In this article I will explain the purpose and the benefits of Collection Account Management for Film & TV producers.
An independent film or TV production comes together through collaboration between several producers. Also, typically an independent production consists of several financing sources. Finally, it is common that the creative team, which include individual producers, actors, the director, and the screen writer, defer part of their fees.
Then, international distribution of the film or TV series may be handled by an independent sales agent, who is entitled to receive sales commission and who can recoup its expenses.
The financiers and creative team are furthermore entitled to receive profit payments if the project sells sufficiently for the project to exceed the break-even-point, and sometimes box offices bonuses are payable.
For these purposes, multiple parties involved in the production, financing, and distribution of the project, are to be considered beneficiaries, and share in the revenues derived from international distribution.
The challenge for film & TV producers is to properly manage the revenues, and make sure that each party receives its rightful share.
Collection Account Management is the solution for the administration of film and TV revenues.
How Does Collection Account Management Work?
All beneficiaries with a major financial interest in the project, together negotiate and sign the so-called Collection Account Management Agreement or CAMA. Generally, these parties include the main production company, the international sales agent, financiers, the US guilds, and major talent. The CAMA is a multi-party agreement that supersedes all other agreements for the project, with respect to the allocation and disbursement of revenues.
In accordance with the CAMA, a Collection Account is opened. The Collection Account is a bank account set up in the name of a neutral third-party called the Collection Account Manager or CAM. The account is opened exclusively for one single project.
The international sales agent, worldwide distributor, or for that matter, anyone that handles the international distribution, subsequently instructs the local distributors of the film or TV project to pay the royalties due under the distribution agreements, into the Collection Account.
The CAM receives the revenues on behalf of the beneficiaries, and allocates and disburses from the Collection Account to the beneficiaries of the project, in accordance with the Recoupment Schedule as included in the CAMA.
For more information on how to put together a Recoupment Schedule, please check out this Stage 32 article.
When is Collection Account Management Needed?
Collection Account Management is typically engaged for independent productions, international co-productions, or for local productions which are distributed internationally.
Projects with a CAM involved typically have:
- An international sales agent attached, and / or
- Several co-producers involved, often from different countries, and / or
- External financiers or investors who finance the project, and / or,
- Guild Residuals (please check out this Stage 32 article for more background info) and / or deferments payable to (international) talent.
The Benefits of Collection Account Management for Film & TV Productions
Setting up a Collection Account, has several benefits for Film & TV producers.
Protection of revenues. With a Collection Account in place, none of the parties with a financial interest in the project controls the receipt, allocation and distribution of revenues. The revenues are in a save place and protected from the usual financial risks in the audiovisual industry.
Avoidance of conflicts. All the parties of interest in the project sign the same, stand-alone contract, which is the CAMA. This substantially reduces the risk of disagreement and conflict between the parties.
Transparency. The CAM periodically circulates statements to the signatory parties showing revenues received, allocated and disbursed. This creates transparency and keeps everyone properly informed.
Outsourcing of administrative work. Through clear and periodic reporting a complete administration of the project’s sales, exploitation and revenue management is created which can amongst others be used by the parties for accounting and audit purposes.
Conclusion
The challenge for independent film & TV producers is the handling of revenues and payment to multiple beneficiaries. The solution for this is Collection Account Management. The beneficiaries with a major financial interest in the project enter into a CAMA and a Collection Account is set up, to receive worldwide revenues from international distribution. The CAM allocates and disburses the revenues to the beneficiaries in accordance with the Recoupment Schedule. The benefits of Collection Account Management for film & TV producers include protection of revenues, avoidance of conflicts, creation of transparency and outsourcing of administrative work.
David Zannoni