9.15.2011

Another Reason Why You Can't Count on Hollywood Accounting...


How Hollywood Accounting Can Make a $450 Million Movie 'Unprofitable'


Now that you read the short article above... here's a thought...

Studios are just using a convenient and legal way to avoid paying (net) profit participants and residual earners by putting them at the bottom of the list.  If they wanted to they could easily create a "Participation Fee" and a "Residual Fee" (could be 1%-5%) for the profit participants and the residual earners, respectively, that they lop on to the "Defined Gross" section at the top of the accounting sheet like they do with their "Distribution Fee" to make sure the participants and residual earners get something.
I am sure an accountant can figure out how to do that.

The problem is, is that the Hollywood studios don't care to do that and prefer to keep their system of maintaining four accounting books:
One for the government (to show that a studio did not make alot of money)
One for the shareholders (to show that a studio is profitable)
One for the profit participants (to show that a movie a studio made/released did not make money)
One for the studio (which we won't see... but something tells me it shows profit)

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