Who Does What?: The Distributor/The Exhibitor

Two of the most important entities in the movie business are the distributor and the exhibitor.

As I always say, any idiot can make a movie, but what's a movie worth if no one can see it?  To get a movie seen you need a distributor and an exhibitor.  These two entities have a strange form of symbiosis.  They need each other, but they are often in conflict, which I will try to explain here.

DISTRIBUTOR: It is the job of the distributor to take your film and put it in theaters.  A little trick of Hollywood is that the major studios are, in fact, two technically separate entities.

One wing handles production of films. Once the film is finished it then goes to a independently incorporated company that handles distribution. Now most of the time they have the same name with maybe a little variation, except for Disney, where the distribution of movies used to be handled by their Buena Vista Distribution company until they retired the brand 2007 and renamed it The Walt Disney Motion Picture Company.

Now this is so the distribution company part of the studio can charge the production company part of the studio a fee for the privilege of releasing their movies. This amount can be whatever they damn well feel like, and usually is more than enough to ensure that nothing gets anywhere near a net profit.

Okay, I just explained how the distributor is used to screw up Hollywood's finances, let me explain what they do.

It's the job of the distributor to handle the release of movies. They book screen time with the exhibitors, they then have to pay for all the marketing and the advertising. 

This means TV/radio ads, billboards, web ads, and even newspaper and magazine spreads.  Then there are the costs of transporting and housing celebrities for overseas premieres and publicity events.

It's expensive, and time consuming, and a distributor really has to know what they're doing to avoid just wasting money and time.

Once the movie is screened, the distributor then has to collect the money from the exhibitors.  This money is called the "rental" and is technically the fee the exhibitor has to pay to rent the movie for the screening. The actual amount can vary widely, depending on the agreement between the distributor and exhibitor.  The rental can be anywhere between 40% to 50% of the ticket price.

EXHIBITOR:  "Exhibitor" is basically a fancy two dollar word for theater owner.

Before 1947 the studios owned the theaters that showed their movies. However, that changed when the federal government decided that studios owning theaters was a monopoly and had the court order them to break up.

Now there's a case to be made that the court was wrong, and vertical integration is the way to go, but that's a topic for another day.

 

Since the 1947 the studios have had to deal with a new partner, the exhibitor. This partnership is often strained due to frequent conflicts.

Distributors want nothing but the best when it comes to exhibiting their movies. They want the best quality projection, the loudest and clearest sound, and even the comfiest seats. However, these things cost the exhibitors money, and since they depend on box office to cover their overhead or "nut" and sales of popcorn and soda for their profit margin, they don't want to pay for them.

Exhibitors say that if the distributors want everything upgraded then they should be able to raise the ticket price to pay for it.  Distributors don't want ticket prices raised if they're not getting the money, because, well, they're not getting the money, and if the price goes too high, there will be fewer bums in seats.

Another stress in the relationship comes from the whole booking process.  In the old days the studios used to engage in what was known as "block booking." If your theater chain wanted the sure fire hit with Cary Grant, you had open up some screens for the less sure-fire movie starring some chick the studio head is scoring with.

However things have changed. There is now no longer such a thing as a guaranteed hit. Big, heavily promoted films with top stars can sink like stones, while small, poorly promoted little movies with no stars can soar like rockets to blockbuster sales.

Neither side knows what's going to sell and what doesn't. They try to hedge their bets, but the old paradigms they used to rely on so much, are crumbling. Both sides are looking out for their own best interests, and while they should be copacetic, in the confusing and convoluted world of movies, they are often in conflict.