Quote:
Originally Posted by DaneMcCloud
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.
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Income statement? I'm not sure how it would end up on the balance sheet.
That makes good sense. Tax planning is sound business strategy as long as the auditors are happy.
Quote:
Originally Posted by DaneMcCloud
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.
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So they're not actively seeking losers, right? If during the production or marketing, it looks like it might not do as well, I can see what you're saying. But I still can't see taking on a project that you know is going to lose
actual money.
EDIT: Not trying to be a dick. I'm just a business nerd.