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Comment by searine | Hacker News Reader

>They all made money

This is hollywood. Take the budget, double it, and add 50 million dollars and then you have an accurate idea of the true budget. To be "profitable" the reported boxoffice needs to be at least 3X the budget. For example, Sherman and Mr.Peabody had a budget of "150 million", made 300 million, but dreamworks still lost 57 million making the movie.

Known flops of the last two years are : Home, Penguins of Madagascar, Sherman and Mr. Peabody, Turbo, Rise of the Guardians.

Only The Croods and HTTYD were profitable.

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See Hollywood Accounting: http://tvtropes.org/pmwiki/pmwiki.php/UsefulNotes/HollywoodA...

Which, to be clear, is about studios making it appear that they never make a profit so that they can minimize their payout in bonuses, royalties, and taxes.

One particularly famous example: "Harry Potter and the Order of the Phoenix" earned $940M at the worldwide box office, yet Warner Brothers reported the film at a $167M loss on paper.

Link with an itemized, Hollywood Accounting-style breakdown:

https://www.techdirt.com/articles/20100708/02510310122.shtml

Serious question: how this can be legal?

If I have to explain myself to IRS why I bought 1TB drive instead of 500GB because in their opinion I did not have enough to backup, hence supposedly I attempted to defraud IRS on extra $6.00 of tax, why can they get away with hundreds of millions or even few billions?

Serious question: did that thing with the hard drive actually happen to you?

I call BS.

You must've run over the taxman's dog or something.

Hollywood executives swerved away from the dog, having watched enough movies to know that's how villains get made.

The reason the IRS doesn't care is because they get their tax money regardless. They just get it from the subsidiary instead of the people ot should have gone to.

Doesn't that work in the opposite direction? The "true" breakeven point is much lower than what the studios claim, not higher.

Yes. "Hollywood Accounting" means cooking the books to make a success look like a failure when to comes to paying people (like the IRS) who get a percentage of the profit.

How is it possible ? don't the IRS demand detailed recipts for every expense ? while sales are easily trackable.

They do have receipts since they own both sides of the transaction.

And to be honest, I'm not sure if the IRS cares since the profit gets taxed at some point in time.

The issue isn't that the budget is wrong (though it doesn't typically include marketing), it's that box office revenue isn't 100% the distributors. Around 60% goes to the distributor for US box office and as low 25-40% for foreign receipts. So 3X is probably right for a heavily marketed movie, but 2X might cover a less heavily marketed movie.

Plus DVD rights, streaming, and broadcast rights do bring in some extra money too.

Of course if you're the star paid a percentage bonus on profit, then take the profit, halve it, subtract 50 million, wash, rinse, repeat until profit is actually in the negative.

How about Kung Fu Panda 3? It did very well in China, and I believe I read that since it was a joint production of DreamWorks Animation and Oriental DreamWorks they ended up getting much more of the Chinese revenue than they would have had it been an all-American production.

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