How Hollywood Accounting Can Make a $450 Million Movie ‘Unprofitable’

These ragtag groups of outlaws are embedded in the hearts of MCU fans across the world, all thanks to the work of James Gunn and his love for the characters. What really made Gunn big, however, was his work for Marvel Studios.

Don’t forget the lovely expense when one division of the studio loans another division the money to make a film at a colossal interest rate further killing any chance of “profit”. Ed Solomon is owed 5% royalties on MEN IN BLACK once it hits profitability, so Sony tweaks the books to make it look like this huge blockbuster that spawned an entire franchise has never made a dime. The estate of Jim Garrison sued Warner Bros. for their share of the profits from the movieJFK, which was based on Garrison’s book On the Trail of the Assassins. Studios, on average, calculate production overhead by using a figure around 15% of total production costs.

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According to a GQ article, they were each only paid a combined $179 in merchandising and music royalties over a 29-year period. Bookkeeping Hollywood None of the actors from The Rocky Horror Picture Show have received any royalties from home video/DVD releases.

Therefore, to reduce (or in the case of “lost” moneys, eliminate) the amounts that a studio has to pay out, accountants will frequently massage the numbers to make that shared profit smaller and smaller and smaller until it’s gone. Another form of Hollywood accounting is a reverse tobashi scheme, in which the studio unjustly cross-collateralizes the accounting of two projects and shifts losses from a flop onto a profitable project by shifting costs involving internal operations. This way, two unprofitable projects are created out of one on paper alone, primarily for the purpose of eliminating net participation liabilities.

The next mafia TV show is about… PayPal?

That is, of course, difficult to prove which is why such a lawsuit took so long to be settled . Whether the books were ever opened or not , it’s true that Brandywine ultimately won the suit and went on to make six more Alien films in partnership with the bigger company. That lawsuit wasn’t settled until 1983 with Fox finally agreeing to fund an “Alien II” so that Brandywine could recoup some of the profits it knew belonged to it. In this case the bet worked out splendidly and that sequel, finally entitled Aliens made over $183 million against an $18 million budget and was also a huge critical success with awards nominations to back up that praise. In 2010, Rysher Entertainment, who produced Nash Bridges, claimed it didn’t have to pay royalties to lead actor Don Johnson because they never made a profit from the show and didn’t have to share anything with the actor. Johnson, whose contract stipulated he owned half the show’s copyrights, sued the company and won $23 million.

When you don’t have to worry about payroll and all the taxing authorities’ forms and deadline requirements, you’ll have more time and energy to devote to serving your clients and acquire new ones. Don’t sacrifice another day struggling to keep up with your finances. Take advantage of our affordable outsourced accounting and bookkeeping services. The goal of /r/Movies is to provide an inclusive place for https://accounting-services.net/ discussions and news about films with major releases. Submissions should be for the purpose of informing or initiating a discussion, not just to entertain readers. Read our extensive list of rules for more information on other types of posts like fan-art and self-promotion, or message the moderators if you have any questions. Yep, this is why you need to get a percent of the gross, not net profits.

Practices

The production budget was inflated by Paramount accounting from 20 million dollars to 70 two weeks after release. The film made “only” 58 millions, while the Conran brothers, who developed, directed and supervised production of their pet project, were working on a percentage alone – unlike actors, who were paid flat fees. The easiest way to recoup actual marketing costs was to make the production a total loss. Unlike other cases, the brothers simply stormed out with minor media buzz surrounding the issue, rather than filling a lawsuit. A Warner Bros. receipt was leaked online in 2010, showing that the hugely successful movie Harry Potter and the Order of the Phoenix ended up with a $167 million loss on paper after grossing nearly $1 billion. This is especially egregious given that, without inflation adjustment, the Wizarding World film series is the third highest-grossing film series of all time both domestically and internationally, after Star Wars and the Marvel Cinematic Universe.

• After the first run, they took her name off of it, marketed later runs as a generic Wonder Woman doll, and she never saw any profit from it.
• Needs to review the security of your connection before proceeding.
• This has the net result of reducing the project’s reported profit by a substantial margin, sometimes even eliminating it altogether.
• Having made $222 million against a $6 million budget, Moore’s 2004 documentary Fahrenheit 9/11 was a big surprise debuting at #1 in the USA .
• As Planet Money explained in an interview with Edward Jay Epstein in 2010, studios typically set up a separate “corporation” for each movie they produce.
• Producers Michael Uslan and Benjamin Melniker filed a breach of contract lawsuit in Los Angeles County Superior Court on March 26, 1992.

Moment, telling them he was refusing to sell them the sequel rights because “I cannot in good conscience allow money to be wasted on a failure,” cheating them out of the potential profits that would have come from a surefire hit sequel. Battlefield Earth was the film Franchise Pictures founder Elie Samaha said would make his company a force worth taking seriously.

How Hollywood Accounting Can Make a $450 Million Movie ‘Unprofitable’

This is the primary reason why Susan Sarandon has bad words to say about the movie, rather than a case of Old Shame. So in this tour’s version of “The Crimson Permanent Assurance”, there’s an additional verse about studio accountants. When adjusted for inflation, the film is still as of 2020 the highest grossing film of all time. Writer Art Buchwald won $900,000 from Paramount for his work writing the story treatment that inspired the 1988 Eddie Murphy comedy “Coming to America.” The movie had made $288 million when Buchwald sued in 1990, but it still had not seen a net profit.