I’m more upset about them killing off the Batgirl movie, which by all accounts I’ve heard from comics people in the know was really good.
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WB accounting is a land of great mystery. Aren’t they still claiming that The Matrix movies haven’t broken even?
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I don’t know that any movie has ever broken even.
I really want to see that if what’s told to stockholders and what’s told to artists don’t match then there’s extremely severe penalties.
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This is the sort of chicanery the IRS should be weaponized to obliterate. Audit those responsible, claw back the gains, and force them to pay the penalties by doing something crazy like, releasing the movie and selling tickets. There’s big name actors involved in these, but tons of unknowns, creatives and other workers who invested years of their careers in putting a dream on film, only to have hedge fund assholes burn it down for insurance money.
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It certainly purports to be legal. As crooked as accounting is in Hollywood, I’d put pretty good odds that if you conducted any real audit, you’d find shenanigans.
That said, wouldn’t the tax write off be the same if they dedicated it to the public domain instead of burring it?
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The IRS doesn’t have a lot of recourse if the tax laws themselves are written badly. Congress needs to fix this.
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You’re right, tax laws are horribly written. Frankly, that is often a feature, not a bug. But the IRS can sometimes do things without congressional intervention. They have largely eliminated the dodge of lease-backs of public infrastructure allowing companies to depreciate public assets. That little tax dodge was getting quite popular for awhile.
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Although I also wonder how much the executives’ decisions are even in the best interests of the company. I believe Zaslav’s compensation, for example, is heavily tied to the amount of free money the company has - his bonuses during the strike were insane precisely because nothing was being made (even though that was neither desirable nor sustainable). He’s literally incentivized to make decisions that are against the very (long-term) survival of the company.
Financialization hit Hollywood some years back, and the way you make real money within that framework is not by producing goods and services, unfortunately.
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Yes, that’s why my last sentence said they were going to drive Warner to bankruptcy just to enrich themselves.
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Though that can be said for the (many) decisions being made for short-term profit that damage the company long-term. As opposed to decisions being made that don’t even benefit the company in the shortest of terms…
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I hate this and think Zaslav should just manage an index fund or something. Clearly he hates being in entertainment. But it should not go into the public domain. As far as I know, that would mean it could be seen far and wide but none of the participants would get paid. Maybe I’m wrong. If anyone sees it, creatives should get residuals.
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even with the film done, marketing budgets are often 50% of the cost of production. it cost around 70 million to make, so it’d maybe be another 35 million to get people in the seats.
it’d probably be easy for warner to argue they need that money for other films, and it’d probably be hard for the irs to sort out fraud vs a necessary business decision
easier probably to close the loophole that makes canning films this way so attractive. (err… not canning, i suppose 
)
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These generally aren’t film-specific rules. So as much as this sucks, I’m not sure changing the tax rules to make it impossible is a good thing.
If I build a building on what turns out to be a toxic location that I’ll never be able to use, I want to be able to deduct the entire amount now and take what tax benefit I can. I don’t want to be forced to amortize the cost of the facility over the next 20 years.
That’s what is happening here. They’ve decided the movie isn’t going to generate much revenue. If they put it in service (i.e., release it) they’re going to be required to spread the cost of the film over however many years the tax code says a film can generate revenue. So they declare the entire thing a loss.
There is probably also a mismatch between state and federal tax law in play here. State tax credits for film production return some of the money spent making the film to the production, but those qualified expenses usually are still deductible at the federal level. That’s a loophole that is real and should be fixed, so they can’t effectively double dip on production expenses.
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I think that’s only true of theatrical releases though, not streaming services like Netflix and Amazon.
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that’s probably true. it sounded like it was originally intended for a theatrical release, and then they tried to sell it for more than it was worth to netflix et al? ( i think the too high price was a tell they didn’t want to release it at all. )
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Or, maybe you should have done your due diligence and not built on a toxic site… That’s on you. Why the fuck should the tax payers be on the hook for your inability to ensure that the build was in a good location? How is that the rest of societies problem if you can’t do something as basic as that?
In addition to above, cultural production is not the same thing as constructing a building.
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Pick any example you want where an unexpected event renders an asset unusable. That wasn’t really the point. There are legitimate reasons why a business shouldn’t be locked into long term amortization of an asset that doesn’t have value.
And from a business and tax code perspective, an asset is an asset. So that IS what’s happening in this case. If you think it shouldn’t be, there are legislators you can talk to about that. But part of the problem is that the tax code is already enormously complicated and a new category of assets is likely to produce more tax abuse rather than less.
why should tax payers (most of whom are not wealthy investors) pay to prop up bad deals?
None of this is an intellectual exercise. It has REAL world ramifications. Propping up bad decisions by wealthy investors has a measurable impact on the ability of the rest of us to live our lives. Someone with tons of capital to throw around is not more important than a working class single mom supporting her kids, and she should not be on the hook for bad decision making on the part of the investor. Period.
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I thought Porky’s was profitable because it had not been set up with the expectation of the gross it achieved. However I could not find anything to verify that.
Google brought up many listicles all seem to be comparing gross and budget and ignoring the Hollywood accounting in between.
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Clearly this asset did have value because multiple distributors bid tens of millions of dollars on it. It wasn’t “unusable,” merely unused.
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