Negative pickup deal
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In film production, a negative pickup is a contract entered into by an independent producer and a movie studio wherein the studio agrees to purchase the movie from the producer at a given date and for a fixed sum. Depending on whether the studio pays part or all of the cost of the film, the studio will receive the domestic, international, DVD and/or TV rights to the film, with net profits split between the producer and the studio.
A canny producer will usually cover all his costs and even make a small profit before production has even begun. But financing of the production up until its completion date is the responsibility of the producer—if the film goes over budget, the producer must pay the difference himself or go back to the studio and renegotiate the deal. This happened on the films Superman, The Empire Strikes Back and Never Say Never Again.
Most negative pickup contracts (either from studios or networks) are bankable at pretty much dollar for dollar (less fees). So, while the studio technically doesn't pay the producer until the film negative is officially deliverered (thus "negative pickup"), the producer can nonetheless get a bank loan against a negative pickup contract, which helps the producer to pay for production of the film. Studios, on the other hand, typically don't like their contracts being factored at banks or (even worse) shopped around to investors/financiers. So (from the studios perspective) it's best to have all the pieces in place before coming to them for a negative pickup. Thus the conundrum: a lot of investors and foreign buyers won't pre-buy a film unless it has U.S. distribution, and the studios don't want to guarantee distribution unless the film is already financed. The same dilemma applies when trying to attach talent, or join a union or guild.
