February 27, 2019
"It will not only put Murdoch’s Fox sale in a whole new light, but may also raise questions about the future viability of Hulu, plus any platform enjoying what’s pejoratively known as 'Hollywood accounting.'"
I'm reading "Fox Rocked by $179M 'Bones' Ruling: Lying, Cheating and 'Reprehensible' Studio Fraud" (Hollywood Reporter). Lots of detail at the link.
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That's a lot of bones.
David Duchovny sues Fox 20 years ago with a similar claim. Said Fox sold the X-Files syndication rights to itself at less than fair market value.
Washington, several statehouses, the nonprofit sector and Hollywood: a nexus of financial corruption and the cesspit of our society.
Hollywood should be forced to use GAAP in accordance with every other industry.
I know next to nothing about contracts in the entertainment industry, but even I know that "points" are where the real money is at. Not surprising the execs were ripping off the actors.
As far as I can tell, the entire entertainment industry is peopled with scoundrels, greedy thieves, sexual harassers, and perverts.
Birkel said...
Hollywood should be forced to use GAAP in accordance with every other industry.
As Public firms how can they not? unless they use different standards in the holding company than in the subs.
The point here I think is the pricing games played in the vertical tiers of an integrated (vertically) supply chain.
Birkel has it. State and Federal authorities have granted Hollywood special rules. Force them to adopt GAAP and wait for the wails.
Organized Crime. The lawyers are window dressing. The story here is how the Arbitrator is not suicided yet.
The #MeToo movement backfired on Hollywood. Now the fuzzy accounting dam is busting. That antitrust angle is hilarious as the THR notes: The ruling also comes as the D.C. Circuit Court of Appeals has allowed to stand another mega-merger between AT&T and Time Warner, an example of vertical integration between a distributor of content and a producer. The media was enjoying that decision this morning because Trump got involved to stop it. But now we have this new ruling. Still, I suspect DC Circuit Court of Appeals trumps an arbitrator.
Hollywood Accounting....worse than Government Accounting.
GAAP accounting would not have fixed the problem. It would have changed the technique. The end results would have been the same. Hollywood Accounting isn't about financial reporting to the public. It's about cheating anyone who gets a cut of the pre-tax net. That cut has its own formula separate from GAAP reporting.
"Hollywood Accounting" is an old story
Cliff Robertson smoked it out long ago.
Anyway, Begelman rose in the sky until he became a chief executive at Columbia. It was then that Cliff Robertson’s tax attorney pointed it out to the actor that he had received a check for $10,000 from Columbia. I don’t remember that, said Robertson, I never got that money; and when he saw the check he realized that his endorsement had been forged “for cash.” There was an investigation, and it turned out that Begelman had been doing quite a lot of this thing, but usually with modest sums. In the early 70s, making a fuss over $10,000 was regarded as picky or anal in Hollywood.
It was a good story but that was long ago. Robertson died in 2011.
Hit records historially never make a profit.
The globalists are just trying to lower the price on acquiring fox so they can shut it up.
The IRS should get involved. That'll fix 'em.
The greatest smash-hit movies somehow never make a profit. Like Silicon Valley, Hollywood is ripe for aggressive antitrust action.
"Hollywood. You will never find a more wretched hive of scum and villainy. We must be cautious.”
There is nothing new under the Sun, is there? I mean, every year or so, you will read about Hollywood accounting that basically states nothing makes a profit that has to be shared contractually. This isn't the first time Fox has been accused of this with one of their series- see this story about the X-Files and David Duchovny.
Hit records historically never make a profit.
Not true. Hits by long established stars don't make a profit specifically for the record labels (because the income generated is offset by the cost of signing the stars). They make a ton of profit for the entity which owns the royalty rights.
Hits by newcomers drive record company profits.
Nonapod said...
As far as I can tell, the entire entertainment industry is peopled with scoundrels, greedy thieves, sexual harassers, and perverts.
I've heard it said that perhaps one reason why so many in the entertainment industry are such hard core leftists is that they think all corporations operate the way the studios and recording industry does. If all you know of business is that you're being screwed royally on a daily basis, it's easy to believe that every business operates that way.
Earnest Prole said...
The greatest smash-hit movies somehow never make a profit. Like Silicon Valley, Hollywood is ripe for aggressive antitrust action.
Antitrust, or maybe RICO.
Earnest Prole said...
The greatest smash-hit movies somehow never make a profit.
Yeah, I always hear about how you're supposed to multiply the production budget of a given movie by 2 to determine what the profitability cutoff is. So if a movie cost $200 million to create, its advertising budget will be $200 million, so it has to make at least $400 million to be considered profitable. That always seemed a little ridiculous to me though. I mean, 200 million for advertising? I'll confess my complete ignorance on advertising, but even so... that seems a tad high.
The IRS should get involved. That'll fix 'em.
At the corporate level, I am pretty sure the aggregate profits are accurately reported and deducted legally, for the most part. Where the studios cheat, though, is in the internal accounting, like, for example, selling the rights to Bones to Hulu for at a discount, but then Fox owning a significant fraction of Hulu itself. I imagine all the studios do this sort of self-dealing to cheat the producers, and the producers do to cheat the actors and writers. The quote from Star Wars above is probably on the mark.
Repeal the Hollywood tax cuts!
Seriously think of all the plastic surgery that’s tax deductible. Once the Oscar goody baskets became taxable, some of the multi-millionaires donated them instead of paying taxes on it.
Old Joe Kennedy set the standard.
Hello. This video by me about Cohaagen is not available yet on Hulu.
Hulu sucks. I'm glad to see shitty companies (yes, I feel for the worthy employees and their families) go under. Prevents forest fires.
I've always found "Hollywood accounting" to be a fascinating subject. It does seem to be one of the few industries in which market pricing doesn't really exist. The distribution arms of the companies excel at keeping the COGS low. It's tough to peg the profitability of any particular show within the ecosystem. Similarly, I don't watch the Golf Channel, but it's included in my cable bundle.
Are there no legitimate, HONEST, CPA firms in Hollywood. I'm guessing not, because it seems that would preclude them from being hired.
I'm over 60 and have been reading about "Hollywood accounting" for almost the last 50 years. Nothing ever really gets done about it.
That's a lot of cash.
Does an artist lament his lack of wealth?
Was he not free to do what his heart said he was born to do, and hear the glorious applause?
Does he not think - nay Dream - about how people not yet born will laugh or cry in seeing his performance?
Well, such Fame comes at a Price.
Here, son, just sign on the dotted line.
I will be your Hollywood Accountant.
So if a movie cost $200 million to create, its advertising budget will be $200 million, so it has to make at least $400 million to be considered profitable.
And if a movie somehow ends up profitable after that, additional items are added to its budget after the fact to keep it nonprofit.
Well in the 19th century the railroads did it. Basicly the same scam. See. Credit Mobilier. Maybe we need a Teddy Roosevelt for Hollywood.
I'm over 60 and have been reading about "Hollywood accounting" for almost the last 50 years. Nothing ever really gets done about it.
And the reason for that is incredibly obvious. Hollywood contributes vast sums of money to political campaigns, nearly all of it to Democrats but enough to squishy Republicans to set up a facade -- and to prevent anything from being done about "Hollywood accounting" now or ever.
Hit records do sometimes turn a nice profit. But makin' music is like buying an NFL franchise. Or buying the distribution rights to, "Gravity," starring a gray tank top with a woman named Sandra Bullock stuffed into it. Where was I? Oh yes. If you don't turn a profit, just remember the back end. That's where the real money is. Rumor has it that Sandra Bullock's splendid ass was clad in a thong during primary filming. The film is comprised of actors. PWND.
Did Spike Lee cover this issue during his speech and after event comments? Oh, hellz no!
Also..."Hollywood accounting" isn't limited to Hollywood (or the record industry). It seems to me these are the same strategies employed by the owners of professional sports teams to get the tax paying public (by way of bond issues) to pony up for their stadiums.
No two words in 2019 signal louder to hateful bigots they should be ready to harass than Hollywood and Accounting. Just a coincidence I suppose, the anti-Semitic whistling of these damn dogs.
Disgusting.
Your jealousy of the Jew is your own damn problem, all they want is to give children a polio-free life you monsters.
I first heard about re coming to America 30 some years ago.
And the reason for that is incredibly obvious. Hollywood contributes vast sums of money to political campaigns,
Hollywood accounting has nothing to do with accounting rules. It's a contract dispute between partners.
One very important reason to arbitrate a business dispute is confidentiality. Spare embarrassment to the losing side, which reads the decision, grimaces, and writes a check (or arranges a payment plan). But I guess the punitive damages aspect of the the award--5 times actual damages--which one rarely sees in an arbitration, forced the losing side to seek a review of the decision in a public court. Many parts of the arbitrator's written decision have been redacted for the public filing, making it harder to understand. I wonder how long that secrecy will last.
I suppose an award this earthshaking for Hollywood ways would have leaked out anyway, but for sure there are going to be a lot of folks with studio contracts contacting the lawyers on these papers and others to see if they may have a similar claim. There's a hint in the punitive damages section of the the decision that other such cases were introduced as grounds for upping the damages to punish, but the arbitrator decided he hadn't seen enough to factor the other cases into his decision.
@Rick, are you insane or merely gullible?
I get Spike Lee mixed up with Spike Jones. We had his album when I was a kid.
The procedural drama took in nearly half a billion dollars in its first seven seasons — Josephson even says James Murdoch once told him that Bones was "perhaps the most profitable show in Fox's history” — but the series was calculated to be a money loser. That meant no profits to share with Josephson and others.
Something similar happened with Universal Studios and The Rockford Files.
Eight year legal battle, with follow-up suits later.
They drive up production costs by subcontracting functions at exorbitant rates to companies they own and then drive down income by selling the rights at below market rates to other companies they also own. Synergy.
The article takes a while to get to the point. A point that should be blatantly obvious to anyone: reduce the declaration of profits to reduce the amount given to other people. Applies to the IRS, too.
Of course, Hollywood seems to take a lazy way of book keeping, which goes along their standard of ‘rules for thee and not for me’.
The fact that Bones ran for as long as it did is depressing. The show was formulaic crap. It jumped the shark way back in season 3.
Reminds me of the story about Affleck and Matt Damon in Vanity Fair a few years ago. Near the end of the story, Harvey Weinstein presented both of them with luxury cars for making him so much money on "Good Will Hunting." Then he proceeded to charge them for the cost of the vehicles.
That this appeared in Vanity Fair, and no consequences ever followed, is a pretty good example of ethical climate in Hollywood.
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