4 ms·

To me, the weird thing is that the tax write-off doesn't even seem to make sense. Let's say you spend $80M making a film and you write it off for a $30M benefi

by mdasen 3y ago

To me, the weird thing is that the tax write-off doesn't even seem to make sense. Let's say you spend $80M making a film and you write it off for a $30M benefit. You're still in the hole $50M. Let's say that you sell the film for $20M and write off the remaining $60M loss for a $23M benefit. In the latter case, you're only in the hole $37M instead of $50M. That's a lot better. Is there some weird accounting rule where you're allowed to write off full losses, but not partial losses? I understand writing off losses: if you make $100M on one project and lose $50M on another project, you pay taxes on the $50M you've made - but you're only getting a fraction of the money back. It's better to get 100% of $20M plus a fraction of $60M than getting a fraction of $80M. No one seems to be explaining how this is working in Warner Bros Discovery's favor. Sure, I get canceling popular shows where the actors might be looking for more expensive contracts. I might think it's short sighted given that you need popular shows to keep your subscribers, but I get what they're trying to do. I understand licensing content to a competitor for a quick pay day. Again, it seems short sighted, but I get what they're trying to do. What I don't get is why it's better for them to completely scrap content than to let it flop upon release. The only possible explanation I can see is that they'd be able to claim the tax relief earlier. If they released it in late 2023, they'd have to wait to claim any losses since they'd be making money off it into 2024. If they cancel it in 2023, they can take the write off for 2023. It must be something else, right?

crooked-v 3y ago
It doesn't work in their favor. It does, however, work in the favor of Zaslav's specific desires about slashing content that has to pay residuals in favor of residual-free reality shows and documentaries.
jowea 3y ago
I'm also scratching my head at why this could make sense from a purely financial point of view, doubly so if the film is expected to be at least good. One of the paragraphs in TFA proposes it's some sort of company vision and trying to avoid embarrassing themselves. I would proposition that being known for scrubbing completely projects is rather embarrassing too specially in the view of contractors for future projects but what do I know. > To my knowledge, the company has never given anyone a justification beyond debt reduction and a bit of vague gesticulation toward a corporate vision that the film supposedly didn’t sync with. Public outcry caused the company to backpedal in November 2023 and say that they would sell the movie elsewhere, but Drew Taylor of The Wrap has reported that the company never entertained any negotiations about their asking price, demanding not a penny less than $70 to $80 million for the privilege of owning a project that they would only gain $30 million by scrubbing from their own ledgers. The offer to sell the film was, to put it mildly, not undertaken in good faith. It appears that the company would rather take less money by writing off the movie than sell it for even a few dollars more than that, because they might risk having a rival turn it into a success, which would further embarrass them for never even having tried to market it themselves, even though it was built around “intellectual property” (i.e., adorable cartoon characters) that are as inextricably linked with Warner Bros. as Marianne is with the nation of France.

by mdasen 3y ago

crooked-v 3y ago

It doesn't work in their favor. It does, however, work in the favor of Zaslav's specific desires about slashing content that has to pay residuals in favor of residual-free reality shows and documentaries.

jowea 3y ago

I'm also scratching my head at why this could make sense from a purely financial point of view, doubly so if the film is expected to be at least good. One of the paragraphs in TFA proposes it's some sort of company vision and trying to avoid embarrassing themselves. I would proposition that being known for scrubbing completely projects is rather embarrassing too specially in the view of contractors for future projects but what do I know. > To my knowledge, the company has never given anyone a justification beyond debt reduction and a bit of vague gesticulation toward a corporate vision that the film supposedly didn’t sync with. Public outcry caused the company to backpedal in November 2023 and say that they would sell the movie elsewhere, but Drew Taylor of The Wrap has reported that the company never entertained any negotiations about their asking price, demanding not a penny less than $70 to $80 million for the privilege of owning a project that they would only gain $30 million by scrubbing from their own ledgers. The offer to sell the film was, to put it mildly, not undertaken in good faith. It appears that the company would rather take less money by writing off the movie than sell it for even a few dollars more than that, because they might risk having a rival turn it into a success, which would further embarrass them for never even having tried to market it themselves, even though it was built around “intellectual property” (i.e., adorable cartoon characters) that are as inextricably linked with Warner Bros. as Marianne is with the nation of France.