Cross-Collateralized
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| In one sentence | Using the profits from one movie or territory to cover the losses of a different movie or territory. |
|---|---|
| Category | Film and Television |
| Related | Collateral, Recoupment |
Imagine running two lemonade stands at once, one on a busy street and one on a quiet one. If the quiet stand loses money, but you are allowed to cover that loss using the profits from the busy stand before anyone gets their own separate share, the two stands have effectively been combined into one shared pot.
That is what cross-collateralized means for movies: when Gross Receipts from one picture, or from one territory, are used to recoup losses from a completely different picture or territory, instead of each one being judged entirely on its own.
Fun facts
- Cross-collateralization can be great for a distributor spreading risk across many movies, but tough for a talent whose participation is tied to just the one hit movie being dragged down by another film's losses.
- Talent negotiating a participation deal often specifically ask for their movie not to be cross-collateralized with anything else.
- Cross-collateralization can apply to territories too, letting a strong performing country's earnings offset a weak performing country's losses within the very same movie.