Negative Pickup
Distribution agreement where distributor commits to purchase completed film for predetermined price upon delivery.
Definition
A negative pickup is a pre-sale agreement where a distributor commits to purchasing a completed film for a predetermined price upon delivery, regardless of production costs or final quality within agreed parameters.
This arrangement provides producers with guaranteed distribution and known revenue, which can be used as collateral for production financing. The distributor assumes market risk but secures content for predetermined cost.
Why It Matters
Negative pickup deals enable independent producers to secure production financing by providing banks and investors with guaranteed revenue sources, significantly reducing project financing risk.
Distributors use negative pickups to secure attractive content at fixed costs, allowing precise profit margin calculations and eliminating competitive bidding for finished products.
Examples in Practice
Netflix frequently negotiates negative pickup deals with international producers, securing exclusive streaming rights for predetermined fees while enabling producers to access production financing.
Genre distributors use negative pickup agreements to secure horror or thriller films from established producers, guaranteeing content supply for their specialized distribution channels.
Television networks establish negative pickup deals with production companies for limited series, providing programming certainty while enabling producers to move forward with expensive production plans.