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Originally Posted by Buehler445
It's one thing to take a profitable film and assign applicable costs to it to reduce overall NI, but I seriously doubt the companies just piss money away because they don't want to pay tax. Unless those escalators are HUGE, I really don't see any way at all they'd purposely produce losing films.
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There are ways to make a film that's grossed $400 million dollars appear as a "loser" on the balance sheet and reasons the studio would do so.
One, is so that they're taxable income is significantly lower. Two, is to avoid paying escalators to the talent, e.g., the director and movie stars get "x" percentage if the film earns "x" amount after net income.
Quote:
Originally Posted by Buehler445
But I really doubt they're going to produce "Buehler445 shits in the field and buries it" for $100M just because they need a loser.
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Every studio knows that every film isn't going to resonate with the viewers. Sometimes, those films are scheduled opposite other "blockbusters" in order to make sure that the film is a "loser". Other times, it just happens. At the end of the day, everyone was paid, the studio gets to write-off the loss and everyone goes home happy.
On the music side, we signed songwriters and bands that either sold zero records because their album was never released (even after spending $1 million or more in recording and publishing) or bands and artists that couldn't find an audience.
It was up to the discretion of the CFO as to how to write those off (this year, spread out over several years, etc.) but it did happen and was expected.