The producer is the one to finance a film's development. They can pitch in to the film production itself if they are financially capable, but they haggle and persuade possible pitchers to get the essentials for free, or at least cheap.
How does a film recoup the production finance?
A film regains it's production finance through releasing the film as a launch-pad to sell it in several different formats. The profit is greater using this method and not using the large overheads of exhibition. This process is long and difficult and takes a lot of time before any real progress is made. It can take several years for the investors of the film to get their profit, but it takes even more time before the producer gets back anything.
What is meant by distribution?
Distributing is essentially putting the film out there. Selling it in different formats like: DVD, Cinema release, hospitality equipment. It is selling the film and getting a profit by showcasing it to the public.
http://www.skillset.org/film/business/
http://www.film4.com/features/article/about-film4-productions
http://blogs.warwick.ac.uk/michaelwalford/entry/working_title_history/
http://www.workingtitlefilms.com/news/index/clearfilters/truey
