STUDIO SHAME! Even Harry Potter Pic Loses $ Because Of WB Phony Baloney Net Profit Accounting

[Quixote1818]

Interesting read. Would love to get others thoughts on this.



EXCLUSIVE: Signing a deal that makes anyone a net profit participant in a Hollywood movie deal has always been a sucker’s bet. In an era where studios have all but eliminated first dollar gross and invited talent to share the risk and potential rewards, guess what? Net profit deals are still a sucker’s bet. I was slipped a net profit statement (below) for Harry Potter and The Order of the Phoenix, the 2007 Warner Bros sequel. Though the film grossed $938.2 million worldwide, the accounting statement below conveys that the film is still over $167 million in the red. (Text continues below…)



I ran the data above by several attorneys and agents, who are so accustomed to seeing studio accounting wave magic pencils over hit movies that they weren’t surprised even a Harry Potter film that grossed nearly $1 billion would fall under the spell. Dealmakers say studio distribution fees are a killer, as are incestuous ad spends on studios’ sister company networks. They also cited the $57 million in interest charges, an enormous pushback on profitablity. Since Warner Bros didn’t invite in a co-financing partner on the Potter films, has the studio borrowed money from parent company coffers? Are they paying that interest to a bank, or to themselves? Bottom line: nearly $60 million in interest for the estimated $400 million required to make and market Harry Potter, charges carried for about two years, is a high tariff.

As one dealmaker tells me: “If this is the fair definition of net profits, why do we continue to pretend and go through this charade? Judging by this, no movie is ever, ever going to go to pay off on net participants. It’s an illusion to make writers, and lower-level actors and filmmakers feel they have a stake in the game.”

More: http://www.deadline.com/2010/07/studio-shame-even-harry-potter-pic-loses-money-because-of-warner-bros-phony-baloney-accounting/

[abelenkpe]

1. K&R

[Katashi_itto]

2. We've been approached over the movie we are shooting. The offer we were given was so full of

poison pill clauses we had a good laugh.

[El_Johns]

3. K&r

[zappaman]

4. Same old, same old.

Disgusting.
If you think that's bad, you should see MARVEL's contracts!

[TeamPooka]

5. This was news 3 years ago when this article was published.

[Quixote1818]

6. I know it's an old article, but it's the first time I have seen it and I found it fascinating

and wanted some feedback, not to mention we all know this stuff is still going on today.

By the way, are you Irish? Curious about the Pooka part of your name?