Hollywood Creative Accounting, or, How to Hide a Hit and Still Profit From It

Generally, Hollywood accounting uses permanent creative accounting practices (such as charging an arbitrary distribution fee from one sub-entity to another) rather than temporary ones since the measures are meant to permanently distort the bottom line of a film project. In an NPR interview, author Edward Jay Epstein argues that this double-edged sword can also be doubly beneficial in some cases. When an actor, director, producer or writer is given a profit sharing contract with a promised percentage of the net profits, on paper they are shown to be making incredibly huge amounts of money… even though that money will never be seen. When negotiating their next projects they can demand higher fees based on that very thing. The Batman lawsuit is hardly unique and seemed to repeat itself a decade later.

Second Home complies with applicable state and local laws governing nondiscrimination in employment, including hiring, placement, promotion, termination, layoff, recall, transfer, leaves of absence, compensation and training. Taylor Swift withdrew her albums from Spotify because of its low royalty payments of pennies on the Bookkeeping Hollywood dollar. She then threatened to do the same for Apple Music because Apple didn’t pay any royalties during the three-month trial period for new users. An interview with Mark Hamill implies he does not make much, if any in royalties from the series, given he claimed he would be homeless if he only lived off of royalties.

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Buchwald sued Paramount, and a jury agreed that Paramount breached their contract and the two stories were remarkably similar. Paramount subsequently argued that it spent so much money on marketing and development that they made no net profit. The court found Paramount’s actions „unconscionable”, noting that it was impossible to believe that Coming to America, which grossed $350 million, failed to make a profit, especially since the actual production costs were less than a tenth of that. Paramount settled with Buchwald for $900,000, rather than have its accounting methods closely scrutinized. Why discuss this in a film about fuzzy accounting in movie production? You should ask Paramount’s lawyers that question, because they’re the ones who brought it up.

Property Accountant

There were no less than four Production companies involved with the creation of Harry Potter and the Order of the Phoenix, only one of which is Warner Bros. Cool Music, Heyday Films and a one-off company called “Harry Potter Publishing Rights” were all involved and are likely recipients of profit percentages.

• Another look at that ledger shows $130 million allocated for advertising and publicity.
• Companies like this “lose” money to make more profits for themselves.
• The film’s producer, Bob Yari, later went bankrupt over the suit (along with a number of money-losing projects he self-distributed).
• For basic monthly accounting services, an accountant might charge anywhere from $75 to $500 or more, depending on what was included in a given package, the size of the client’s business, and the complexity of work requested.
• However, Jack Nicholson earned around $60 million for his role due to his percentage.

This, coupled with the overwhelming evidence against Paramount that indicated a tort case would be lost , the studio settled with the writer and his producer for $900,000 and had the previous decision https://accounting-services.net/ vacated as part of the1990 settlement. Thus, Warner Bros. stood to lose a lot of profit by making a lot of money. The smaller the net percentage, the smaller the amount Warners had to share.

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The man who would love for you to think of him as both “Mister Documentary” and “Mister Independent”, Michael Moore, also filed suit over shady accounting practices. Having made $222 million against a $6 million budget, Moore’s 2004 documentary Fahrenheit 9/11 was a big surprise debuting at #1 in the USA . Moore waited until 2011 to sue his buddies Bob and Harvey Weinstein for a big, fat $2.7 million, claiming that the brothers had employed those similar creative formulas to cheat him out of his just income. A lawyer for the former Miramax executives responded that Moore had “been paid $20 million and he claims he should get $2 million more” and went on to call Moore’s claims “Hogwash”. While it might take a big screen investigation like a Michael Moore film to figure out where the real corruption here is, The Weinstein Company settled out of court with the big guy. After all we didn’t hear many entertainment companies swept up in the accounting investigations of the early ’00s. There is a grey area there, and the legality of this sort of profit sharing tends to be defined only when lawyers can prove damages.