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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

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.