Mark Cuban recently sent me an unusually persuasive missive in which he argues that the reason he pulled my film from its scheduled Landmark screenigs was not because of Comcast's refusal to carry his HDNet television station, as he had argued initially, but because of IFC's failure to offer ancillary revenue sharing to Landmark Theaters.

I quote:

"We want to push day n date because it can enable film makers of all sizes to make more films and have money to make better films that have a better chance to be profitable.

However, for that formula to work, all parts of the chain have to be partners. Everyone has to acknowledge where and how they benefit and share in the upside. If any one component doesn't participate and share, it doesn't work.

When its Landmark, HDNet movies and Magnolia distribution, HDNet movies kicks in money, Magnolia kicks in money and hopefully we make some box office. Knowing that the box office is the riskiest component, we pay back part of the ancillary sales to the theaters. We sell a dvd, the theater makes money.

This way HDNet movies gains from the day n date w/happier subs, and they pay for that. Magnolia gains from better dvd sales and they pay for that. Landmark and other theaters gets part of that money to compensate them for the risk.

And to help the theaters, we only play the movie twice on opening night. That's it. The hope is that it creates positive feedback and HDNet subs, knowing they can't see it on HDnet again, will go to the theater or buy the dvd. Again to the benefit of the theater and film maker.

Enron, War Within, Bubble, have still not been shown since their opening night play. You have to buy the dvd. The screens that played this movie get a cut.

As I understand it, Comcast plans on doing VOD. Available all the time, anytime. That will impact box office.

Plus, HDNet movies and HDNet, our 2 channels plug the hell out of the movie to promote theatrical attendance and dvd sales, before and after the 2 plays on HDNet movies. We are near 3mm subs that match the indie film demo. It helps.

We want people to go see the film.

In the IFC Comcast deal, there were no incremental considerations for the theaters, Landmark or otherwise. No promotions on IFC or Comcast that we knew about. No share of dvd revenues for the screens showing the movie. No limit on showing on Comcast to create incentives to go the box office

That's at the heart of the problem. Our day n date works because its a partnership with all involved sharing in the upside. We are even looking at giving a much higher pct of 1st week box to the screens because of the risk.

None of that took place w/IFC and Comcast.

That's why its not hypocritical. Its the only way for day n date to work."

Here is my reply:

Hey Mark,

Your most recent e-mail does make a lot of sense, and goes a long way towards explaining your position. Thank you for sending that. I think I understand better where you are coming from.

But it still seems to me that there are three separate issues. One is Comcast's decision not to carry HDNet, which was the first reason you gave for pulling my film from most of its Landmark theater screenings. The implication was that if Comcast would agree to carry HDNet, then you would reverse your decision to pull my film from Landmark theaters, and that you were using my film to pressure Comcast into carrying HDNet. I still don't think that is a fair or even effective way to get Comcast to carry HDNet.

The second reason you give for pulling my film from your Landmark theaters is that IFC First Take is negatively impacting Landmark's theatrical grosses by making its films simulataneously available on Comcast (through Video on Demand) all the time and anytime. But this argument is inconsistent with your own decision to make films availalbe on DVD simultaneously to their theatrical release. More people watch films on DVD than through Video On Demand, so your decision to make the DVD of a film available through day and date has a far greater negative impact on theatrical revenue than IFC's more modest version of day and date.

The third reason you give is that IFC's deal with Comcast doesn't include revenue sharing with the theaters who, arguably, take the biggest risk and help to promote the film, which then benefits Comcast. This argument makes a lot of sense to me, except that 1) your contention that there were no promotions of the film on IFC and Comcast is inaccurate. There were promotions on both IFC and Comcast. 2) If the issue is revenue sharing with theaters (which, to me, sounds both fair and intelligent), then why not simply strike a deal with IFC to play their films at Landmark if and only if they agree to a certain amount of revenue sharing from ancillary markets? As far as I know, this was never suggested by Landmark. So my question is: why not negotiate a deal with IFC to share in the film's ancillary revenue and reverse your decision to pull my film from Landmark Theaters? If this is really your main issue with IFC First Take, then it seems to me more effectively resolved through negotiations than through strong arm tactics.

I look forward to your answer to my proposal.

Best,

Caveh Zahedi

P.S. Congratulations on the Mavericks' victory.