thismeintiel said:
Except that article isn't talking about what we are talking about. We're talking about production budget plus marketing budget, which that also says are legit numbers. What that article speaks of is bogus fees added onto those budgets to ensure that if a movie actually does make a lot of money over its production and marketing budget, they don't have to pay anyone their x% of the movie's profit that's stated in their contract. Really that practice should be illegal if it isn't already. |
I'm probably missing something, but how is it not what we're talking about here? One article even clearly mentions talk of the marketing budget (which the article actually said were 'mostly' legit numbers):
"A studio funds A Movie with a production budget of $100 million. It sets up AMovieCo Inc. and gives it the production budget money. The studio then spends another $50 million on marketing and puts that down as an expense as well -- though, with some of the big studios, some of this money involves paying itself for advertising on its own properties. Still, even if we assume that's real money spent, you might think that AMovieCo now needs to make back $150 million to be profitable. But... the studio (which, again, controls AMovieCo completely) then tacks onto all of that, say, a $250 million "distribution fee." Now, while there may be some money spent on actually distributing the film, the number is almost completely bogus, and much higher than the actual expense for the studio. Very little actual money needs to change hands here -- it's just a fee on the books (a fee they are effectively charging to themselves). And it's not just "distribution" but a variety of additional charges. On top of that, the studio may then charge "interest" on that money, even though it's really just lending money to itself. What it all means is that rather than becoming profitable at ~$150 million (the actual money spent), AMovieCo now needs to earn over $400 million before anyone with a cut of the profits sees an additional dime from the movie, thanks to completely imaginary accounting entries on the books. "
I mean I'm no accountant or anything, but I'm curious: If we're talking about movies breaking even in this thread, and then you read that paragraph above, aren't they talking about similar things? I know the article is specifically looking at things like paying out money to people once a movie turns a profit, but look at how the money is trading hands here...isn't that also part of the breaking even problem? Combined with not taking a 100% cut from the box office revenues of course.
