Film Accounting Glossary
Negative pickup
What is a negative pickup?
Also called negative pick-up, or pickup deal.
A negative pickup is a deal in which a distributor commits in advance to acquire a completed picture for a fixed price on delivery, and the producer borrows against that commitment to fund production.
The distributor takes no production risk and pays nothing until delivery is accepted, so the lender's security is the distributor's contract plus a completion bond. Missing a delivery condition can void the pickup, which is why deliverables are tracked as tightly as the budget.
Example
A distributor commits to pay $6M on delivery of a finished picture. The producer borrows against that contract to fund the shoot, so the lender's security is the distributor's covenant plus a completion bond. Miss one delivery condition and the pickup can be voided.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
The financing structure. Makes the deliverables list as important to track as the budget itself.
Common mistake
Underestimating delivery risk. The distributor pays on acceptance, so one unmet delivery condition can void the pickup the whole loan was secured against.
Related questions
- How does a negative pickup deal work?
- A distributor commits in advance to acquire the finished picture for a fixed price on delivery, and the producer borrows against that contract to fund production.
- Who takes the risk in a negative pickup?
- The producer and its lender. The distributor pays nothing until delivery is accepted, which is why the lender requires a completion bond.