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Agreement for profit splitting

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Film studios and movie theaters usually come to an agreement for profit splitting that involves studios taking 90% of movie theater profits and 10% of movie theater profits staying in the theater. Film studios also negotiate a "floor" that guarantees them 70% of total revenues collected by the theater. Why is it important for film studios to have this floor on total revenues? What kind of incentive are they trying to create for movie theaters?

Reference no: EM133222901

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