Quote Originally Posted by venkkiram View Post
As per Economic Times : http://economictimes.indiatimes.com/...imum-guarantee

A minimum guarantee is an initial sum that is paid to the producer by the distributor irrespective of how the film performs.

Definition: A minimum guarantee is an initial sum that is paid to the producer by the distributor irrespective of how the film performs. Typically, large producers command a high sum due to their brand that pulls in crowds into theatres.

Description: The minimum guarantee is the minimum that is assured to the producer and a revenue sharing arrangement is worked out, whereby the producer will get a portion of the profits that the distributor makes.

This would mean that if the film gets a good response that the distributor recovers his costs in full, and on the overflow the producer will get a royalty.

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I still not sure what would happen for MG films when the movie is not generating the revenue as expected.
The distributor or theatre owners (depending on the arrangement) will generally have to bear the loss. However, in the movie industry, especially with Rajini and other big artists, some adjustments in the form of a refund or some concessions in the form of reduced pricing for a future film is made. Ultimately they all have to co-exist.

The bottomline which is quite clear is that relative to the price paid for Lingaa there is a heavy loss incurred. With Eros and the "karnataka" producer, it is difficult to see how to recover anything.