3 ms·

Shouldn't this say, how a $19 million movie that spends $50 million in advertising and $250 million in distribution can make $150 million and not be profitable?

Shouldn't this say, how a $19 million movie that spends $50 million in advertising and $250 million in distribution can make $150 million and not be profitable? Your marketing and distribution costs are real costs aren't they? I don't get how this is "Hollywood Accounting", it sounds like actual accounting.

HelloMcFly 14y ago
The point is a lot of those "figures" aren't real or objectively driven, they're just numbers being shuffled around within the company to make the movie seem more expensive. There's a wikipedia article on it that may make the concept more clear.
- hermannj314 14y ago
  Thank you, it did seem a little more clear after reading that. Basically, no one is claiming the movie didn't "spend" $50 million on advertising, the claim is that the studio is inflating the $50 million advertising expense while hardly providing anything close to that value in return. Wouldn't that be caught in an audit? Aren't there (shouldn't there?) be laws prohibiting corporate-to-corporate transfers that are just money dumps not tied to legitimate verifiable expenses? I am ridiculously naive about this topic, but it seems the directors of these movies could sue if the studio were lying and exaggerating expenses?
  - shinratdr 14y ago
    So you can spend years in court fighting the defacto standard only to win a pittance as well as an informal blacklisting? Most filmmakers would rather just suck it up, move on, and learn from the experience rather than dwell on it and make it worse.
  - Nick_C 14y ago
    There's no lying or fraud. Company B (the production company) agrees to pay Company A (the studio) $X for services. Done, price agreed. Of course, both companies are owned by the studio, so it is just transfer pricing as far as the studio is concerned. But it is a real cost for the production company so that that there is no profit for residuals. Intentionally.

HelloMcFly 14y ago

The point is a lot of those "figures" aren't real or objectively driven, they're just numbers being shuffled around within the company to make the movie seem more expensive. There's a wikipedia article on it that may make the concept more clear.

hermannj314 14y ago
Thank you, it did seem a little more clear after reading that. Basically, no one is claiming the movie didn't "spend" $50 million on advertising, the claim is that the studio is inflating the $50 million advertising expense while hardly providing anything close to that value in return. Wouldn't that be caught in an audit? Aren't there (shouldn't there?) be laws prohibiting corporate-to-corporate transfers that are just money dumps not tied to legitimate verifiable expenses? I am ridiculously naive about this topic, but it seems the directors of these movies could sue if the studio were lying and exaggerating expenses?
- shinratdr 14y ago
  So you can spend years in court fighting the defacto standard only to win a pittance as well as an informal blacklisting? Most filmmakers would rather just suck it up, move on, and learn from the experience rather than dwell on it and make it worse.
- Nick_C 14y ago
  There's no lying or fraud. Company B (the production company) agrees to pay Company A (the studio) $X for services. Done, price agreed. Of course, both companies are owned by the studio, so it is just transfer pricing as far as the studio is concerned. But it is a real cost for the production company so that that there is no profit for residuals. Intentionally.