Which statement about modified adjusted gross is true?

• A. It has no effect on profitability.
• B. It decreases the likelihood of profits.
• C. Lower distribution fees that producers negotiate to get a percentage of.
• D. It is irrelevant to revenue sharing.

Answer: (C)

Modified adjusted gross is the working figure used to determine how much money from a release actually stays for profit sharing after the contract-defined deductions are taken out. It sits at the heart of revenue sharing because it converts gross receipts into a net base from which producers’ and distributors’ shares are calculated.

Why the statement is true: distribution fees are one of the deductions subtracted to reach the modified adjusted gross. If producers negotiate lower distribution fees, fewer dollars are deducted, so the modified adjusted gross goes up. A higher MAG means more money is available to be split under the revenue-sharing terms, increasing profitability for the parties entitled to a share. So the relationship between lower distribution fees and a higher MAG directly links to higher potential profits.

The other options aren’t accurate because MAG does affect profitability, it does not inherently decrease profits, and it is a central factor in revenue sharing rather than something irrelevant to it.