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"A good example of “Hollywood accounting” would be “Harry Potter and The Order of the Phoenix”, which took in $938 million in revenue, yet still produced a $167

"A good example of “Hollywood accounting” would be “Harry Potter and The Order of the Phoenix”, which took in $938 million in revenue, yet still produced a $167 million loss. In cases like this the distributor, Warner Bros., still makes a bundle, but the film and its backers, set up as a independent corporation, wind up in debt. How is this possible? You can get a more detailed picture in this episode of Planet Money, which details how Disney paid itself more than $200 million in distribution fees on the Nicholas Cage vehicle “Gone in 60 Seconds.” The film made a lot of money for Disney, even while the corporation created to produce “Gone In 60 Seconds” was a loser on the official accounting." Now I understand why Hollywood does not want simplified and efficient distribution. It has nothing to do with ignorance and everything to do with greed and avoiding all risk. They overcharge for complicated distribution and DRM, and pass all the risk of to the film and its backers.

nextparadigms 15y ago
This kind of reminds me of Yahoo when they didn't want a more efficient ad system because they wouldn't be able to charge the media buyers as much. I don't really care they are doing this. They will eventually be replaced because of this. I just want the Government to stop protecting them from getting replaced. It's not the Government's job to stop disruptions from happening.
- alan_cx 15y ago
  So, if the government were to put money in to troubled businesses to prop them up or even create jobs, it gets heavily criticised. Its seen as socialist and evil. However, if the government criminalises its citizens to support a dying business, well, that's OK and all American, patriotic even. Protecting American jobs by criminalising Americans. Have I missed something? I must have. Surely, the government should be merely supporting the market forces of capitalism, and if the current form of Hollywood dies, well, isn't that exactly as it should be? All that will happen is that new business models will emerge. Oh, I dunno. Too much interference, if you ask me. If "we" truly believe in capitalism, then why not sit back and let it do its thing? OK, so Warners or who ever goes bust. Well, wont all those people simply go out and start again, but in a different way? In fact, while the government supports the antiquated Hollywood, its is in fact holding back the natural progress. Imagine if the government made moves to protect valves, and transistor possession was made illegal. Would we have still gotten the microchip? Well, it amuses me!!!
DevX101 15y ago
If by 'film backers' you're referring to the executive producers that pay money for the movie, I highly doubt they're stupid enough to fall for hollywood accounting and actually lose money. Their fee is in that $938 million somewhere. More likely, the losses are probably for tax reasons or to screw over anyone involved in the film that signed a 'percent of net' rather than a 'percent of gross' deal. EDIT: See link below for how wealthy individuals finance films because they WANT the film to lose money on paper. This gives them large tax deductions. http://en.wikipedia.org/wiki/Film_finance#Tax_schemes http://en.wikipedia.org/wiki/Film_finance#Tax_schemes
- jonnathanson 15y ago
  This. The smart money involved in film financing wets its beak before the accounting actually begins. Gross percentage points, hefty producers' fees on top of those gross points, salaries on top of those fees, generous slices of ancillary revenue streams and foreign territory sales, and so forth. A Hollywood film is basically a vehicle designed to enrich its participants, and allow them tax deductions on the nominal loss after everyone's taken a taste of the profits. If you're someone with net points in a movie -- the screenwriter, say -- good luck ever seeing a dime. You're at the bottom of a pretty big pyramid.
- seizetheday 15y ago
  You make a good point. If film financiers are getting screwed like the article perpetuates then why are Hollywood films getting made at all? Let alone with astronomically high budgets. Just a point of clarification and correct me if I'm wrong but executive producers are almost never the ones who put up the actual money unless they're say George Lucas (e.g. Red Tails). Instead they represent the investors to make sure everything goes smoothly with the film.

nextparadigms 15y ago

This kind of reminds me of Yahoo when they didn't want a more efficient ad system because they wouldn't be able to charge the media buyers as much. I don't really care they are doing this. They will eventually be replaced because of this. I just want the Government to stop protecting them from getting replaced. It's not the Government's job to stop disruptions from happening.

alan_cx 15y ago
So, if the government were to put money in to troubled businesses to prop them up or even create jobs, it gets heavily criticised. Its seen as socialist and evil. However, if the government criminalises its citizens to support a dying business, well, that's OK and all American, patriotic even. Protecting American jobs by criminalising Americans. Have I missed something? I must have. Surely, the government should be merely supporting the market forces of capitalism, and if the current form of Hollywood dies, well, isn't that exactly as it should be? All that will happen is that new business models will emerge. Oh, I dunno. Too much interference, if you ask me. If "we" truly believe in capitalism, then why not sit back and let it do its thing? OK, so Warners or who ever goes bust. Well, wont all those people simply go out and start again, but in a different way? In fact, while the government supports the antiquated Hollywood, its is in fact holding back the natural progress. Imagine if the government made moves to protect valves, and transistor possession was made illegal. Would we have still gotten the microchip? Well, it amuses me!!!

DevX101 15y ago

If by 'film backers' you're referring to the executive producers that pay money for the movie, I highly doubt they're stupid enough to fall for hollywood accounting and actually lose money. Their fee is in that $938 million somewhere. More likely, the losses are probably for tax reasons or to screw over anyone involved in the film that signed a 'percent of net' rather than a 'percent of gross' deal. EDIT: See link below for how wealthy individuals finance films because they WANT the film to lose money on paper. This gives them large tax deductions. http://en.wikipedia.org/wiki/Film_finance#Tax_schemes http://en.wikipedia.org/wiki/Film_finance#Tax_schemes

jonnathanson 15y ago
This. The smart money involved in film financing wets its beak before the accounting actually begins. Gross percentage points, hefty producers' fees on top of those gross points, salaries on top of those fees, generous slices of ancillary revenue streams and foreign territory sales, and so forth. A Hollywood film is basically a vehicle designed to enrich its participants, and allow them tax deductions on the nominal loss after everyone's taken a taste of the profits. If you're someone with net points in a movie -- the screenwriter, say -- good luck ever seeing a dime. You're at the bottom of a pretty big pyramid.
seizetheday 15y ago
You make a good point. If film financiers are getting screwed like the article perpetuates then why are Hollywood films getting made at all? Let alone with astronomically high budgets. Just a point of clarification and correct me if I'm wrong but executive producers are almost never the ones who put up the actual money unless they're say George Lucas (e.g. Red Tails). Instead they represent the investors to make sure everything goes smoothly with the film.