The debate playing out at Caveh Zahedi’s blog over, specifically, Landmark’s backing out of screening his I Am a Sex Addict gets more and more fascinating as Zahedi and Mark Cuban go back and forth in a increasingly long series of blog entries. At the very least, it’s a more interesting and thorough debate of the whole “day and date” releasing strategy than we’ve seen in the trades as it deals with the inevitable conflicts that will arise between competing alliances of theater chains, cable providers and theatrical distributors.

After a seemingly futile letter to Steven Soderbergh to intervene, Zahedi penned an “Epistle to Mark,”, which publicly printed his reply to an email he received from Cuban. Zahedi concluded:

And this is the essence of my disagreement with you. Your position has no social conscience. It’s just about what’s best for HDNet. But HDNet doesn’t exist in a vacuum, and HDNet shouldn’t only be about the bottom line. My impression was that HDNet was set up to make politically and aesthetically progressive films. But to then engage in a turf war to maximize HDNet’s bottom line seems to me antithetical to the whole idea of what HDNet was supposed to be. In this case, I believe that the means do not justify the ends.

In today’s post, “Second Epistle to Mark,” Zahedi goes on to reply to the following email he received from Cuban:

I tried to give you an honest, direct answer to everything you asked me, Caveh. You never answered a single question I asked you . I tried to find a middle ground of compromise. You avoided the topic completely. You made IFC the good guys, me the bad guy. You played this out to your advantage, but not honestly, good for you. All the best.

Zahedi’s response is fairly long but contains this admission of defeat:

You write that I played this out to my advantage, but not honestly. But Mark, I DON’T AGREE with you. That’s not dishonest. If by “not honestly” you mean that I tried to argue for a particular point of view (my own), then yes, you are right. I did that. But you did the exact same thing. As to playing this out to my advantage, I have utterly FAILED to persuade you to change your mind about pulling my film from most of your theaters.

What’s just as interesting, though, are the following posts in the comments section from “Atticus,” the assistant manager at Landmark’s Shattuck Theater, where Sex Addict was due to open. Atticus posts an email from Cuban in which he explains the situation and then his own reply to Cuban.

Cuban to Atticus:

There was no misunderstanding on IFCs part. I was quoted in the chicago tribune in february re comcast . They saw it and called about it. We reiterated it.

We did a poor job of communicating to our buyers and IFC went for it.

Kind of like seeing a mispriced item at the store and buying it, knowing there was a mistake.

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 again on hdnet again, will go 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 ndate 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

Atticus then replies:

Mark,

Thank you for clarifying your thinking a bit. I think you make some very good points, specifically about the fact that the IFC/Comcast day-and-date strategy fails to share revenue with the theaters.

As I see it, there are still two central issues here. One is what has happened with Sex Addict specifically, the other is how Landmark/HDNet/Magnolia’s day-and-date strategy affects independent filmmaking in general.

The core of the first issue, I think, is that you sort of pulled the rug out from under Caveh at the last minute, and this seems unfair. IFC may have known your opinion, but apparently Landmark’s film buyers did not. As a result they booked a film and we at Landmark spent weeks promoting it. When an item in a store is priced incorrectly it becomes the merchant’s responsibility to honor that price anyway. I think what Caveh has been hoping for is that you might recognize that although booking his film may have happened by mistake it was rather late in the game for a cancellation.

Personally I’m not a big TV watcher, but I do live in a Comcast market and I don’t even know of anyone who knew that Sex Addict would be playing on VOD. I even looked on both IFC and Comcast’s websites and couldn’t find information about it anywhere. So in this particular instance I don’t see that it would have eaten into the gross at the theater much, if at all. The point being, it would have been nice if you could’ve made an exception for Sex Addict given the circumstances. It would have helped the customer, it would have helped a filmmaker, and it probably wouldn’t have hurt you very much.

But that’s mostly water under the bridge at this point.

The larger issue is what you’ve said about what it takes for day-and-date to work. Economically, the strategy that you’ve laid out makes perfect sense. DVD sales, VOD, etc. all eat into the theater grosses, so having all those entities work together as partners to fairly distribute the revenue is entirely logical. I think what worries me and many others, however, is that it has the potential to be hazardous to the health of independent filmmaking as a whole, even if it is beneficial for those films that Landmark/HDNet/Magnolia partner up on.

As a cinema-goer, the thing I most want out of a theater is for them to play great films. As a theater manager, that is what I believe Landmark should be doing and it’s what I think puts people in seats. The structure currently in place seems to fast-track films produced by Landmark’s sister companies into theaters while, at least to some degree, it now freezes out films made by IFC. Should other distributors partner up with companies offering competing day-and-date programs, as I imagine some eventually will, logically I assume they would be frozen out as well.

That scares me. I want to see some of those films and I’d like them to play at my theater. And in a world where Landmark controls so many art-house screens, it sounds dangerously monopolistic. And although it makes good business sense it pits you against a lot of filmmakers and film audiences – people who should be our closest of friends.

Perhaps this problem could be resolved by sitting down at a table with Comcast (or whoever else) and working out a revenue sharing arrangement. I imagine they’d see the benefit of opening theatrically with Landmark as being worth some kick-back, as that seems fair. I guess I’m just hoping that you’re working hard to make that happen rather than simply trying to strong-arm Comcast into playing ball with HDNet.

I know HDNet and day-and-date are good for Landmark. And I’m interested in what’s good for Landmark. But my interest in Landmark stems from the fact that I’m interested in what’s good for cinema. When it becomes in the best interest of Landmark to keep good films out of theaters, I think you have a problem.

Read the full exchanges at the links above.