If you want to thrive in the independent film world, this is a term you need to become familiar with. It’s an agreement made between a distributor (usually foreign and specific to only one country) and the production company before the film is completed and often times even before production of a film has even commenced. This is a strategy that producers use to get their film financed. You may here that a producer financed a film via foreign presales alone. This means that a distributor will pay for the distribution rights in their country before they even see the finish product. In return, they will get to pay a significantly reduced cost for these rights as opposed to if they waited to buy the rights to the film in the open market upon completion. They are banking on the film doing well in the box office based on the script, director, producer and actors that are attached to the film. Some presale agreements involve the distributor and producer agreeing – prior to production – on a fixed amount to be paid upon delivery of the film. This is called an advance or a minimum guarantee.
These are the companies that develop and produce televisions shows. They are not necessarily the companies that are in charge of “production”. They are responsible for developing material which are then acquired by the Studio. These companies include Bad Robot, Grammnet, Jerry Bruckheimer, Imagine televions, & Dick Wolf. Most production companies have an affiliation with a particular network, similar to a first-look deal for a film production company.
This is similar to a PFD agreement, except the film company will pay a fixed price for the completed film, and it is up to the production company to finance the budget for the film. In most cases the production company will have to seek out a loan in order to finance the film. Because the film company is not financing the film, the production company is able to retain more creative control over the project than if it were made under a PFD agreement.
If you want to play in the studio system as producer, a PFD agreement is ultimately what you’re looking for. PFD stands for Production/finance/distribution. This is an agreement between a studio and a production company. The agreement basically states that the studio will hire the production company to produce a particular film and pay them a substantial producer fee. In return, the film will finance and distribute the film. The studio has full control and ownership of all rights pertaining to the film in perpetuity throughout the world. PFD agreements vary in terms of the back-end deal the production company has with the project.