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this post was submitted on 08 Mar 2024
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Piracy: ꜱᴀɪʟ ᴛʜᴇ ʜɪɢʜ ꜱᴇᴀꜱ
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I honestly don't understand the math of not releasing movies and un-releasing games. People say tax purposes but I'd think streaming is essentially pure profit, hard to imagine not being able to make 20% of your money back or whatever credit you get for taxes.
if you write it off as a tax write off you get to lie about "expected viewership" rather than actual viewership
You clearly have no idea what a tax write off is. If you get 50$ profit spend 25$ on your business and pocket 25$ you pay taxes on your pocketed 25$ not the companies expenditures. That is a tax write off. A "company" doesn't pay taxes.
The second part of this comment doesn't make a lot of sense.
My understanding is that the tax system allows for the declaration of depreciation in assets as a business expense. This is fine for assets with transparent market valuations.
The part where this system could be abused is in willfully withholding the release of a movie, overvaluing the expected revenue, and then subsequently declaring the lack of revenue as a depreciation in assets which is then declared as a business expense to reduce the tax burden.
A clearer example of this, with very obvious fraud, might be:
So obviously this example was fraudulous. It's possible that the expected revenue on the cases involving movies was estimated transparently and was fair, because of market forces.
Maybe something more scummy was at play?
Who knows.
You can't write off expected future profits. That would essentially make income taxes meaningless. You can use a depreciation schedule for movies that you've produced and spread your tax savings out if you want(and you can avoid doing that by cancelling the movie all together and claiming it on your taxes now as a deduction), but that only matters when you're actually making future money for the movie that you want to reduce your tax burden on. WB is losing a hell of a lot of money in the future to save money right now.
Think of it like Russian nesting dolls.
You got the production company that pays $100 million to make a movie. The production company is owned by a studio. Production company licenses the movie to the studio that owns it for $200 million. But it’s all the same ownership and no money changed hands. It’s just on paper. So now the $100 million movie cost $200 million. Then the studio licenses out the movie to the marketing company, which the studio also owns, for $300 million. Again no money changed hands and the value is all on paper.
Do that a couple more times and that’s how a movie that literally cost $100 million and made $500 million at the box office “barely broke even”.
Might be off on the layers, but I heard that description of movie accounting years ago.
Nice write up. Crazy how fat cats find ways to milk the cash cows.
I'm reminded of how the freaking NFL of all things is considered a non profit somehow. Simply due to the fact that they pay themselves so much money.
The NFL is a non profit, the teams are not. It still doesn't make it right, though.
It's also how the studios fuck over anyone involved who had "profit share %" in their contract.
The marketing costs eat up 100% of the profits, movie makes no money, yet the marketing company the advertising was sold to made half a bill...
Exactly. I left that part off since I thought it was already a long description. But completely true. Can’t pay out an actor that takes a percentage if it never made any money on the “official” paper.
Gotta get you hooked on the new drug that doesn't have royalties they have to pay out.
They're looking forward to all the AI generated crap, and the newer stuff they've already fucked the creators over in their contracts.
They are losing money on streaming. It was so bad that they took their cash cow HBO and grouped it with their streaming divisions to improve their financial report. WBD is making insane decisions because their #1 goal is to increase free cash flow to pay off their debts, whereas most companies' #1 goal is to "increase shareholder value."
A big part is also residuals, they don’t want to have to keep paying actors, directors, and others involved with production, after the fact on a losing property. If there is zero income there are zero continued payments.