Last summer, Deadline released this balance-sheet ("participation statement") detailing the alleged financial state of the corporate entity struck to run the Warner Bros movie "Harry Potter and The Order of the Phoenix." The movie, which had grossed nearly $1B at the time, was nevertheless running $167M in the red. The losses are largely attributable to to prints and advertising/marketing -- and, as many commenters on the original post point out, a major recipient of that marketing budget would have been Warner's itself, in the guise of its other media divisions. Another culprit is high interest fees, though the film didn't have outside financing, so Deadline speculates that the loan note was also held by Warner's.
The original post holds this out as an example of why only a fool accepts "net-participation" compensation for work associated with a film, but I think this is also a great example of why all financial numbers released by the entertainment industry should be treated as fiction until proven otherwise. Especially piracy "loss" figures, alleged contributions to national GDP, and job creation numbers.
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."
And yet Warner Bros isn't doing anything differently here than is done by every other studio. Clearly, nothing has changed since Art Buchwald successfully sued Paramount over the 1988 hit Coming to America when the subject of net participation was scrutinized, and a judge called studio accounting methods "unconscionable".
STUDIO SHAME! Even Harry Potter Pic Loses Money Because Of Warner Bros' Phony Baloney Net Profit Accounting
Do you own a Samsung smartphone? Do you take photos with said phone? Congratulations, there’s an excellent chance that your handset is randomly firing off those pictures you’ve snapped to folks on your contact list without your permission. According to The Verge, the images are being pushed out by Samsung’s cleverly named default messaging app, […]
When you live full-time in a motorhome, no matter how big it is, there’s not a lot of room for extras. In order to have enough space to be comfortable, its necessary to strip your belongings down to the essentials. A library full of books gives way to e-readers and tablets. Full-sized anything? You’re gonna […]
On Monday, the Supreme Court will review the 9th Circuit's decision in Apple Inc. v. Pepper, in which the plaintiffs argue that Apple has established a monopoly over apps for Ios (this part is actually incontrovertible, as Apple has used both technology and law to prevent rival app stores from operating), and that Iphone and […]
Summer’s here, which brings not only warmer weather but also the unsettling realization that the year is more than halfway over. So, for those who weren’t as productive as they would have liked during the first half of 2018, we’ve rounded up 5 skill course bundles you can start learning today to help you finish […]
It’s good to be proactive, but when it comes to preparing for an emergency situation, one of the most important items you can pack is a flashlight. After all, whatever else you include in your kit won’t be of much use if you can’t see what you’re doing. The Viper 1000-Lumen Tactical Flashlights not only […]
Chances are you took a handful of language classes in high school, and aside from a smattering of conjugations and vocabulary words, the only things you likely remember are the dry, rehearsed sentences that did little to make you speak like a true native. If you’re still hoping to learn a new language but want […]