Interesting Article on How (And Why) Hollywood Hides Profits

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It's hilarious (and horrible).

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Well put.

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so its not just hollywood.

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It's definitely not.

But from the Hollywood angle, it's why some actors (like Will Smith, for example) take "points" in lieu of salary and those points are tied to gross numbers instead of net "profit" (since movies rarely make any....per the books).

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But if this is how it works...sucks that it has to work this way.

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That's not how it "has to work" though. It's just how it does, and nobody has the balls to challenge it. Sure, somebody could sue and try to get this out there, but ultimately, you're fighting all of Hollywood, basically. So they have the money (and the time) to wait you out until you throw it out or settle for peanuts. The other alternative is being blackballed by all of Hollywood, and good luck ever making another dime in that town again if that happens.

This right here is a perfect example of hos hilariously stupid this issue is:

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Similarly, Peter Jackson and Wingnut Films sued Warner Bros’ subsidiary New Line Cinema in 2005 claiming that they had been shut out of huge profits from the Lord of the Rings trilogy (specifically the first film, 2001’s The Fellowship of the Ring) due to Hollywood Creative Accounting. As if it needed to be said, the Lord of the Rings trilogy (directed by Jackson) was an enormous critical, award and financial success which brought in close to $3 billion against a cumulative budget of $281 million. How could anyone hide profits like that?

Jackson asked that very question and demanded an audit. New Line chief Bob Shaye was furious and refused to allow Jackson to ever direct another film with the company. New Line was later fined $125,000 for failing to provide its accounting documents in relation to the suit.

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Those movies made 3 billion dollars. Billion. Yet the studios basically claim losse on it to get out of paying the people that are owed. And that's on top of cannibalising its own profits (a.k.a. losing money...to itself) to avoid having to claim profits.

And what happens to them in the long run? They get a $125,000 fine. How hilarious is that? I'd pay $125K every time if it meant I pockets billions. So the rich get richer and more powerful, and the rest...don't. And it won't ever change unless some awfully big names start making a fuss (more of a fuss than people like Peter Jackson already have), or the government (SEC) gets involved (which I'm sure is on the take in some form or another as well).

Take a look at what most oil companies did this quarter on their income statements.

Most made a net profit but then devalued their oil properties at $46 a barrel. Essentially making the quarter look like a huge loss.

Look for most of the companies to rebound in revenue next quarter BC of oil prices are higher, also increasing stock prices. Good time to invest.

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That's not how it "has to work" though. It's just how it does, and nobody has the balls to challenge it. Sure, somebody could sue and try to get this out there, but ultimately, you're fighting all of Hollywood, basically. So they have the money (and the time) to wait you out until you throw it out or settle for peanuts. The other alternative is being blackballed by all of Hollywood, and good luck ever making another dime in that town again if that happens.

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Oh no I agree. No one has the balls, which means this is how it has to work. I mean, it's deplorable, but legal. Not much to be done.

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Those movies made 3 billion dollars. Billion. Yet the studios basically claim losse on it to get out of paying the people that are owed. And that's on top of cannibalising its own profits (a.k.a. losing money...to itself) to avoid having to claim profits.

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Yeah that makes me sick. But again, them's the rules Someone has to crack to change anything.

I don't know if that still sounds like I don't care. I do, just hard to waste time worrying about things that obviously "work" for some people, otherwise they'd change it.

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I mean, it's deplorable, but legal

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when did "cooking the books" become legal? It's the definition of tax evasion. People go to prison everyday for this.

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I believe Forest Gump is technically a flop. Novelist Winston Groom owned a piece of the net profits, and of course saw no money.

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Sounds like he had a crappy lawyer.

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Let me know when you find a lawyer who can get an unknown writer points of the gross instead of the net

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Then why accept that provision? I negotiate contracts for a living. Depending on bargaining power there are always things a client can or can't get. The original statement made it sound like they accepted the provision actually expecting a favorable outcome and were taken by surprise. If that's the case, then like a said, sounds like he had a crappy lawyer.

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"creative accounting" to "hide" profits is used in nearly any and every industry and is well known, and as to the "why"? Please, if you have to be told why high income taxes cause this, you really are naive.

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You should read the actual article instead of just the headline. There is no mention of tax rates anywhere in the article, and the movies referenced span the last 30 years or so and all the different tax rates that were in effect at the time.

So, no. You can't blame Obama for the shady accounting that took place on Alien.