What is a Production-Financing-Distribution Agreement?

The Production-Financing-Distribution Agreement is used by a studio or mini-major to finance production of a film. In return for the financing, the studio acquires the distribution rights and substantial equity in the project.

The principal difference with this form of Hollywood studio financing and other forms of financing is that the studio or mini-major obtains substantial creative or other controls over the production, unless the producer has experience and reputation or has an established relationship with the studio. In most other distribution agreements, the distributor will not have any creative input in the production (but may negotiate for approval, at least consultation, rights, such as, approval of the principal cast and the budget).

Another essential difference between Production-Financing-Distribution Agreement and most other distribution agreements, is that with the Production-Financing-Distribution Agreement, the distributor pays the money up-front, so that it is used to finance the picture without any necessity for the production company to use the agreement as collateral for a production loan.