Some independent distributors are with-holding films from Reading Cinemas in Australia and New Zealand due to disputes over film hire terms.
The smaller indies are objecting to being asked to pay the exhibitor a minimum guarantee of $2,000 per film per week, an unprecedented request, regardless of how much Reading collects as a percentage of ticket sales.
Nor are they happy to pay the Virtual Print Fee (which subsidises the exhibitor’s costs for upgrading to digital) in advance; normal practice is to pay the VPF at the end of a film’s run.
The larger indies are balking at Reading’s push for terms tied to the box-office performance of each film. These terms reportedly would be more favourable to Reading than those for the major exhibitors.
However Reading denies there are any disagreements with the independents. “There is no dispute,” Wayne Smith, Reading MD Australia and New Zealand tells IF.
“Our cinemas respond best to ‘action’ films. Art / indie film doesn’t work for us at all and are mostly loss makers, that’s why they are not booked. Plus many indie producers are seeking unrealistic terms, which is another consideration.
“But having said that, if there’s money in any film, mainstream, crossover or art, it’s booked subject to suitable commercial terms being agreed.
“Films, producers or distributors that have no track record, of which there are a few of late, we are treating as a cinema hire arrangement where they back themselves. But each is considered on its respective merits.”
Reading announced in July a long-term VPF deployment agreement with Christie to digitally upgrade its 200 screens in Australasia. Most other exhibitors signed VPF deals with Cinedigm Digital Corp.
On the VPF issue, Smith says, “Whatever the VPF obligations are for the distributors [they] are the same for all and are a matter for Christie and the [other] guys.
“As I understand it, the major exhibitors were exposed to a bad debt from one local indie distributor refusing to pay the VPF, but that was not us.”
Currently Reading’s website lists only one indie film on its Australian circuit, Ender’s Game. IF understands that film was booked before Reading asked for new terms.
Distribution sources say they are waiting for Reading to propose a revised set of performance-based terms, at least for the larger independents.