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WinMX World :: Forum  |  Discussion  |  WinMx World News  |  The Real Theives - Hollywood Accounting

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Offline GhostShip

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The Real Theives - Hollywood Accounting
« on: July 11, 2010, 02:13:13 pm »
Often we are all told that piracy is taking food out of the mouths of babes etc , we all know this is hype and tripe put out by the media mafia to get more monopoly legislation created in their favour, but what would you think if such giants didnt pay their tax bills as you have to, and worse ripped off those who where promised a share of the profits of a release but due to some really dodgy accounting practices earned next to nothing ?

If you follow the entertainment business at all, you're probably well aware of "Hollywood accounting," whereby very, very, very few entertainment products are technically "profitable," even as they earn studios millions of dollars. A couple months ago, the Planet Money folks did a great episode explaining how this works in very simple terms. The really, really, really simplified version is that Hollywood sets up a separate corporation for each movie with the intent that this corporation will take on losses. The studio then charges the "film corporation" a huge fee (which creates a large part of the "expense" that leads to the loss). The end result is that the studio still rakes in the cash, but for accounting purposes the film is a money "loser" -- which matters quite a bit for anyone who is supposed to get a cut of any profits.

For example, a bunch of you sent in the example of how Harry Potter and the Order of the Phoenix, under "Hollywood accounting," ended up with a $167 million "loss," despite taking in $938 million in revenue. This isn't new or surprising, but it's getting attention because the income statement for the movie was leaked online, showing just how Warner Bros. pulled off the accounting trick:

I like to think the IRS is en route to resolve this seemingly dubious accounting method but I think we can see now how the studios have so many millions to spend on "donating" to politicians when they want some anti democratic legislation raised and enforced.

WinMX World :: Forum  |  Discussion  |  WinMx World News  |  The Real Theives - Hollywood Accounting

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