping expenses; negative cost; net profits; sequels and remakes.
