What are distribution costs?

• A. The producer's upfront budget for production
• B. Expenses incurred by a distributor in the distribution and marketing of a film, which will be taken by the distributor out of the Gross Receipts
• C. A fee charged to exhibitors for printing and shipping
• D. Taxes paid to the government

Answer: (B)

Distribution costs are the expenses a distributor incurs to get a film into theaters and to promote it to audiences, and these costs are recouped from the film’s gross receipts before any producer or rights-holder proportion gets paid. This includes marketing and publicity, as well as the costs of producing and delivering prints or other distribution materials to exhibitors. The option describing expenses incurred by a distributor in distribution and marketing, taken out of gross receipts, matches this concept precisely. Production budgets cover making the film, not distribution; taxes aren’t distribution costs; and while printing and shipping to exhibitors is part of distribution, the broader definition includes marketing costs as well.