Rep. Joaquin Castro asks Justice Dept. to review Warner Bros.' practice of permanently shelving movies for tax breaks

In the past couple of years, Warner Bros. Discovery has withheld completed movies from release in order to get tax breaks. "Batgirl" and "Scoob! Holiday Haunt" were fully completed and intended to be released on the streamer Max, but permanently shelved so the studio could cut losses and get tax breaks. Link to an article in Variety is here.

This month, the company said that it's permanently shelving the new and completed movie "Coyote vs. Acme" for the same reasons. WBD has since said it would put the film on the market to other distributors, but Congressman Joaquin Castro said on Xwitter that the Justice Department and FTC should review this pattern of conduct.

The movie's director, Dave Green, said on Xwitter that the movie, a live-action animation hybrid starring John Cena and Lana Condor, was "embraced by test audiences with fantastic scores."

By the way, for all that's been written about this practice by WBD, I haven't immediately found an explanation as to why permanently shelving movies creates a tax benefit, since the cost of producing the movie is deductible whether the movie is released or not. But I suspect it has to do with being able to take an immediate deduction vs. some kind of deduction amortization over an expected productive life of the film.