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Uh huh. Sure. There's a reason they call it Hollywood Accounting[1]. Not that Warner Brothers is new to this game either: >A Warner Bros. receipt was leaked

Uh huh. Sure. There's a reason they call it Hollywood Accounting[1]. Not that Warner Brothers is new to this game either: >A Warner Bros. receipt was leaked online, showing that the hugely successful movie Harry Potter and the Order of the Phoenix ended up with a $167 million loss on paper after grossing nearly $1 billion. [1] https://en.wikipedia.org/wiki/Hollywood_accounting https://en.wikipedia.org/wiki/Hollywood_accounting

jgalt212 5y ago
Dumb question: how is Hollywood accounting not fraud? I know there have numerous civil court cases over differences of "opinion" over incentive compensation calculations, but has anyone actually gone to jail?
- sircastor 5y ago
  Part of the problem is that many of the people with a stake in the “higher profits” camp risk losing future opportunities. If you start to make a ruckus about contract profits you find yourself not employed by that studio, and you start to be looked over by other studios. It’s a shell game but everyone agrees to it so as to book another gig. The recent scuff-up between Scarlett Johannson and Disney was an example, and the rumors of Disney being unwilling and to work with her was the quod-pro-quo rearing it’s head.
- chrisseaton 5y ago
  What would you charge them with? They claim the costs for things like licensing and services are legitimate. How do you prove they aren't? What is the correct charge for a licence or service except for what two companies agree?
- gamblor956 5y ago
  Hollywood accounting doesn't change whether there are profits, it changes who records the profits. IP Holder the rights to a movie. Production Studio S to make the movie for a fee. Distributor D distributes the movie for a fee. Most people think that Production Studio S is the company that records the profits from the movie, but they generally don't see anything beyond their costs associated with actually making the film. In the old days, Production Studio S also got saddled with all the costs associated with the movie, including distribution costs paid to the distributor; now this is usually only the case for independently financed movies. Naive talent and investors, or independent film investors, make their profit sharing agreements with Production Studio S. IP Holder owns the rights to the movie, and generally is the one that records the profits to the movie. These days, this entity is rarely the same entity that made the movie, but for independent films, this entity is usually the same as the Production Studio S. If Distributor owns IP Holder, they will usually put expenses into this entity instead of Production Studio S because...sophisticated talent and investors make their profit sharing agreements with IP Holder (and Production Studio S won't see much income, so that's a moot point). Distributor can suck out the profits by increasing the fee charged to IP Holder for distribution services, which includes marketing. IP Holder sees a lot of expenses, and it may take years (or over a decade) to record a profit, so the highest-tier talent and investors make gross point profit sharing agreements, meaning that their profit share is based on the movie's pre-expense earnings rather than on net (post-expense) earnings (but only the highest tier talent and investors get to do this, see e.g., Sandra Bullock and Gravity). Note: when I was at a firm, my clients included both one of the big studios and a number of the smaller studios, so the above is a very simplified version of the accounting structuring.
dylan604 5y ago
If there's no profits, there's no need to pay out all of those agreed residuals that they negotiated.
fishtoaster 5y ago
Any reason to believe that this is an instance of Hollywood Accounting? At a glance, wikipedia says the film cost $190m, which seems reasonable for a film like this, and only received $124.5m in box office sales. Conversely, wikipedia lists Harry Potter OotP as a "150–200 million" budget on $942m in box office sales. It's certainly possible this is a case of Hollywood Accounting, but is there any particular reason we think it is, vs just a film losing a lot of money normally?
- jeffwilcox 5y ago
  The long tail of box office receipts, especially internationally, is always interesting, as are licensing deals. Maybe they find a way to protect those with other subsidiaries.
- blhack 5y ago
  How much did HBO pay for the streaming rights? I would have bought 3 tickets to this, but watched it on HBO instead.
  - cheschire 5y ago
    yep. i watched it at least 3 times on hbo as well. easily would've bought a couple tickets.
    - mraudiobook_com 5y ago
    - utopcell 5y ago
      same here
  - oliyoung 5y ago
    > How much did HBO pay for the streaming rights? They wouldn't -have paid- anything, HBO is owned by Warner too edit: ...they wouldn't have to have paid anything..
deleted 5y ago
[deleted]
vmception 5y ago
You don't need Hollywood accounting when the expenses exceed the revenue, you can still pocket the revenue for yourself though. You can just stagger things across tax years. Everyone should do themselves a favor and pay for a CPA firm (not just your friend that happens to be a CPA), learn some things just treat it as expensive education. Its very different doing exploratory stuff with a CPA, compared to needing a CPA last minute for a problem you already have. They have excerpts from journals they are subscribed to that can inspire you about things you didnt know.
- sam0x17 5y ago
  You can also always take the time to _become_ a CPA. I've thought about it a few times.
  - trepanne 5y ago
    ...or take an intermediate position on buy vs build, and _marry_ a CPA. I've regretted it a few times, but on balance I'd recommend it.
    - pengaru 5y ago
      > ...or take an intermediate position on buy vs build, and _marry_ a CPA. I've regretted it a few times, but on balance I'd recommend it. Has the marriage concluded in divorce/death yet? Otherwise I'm not sure how much weight should be placed in that recommendation ;)
      - trepanne 5y ago
        Are there generally accepted marriage principles??
- rdtwo 5y ago
  How do you do this and how much does it cost?
  - 5y ago
deleted 5y ago
[deleted]
fullshark 5y ago
> We can add The Matrix Resurrections to that list, too, with the HBO Max hybrid barely scraping past $100 million globally since hitting the big screen and streaming on December 22, not ideal when the sci-fi actioner’s budget is estimated to be hovering around the $190 million mark. Even with the fact that it was used to inspire people to sign for HBO max, I'm going to guess it's not a success if those two numbers are true. I don't know how much more legs it's got but rough rule of thumb is the films' grosses need to roughly double the film's budget to be a success.
StanislavPetrov 5y ago
Hollywood Accounting is absolutely a real thing but that doesn't mean that movies that cost hundreds of millions of dollars to make and promote don't routinely lose huge amounts of money when they bomb.
kingcharles 5y ago
"I get these occasional letters from Lucasfilm saying that we regret to inform you that as Return of the Jedi has never gone into profit, we've got nothing to send you." https://www.slashfilm.com/503174/lucasfilm-tells-darth-vader-that-return-of-the-jedi-hasnt-made-a-profit/ https://www.slashfilm.com/503174/lucasfilm-tells-darth-vader...

jgalt212 5y ago

Dumb question: how is Hollywood accounting not fraud? I know there have numerous civil court cases over differences of "opinion" over incentive compensation calculations, but has anyone actually gone to jail?

sircastor 5y ago
Part of the problem is that many of the people with a stake in the “higher profits” camp risk losing future opportunities. If you start to make a ruckus about contract profits you find yourself not employed by that studio, and you start to be looked over by other studios. It’s a shell game but everyone agrees to it so as to book another gig. The recent scuff-up between Scarlett Johannson and Disney was an example, and the rumors of Disney being unwilling and to work with her was the quod-pro-quo rearing it’s head.
chrisseaton 5y ago
What would you charge them with? They claim the costs for things like licensing and services are legitimate. How do you prove they aren't? What is the correct charge for a licence or service except for what two companies agree?
gamblor956 5y ago
Hollywood accounting doesn't change whether there are profits, it changes who records the profits. IP Holder the rights to a movie. Production Studio S to make the movie for a fee. Distributor D distributes the movie for a fee. Most people think that Production Studio S is the company that records the profits from the movie, but they generally don't see anything beyond their costs associated with actually making the film. In the old days, Production Studio S also got saddled with all the costs associated with the movie, including distribution costs paid to the distributor; now this is usually only the case for independently financed movies. Naive talent and investors, or independent film investors, make their profit sharing agreements with Production Studio S. IP Holder owns the rights to the movie, and generally is the one that records the profits to the movie. These days, this entity is rarely the same entity that made the movie, but for independent films, this entity is usually the same as the Production Studio S. If Distributor owns IP Holder, they will usually put expenses into this entity instead of Production Studio S because...sophisticated talent and investors make their profit sharing agreements with IP Holder (and Production Studio S won't see much income, so that's a moot point). Distributor can suck out the profits by increasing the fee charged to IP Holder for distribution services, which includes marketing. IP Holder sees a lot of expenses, and it may take years (or over a decade) to record a profit, so the highest-tier talent and investors make gross point profit sharing agreements, meaning that their profit share is based on the movie's pre-expense earnings rather than on net (post-expense) earnings (but only the highest tier talent and investors get to do this, see e.g., Sandra Bullock and Gravity). Note: when I was at a firm, my clients included both one of the big studios and a number of the smaller studios, so the above is a very simplified version of the accounting structuring.

dylan604 5y ago

If there's no profits, there's no need to pay out all of those agreed residuals that they negotiated.

fishtoaster 5y ago

Any reason to believe that this is an instance of Hollywood Accounting? At a glance, wikipedia says the film cost $190m, which seems reasonable for a film like this, and only received $124.5m in box office sales. Conversely, wikipedia lists Harry Potter OotP as a "150–200 million" budget on $942m in box office sales. It's certainly possible this is a case of Hollywood Accounting, but is there any particular reason we think it is, vs just a film losing a lot of money normally?

jeffwilcox 5y ago
The long tail of box office receipts, especially internationally, is always interesting, as are licensing deals. Maybe they find a way to protect those with other subsidiaries.
blhack 5y ago
How much did HBO pay for the streaming rights? I would have bought 3 tickets to this, but watched it on HBO instead.
- cheschire 5y ago
  yep. i watched it at least 3 times on hbo as well. easily would've bought a couple tickets.
  - mraudiobook_com 5y ago
  - utopcell 5y ago
    same here
- oliyoung 5y ago
  > How much did HBO pay for the streaming rights? They wouldn't -have paid- anything, HBO is owned by Warner too edit: ...they wouldn't have to have paid anything..

deleted 5y ago

[deleted]

vmception 5y ago

You don't need Hollywood accounting when the expenses exceed the revenue, you can still pocket the revenue for yourself though. You can just stagger things across tax years. Everyone should do themselves a favor and pay for a CPA firm (not just your friend that happens to be a CPA), learn some things just treat it as expensive education. Its very different doing exploratory stuff with a CPA, compared to needing a CPA last minute for a problem you already have. They have excerpts from journals they are subscribed to that can inspire you about things you didnt know.

sam0x17 5y ago
You can also always take the time to _become_ a CPA. I've thought about it a few times.
- trepanne 5y ago
  ...or take an intermediate position on buy vs build, and _marry_ a CPA. I've regretted it a few times, but on balance I'd recommend it.
  - pengaru 5y ago
    > ...or take an intermediate position on buy vs build, and _marry_ a CPA. I've regretted it a few times, but on balance I'd recommend it. Has the marriage concluded in divorce/death yet? Otherwise I'm not sure how much weight should be placed in that recommendation ;)
    - trepanne 5y ago
      Are there generally accepted marriage principles??
rdtwo 5y ago
How do you do this and how much does it cost?
- 5y ago

deleted 5y ago

[deleted]

fullshark 5y ago

> We can add The Matrix Resurrections to that list, too, with the HBO Max hybrid barely scraping past $100 million globally since hitting the big screen and streaming on December 22, not ideal when the sci-fi actioner’s budget is estimated to be hovering around the $190 million mark. Even with the fact that it was used to inspire people to sign for HBO max, I'm going to guess it's not a success if those two numbers are true. I don't know how much more legs it's got but rough rule of thumb is the films' grosses need to roughly double the film's budget to be a success.

StanislavPetrov 5y ago

Hollywood Accounting is absolutely a real thing but that doesn't mean that movies that cost hundreds of millions of dollars to make and promote don't routinely lose huge amounts of money when they bomb.

kingcharles 5y ago

"I get these occasional letters from Lucasfilm saying that we regret to inform you that as Return of the Jedi has never gone into profit, we've got nothing to send you." https://www.slashfilm.com/503174/lucasfilm-tells-darth-vader-that-return-of-the-jedi-hasnt-made-a-profit/ https://www.slashfilm.com/503174/lucasfilm-tells-darth-vader...