This revenue may then go into studio gross revenues and may be reduced further by the parent studio's distribution fee. It can be profitable for a studio to spend money to promote a picture yet be disadvantageous to profit participants. That is because the studio recoups its advertising expenses, and perhaps some overhead on it, before profits are available. It is not fair for the studio to earn interest on advances while charging the producer interest on the full outstanding negative cost. The contract needs to be carefully worded so that these sales are charged at the lower outright sale distribution fee even if the buyer is technically required to account to the studio for income.
Some countries assess a remittance tax on funds remitted to other countries.
These taxes may be a tax credit for the distributor. Some distribution agreements allow the studio to deduct these taxes as a distribution expense. Copyright 1994, Mark Litwak. All Rights Reserved. Return to Entertainment Law Resources Home Page.