Hollywood Accounting — How Harry Potter Loses Money 447
An anonymous reader writes "Techdirt has the details on how it was possible for the last Harry Potter movie to lose $167 million while taking in nearly $1 billion in revenue. If you ever wanted to see 'Hollywood Accounting' in action, take a look. The article also notes two recent court decisions that may raise questions about Hollywood's ability to continue with these kinds of tricks. For example, the producers of 'Who Wants To Be A Millionaire' now have to pay $270 million for its attempt to get around paying a partner through similar tricks."
Read Roger Corman's book. (Score:5, Insightful)
Roger Corman had some problems like that with studios back in the 1970s, and he won, too. Read his "How I Made A Hundred Movies in Hollywood and Never Lost a Dime".
Re:Peter Jackson (Score:5, Insightful)
They very well could have - but thats not a director's fault.
I expect to be paid for writing an application or website if I'm contracted to do it, regardless if its used or not.
Not Hollywood alone (Score:2, Insightful)
"It's okay for us to be dishonest..... (Score:5, Insightful)
".....and not pay our actors, writers, staff their share of the profit-sharing contract, but if you are dishonest and download a DVD, then you'll get the equivalent of a life sentence in fines! Seems perfectly fair to us." - Motion Picture Association of America (MPAA) aka megacorp tyrants
Feh. (Score:5, Insightful)
I absolutely adore the world of film, but holy fuck do I hate Hollywood.
Re:Peter Jackson (Score:3, Insightful)
Saving, no. Making, yes.
Re:Peter Jackson (Score:5, Insightful)
That's because you contract doesn't say "will be paid X% of gross income", whereas Peter Jackson's did.
And of course he did get paid, he just got paid less than he should have because New Line sold the rights to sister companies for below market value.
Re:Not a new trick (Score:5, Insightful)
Bubba knew all there was to know about the movie business...
"There's dumb fucks, stupid fucks, lying fucks, stealing fucks, lawyer fucks, producer fucks, and they're all trying to fuck you out of your ideas and passion. And that's... that's about it."
Re:Not Hollywood alone (Score:5, Insightful)
Hollywood is the only party (and the music industry) that screws over the people actually producing stuff by pulling this trick. Sure corps do it all the time, but they pay employees first, and generally employee pay is not tied to "net profits" of the company. Same goes for sports teams. Lebron James paycheck is not dependent on the team he plays for making money, its dependent on how well he and his agent negotiate his contract.
In hollywood and the music industry, not only do they get to dodge taxes with this trick, they also get to dodge paying their employees cause most of the contracts in LA are of a "% of net profits" mold... Thus, not only are they screwing over the government (why again do they have so much sway in DC??!!??) but they screw over regular working people and of course, high paid actors and musicians as well...
Re:Babylon 5 (Score:3, Insightful)
I'm surprised the people like JMS, Ronald Moore, Ira Behr, and others don't rally together and sue these companies. Or maybe complain to the IRS, and let the IRS open an audit.
I forget, why do I feel guilty about pirating? (Score:5, Insightful)
Oh, right. I'm taking money out of the hands of the starving artists. You know, the ones who aren't getting any money because their points were off the net and golly gee, the movie didn't make any money.
I love Disney strip-mining the world's fairy tales for ideas and then suing people for intellectual property infringements.
Fuck all the fucking fuckers.
Re:Babylon 5 (Score:3, Insightful)
You have to be careful about biting the hand that feeds you, even if it repeatedly punches you in the face while doing so.
Re:Not a new trick (Score:4, Insightful)
No it doesn't (Score:5, Insightful)
In the movie industry, gross profits is customarily defined as the profits remaining after production and distribution expenses are subtracted from revenues.
The more you know.
Re:MPAA's Piracy Statistics (Score:5, Insightful)
Actually it would be awesome if it was legal to download copies of movies that didn't make money anyway; maybe that would solve this problem?
Re:Babylon 5 (Score:5, Insightful)
I like his last sentence best:
But then again, I knew that was the situation going in...I saw the
writing on the wall (and the contract) from the git-go. I didn't do
this to build an empire, I wanted to tell this story...and that's worth
more than anything else.
And this is why there's so much dreck in the movies/TV. Who the hell wants to give away their best creative ideas to a bunch of corporate executives, and never recieve anything in return except for the chance to "tell a story"?
Kudos to JMS for doing so; I feel I should mail him some money directly, rather than buy the DVDs, however.
revenue vs. profit (Score:3, Insightful)
Always ask for a percentage of revenue. It is much harder to lie about revenue than about profit.
Re:Babylon 5 (Score:5, Insightful)
That post from JMS really bummed me out when I first read it since I bought all five seasons and all of the "made for TV movies" on DVD. Not a penny of my purchases went to anyone that poured their heart and soul into B5. Hollywood Accounting is one of the big reasons I don't have much sympathy for the studios crying that they're loosing trillions of dollars to piracy. If they can fudge the numbers so no one can get any residuals, they can fudge the numbers just as much to claim that rampant piracy is going to force them to close up shop and justify their lobbying for more ridiculous laws in their favor.
Re:I forget, why do I feel guilty about pirating? (Score:2, Insightful)
Just an FYI: You to could use the public domain material that Disney used, as can anyone. You can't make the characters look like Disney character, or copy the dialog or music.
You know, public domain is available to everyone including people who work at corporations.
Re:revenue vs. profit (Score:3, Insightful)
If they drive the subsidiary into bankruptcy and give their own debt priority they can still screw you ... so ask for a percentage of the net, to be paid by the studio.
Re:No it doesn't (Score:5, Insightful)
Re:Feh. (Score:5, Insightful)
Love your country, hate your government.
Embrace faith, despise religion.
I'm sensing a pattern...
The general pattern is: Ideals are great, but people keep fucking up the implementation.
Re:Peter Jackson (Score:3, Insightful)
I'm not sure if the reason is some walled off garden. Remember McCarthy? There is a shinning example of what can go wrong if you start digging into Hollywood too deeply. They control the media more so then any politician or political group could ever hope for in their wildest wet dreams. And being Hollywood with years of experience in making statements without making statements to sway the public subliminally or subconsciously instead of directly, their power is almost unrivaled by any other threat that any politician would see in their lifetime.
If you don't believe me, just look at how the coverage of the BP oil spill has moved to Lindsey going to jail with a fingernail painted to say Fuck You.
Re:Peter Jackson (Score:3, Insightful)
Honest people think most other people are honest, while thieves think everyone is a thief. If you see any kind of DRM on anything, you can be pretty sure its creator is a thief, and a stupid one at that.
Re:"It's okay for us to be dishonest..... (Score:2, Insightful)
So if I get someone to sign a contract that allows me to kill them whenever I want, that should be allowed?
Yes, we should respect contract law. But if the contract is OBVIOUSLY unfair, there should be no legal protections for it.
Re:I forget, why do I feel guilty about pirating? (Score:3, Insightful)
Any time Mikey Mouse is going to become Public Domain, Disney heavily lobbys to extend copyrighted works [wikipedia.org]. It's sad that I'll probably live to see this happen again. I just wonder how long they're going to try to string it out.
Re:I forget, why do I feel guilty about pirating? (Score:3, Insightful)
The point is that Disney has fought to keep their works, built ON the public domain, from going back to it.
They profited from it, and they should contribute back, rather than buy off senators to extend copyright and trademark law to where it's way past beneficial for the whole of society.
Re:Babylon 5 (Score:5, Insightful)
Sounds like another old system -- you were paid for your work, but you had to lease all the tools and your food and housing from the company. Your pay always ended up being a bit lower than those costs, but no matter, the company would keep loaning you the tools and housing... as long as you kept working.
Re:Not a new trick (Score:4, Insightful)
Re:Peter Jackson (Score:3, Insightful)
Your reading comprehension is a bit flawed today. I didn't say that honest people thought everyone was honest; you only have to be ripped off once to know that not everyone is honest. Most people are honest, me included. But thieves think everyone is a thief.
Re:Peter Jackson (Score:1, Insightful)
Never trust anyone who claims they are honest.
Re:Not a new trick (Score:4, Insightful)
Re:So this means (Score:3, Insightful)
Copyright infringement is illegal, but it may or may not be wrong. If he pirates a movie that he would never buy, or like a lot of people pirate it then buy it when he sees he's not getting ripped off buying it, what he's doing is still illegal, but it isn't wrong.
Adultery is legal in Illinois, but it's wrong. Smoking pot is illegal, but it isn't wrong. Don't confuse legal and illegal with right and wrong. There are a lot of legal ways to steal, but they're still wrong.
Re:Not a new trick (Score:3, Insightful)
No, internal billing has a place. It's an ingrained part of project accounting & isn't a problem as such. In most companies that are actually doing it, they charge exactly what it costs. You took 400 man hours of 'Research' time & we paid $30/hour for that time, we're billing you $12K which you can account for in your project budget.
The abusive companies are saying: You took 400 man hours of 'Research' time & we paid $30/hour for it. Adding in our profit margin of 100%, we're billing you $24K.
The internal profit making is what needs to be stopped, not the process of internal billing. If Division A is spending time helping Division B, there needs to be some form of accounting in place to show why A lost X number of man hours that quarter, otherwise it just fucks everyone's bonus and job evaluations.
Re:No it doesn't (Score:3, Insightful)
Re:Peter Jackson (Score:3, Insightful)
What the hell kind of hitman charges 2-3 million? Maybe if you were going for a paranoid military dictator or something, but most of these guys don't even have a real security detail.
Re:No it doesn't (Score:4, Insightful)
In other words, as soon as everyone realized that a percentage of the net was for suckers and started insisting on a percentage of the gross, Hollywood re-defined 'gross' to be the same thing as 'net' and continued screwing people.
Re:Not Hollywood alone (Score:3, Insightful)