Richard Dreyfuss Takes Disney To Court Over Its Refusal To Allow An Outside Auditor To Examine Its Accounting Methods
from the Hooray-for-Hollywood-(accounting)! dept
It takes a lot of skill to turn hugely-profitable films into net losers, and Hollywood studios have it down to an art form — one that’s often more creative than their sanitized retreads and ultra-safe franchises and reboots.
Lucasfilms, now owned by Disney, produced several Star Wars films, amassing billions of dollars. But the actor who played Darth Vader has never received any residuals from The Return of the Jedi, which was the 15th highest-grossing film of all time as of 2012. Low-budget hit The Exorcism of Emily Rose grossed $150 million on a $19 million budget. And yet, its director has yet to see a cent of his residuals, which were supposedly 5% of the net profit. Somehow $131 million just… vanished.
No matter how much is exposed about Hollywood’s complete bullshit it calls an accounting process, it will seemingly never stop screwing over everyone but the studios themselves. It’s apparently far more profitable to simply weather the criticism and occasional lawsuit.
Speaking of the latter, Richard Dreyfuss has just filed a lawsuit against Disney over missing What About Bob? residuals. His co-complainant, Christine Wagner, is the widow of the producer of Turner & Hooch. Both have a problem with the way studios do math. Both tried to bring in a third-party to take a look at Disney’s books, and both were shot down by the studio. (h/t to Techdirt reader techflaws)
According to a complaint filed on Thursday in LA Superior Court, Disney has refused a demand by Dreyfuss and Wagner to hire their chosen auditor — Robinson Inc., founded by David J. Robinson.
In a potentially watershed case from attorney Neville Johnson, the complaint lays out how profit participation auditors are called upon to find monies due to profit participants and how studios are “make auditing as onerous as possible.”
The allegations are harsh, but also unsurprising.
Studios make auditing as onerous as possible. For example, they make the auditors sign strict confidentiality agreements before auditing commences in order to ensure that, if wrongdoing has occurred, others will not find out. Even more egregious, when errors are discovered with respect to a property, the Studios do not correct the error retroactively or going forward for other profit participants on the same property. Additionally, Studios intentionally understaff the audit departments so that audits can take many years to be scheduled, and then to complete. On information and belief there is currently a three-year queue to audit Disney, which is inexcusable and outrageous.
Dreyfuss and Wagner allege that studios often attempt to deter those seeking unpaid residuals with threats of blackballing and forcing them into restrictive confidentiality agreements and binding arbitration. The lawsuit also alleges that Disney’s refusal to recognize Robinson’s firm as qualified to perform an audit is based simply on its unwillingness to be audited by a firm it can’t control, rather than any lack of experience on Robinson’s part. The filing points out that Robinson has performed this service for a number of other movie and TV studios (including some of Disney’s television partners), in addition to serving as Director of Finance for both NBCUniversal and Warner Bros. He has also previously audited Disney.
Both parties allege that Disney is contractually obligated to allow them to audit the studio’s records related to the two movies, but that the studio has abused its “final say” power to limit audits to auditors it prefers, rather than those chosen by the plaintiffs.
This should certainly prove interesting if Disney is forced to make its auditing procedures public. But there’s only a slim chance that will happen. The dark calculus of Hollywood accounting is more closely-guarded than law enforcement methods and capabilities. If the plaintiffs manage to secure the court-ordered (and court-supervised) auditing they’re requesting, it will likely be met with settlement offers, rather than the “outing” of the studio’s perverse number massaging.
Filed Under: accounting, audit, richard dreyfuss
Companies: disney
Comments on “Richard Dreyfuss Takes Disney To Court Over Its Refusal To Allow An Outside Auditor To Examine Its Accounting Methods”
Think of the artists!
This is why Disney keeps pushing to get Copyright extended. They’re just thinking of the poor artists and making sure they get their fair cut. It’s just that, they haven’t made enough profit to give the artists their fair cut yet and if they allow the copyrights to expire, the poor actors won’t get paid!
Re: Think of the artists!
No, it’s because the films make lots of money, but the pirates steal it all, obviously. That’s why we need stronger copyright laws like SOPA, to protect artists!
if they do get the court order and settlement offers, I hope they turn it down. It will only help those that come after them.
Let's list the basic subjects Hollywood failed:
1. Math
2. History
3. Social Studies
4. English
Re: Let's list the basic subjects Hollywood failed:
Re: Re: Let's list the basic subjects Hollywood failed:
Re: Re: Re: Let's list the basic subjects Hollywood failed:
Yeah. I think that someone cut off all of their fingers and toes so they have nothing to count with!
Re: Re: Re: Let's list the basic subjects Hollywood failed:
Make 5. Accounting and you’ve scored perfectly.
Re: Re: Re:2 Let's list the basic subjects Hollywood failed:
Shouldn’t somebody be blaming Jews for something by now?
Re: Let's list the basic subjects Hollywood failed:
Don’t forget:
5.Art
6.Ethics
Unfortunate
This appears to be a civil suite. There should be a criminal case for fraud, but who’s gonna bring that?
Corruption in the political system prevents many from doing their jobs.
Re: Unfortunate
and the justice system, as well as the criminal system.
Why don’t we just say almost the whole countries watchdog systems are hopelessly corrupted
Excuse me if this gets political
Perhaps Hollywood just doesn’t live in the same world as the rest of us. And I don’t mean just the studios, but the actors, directors, producers, and all the other behind-the-scenes folks who make the industry hum along.
See, for the rest of us (or so we are told by the Hollywood elites), labor unions are virtually required to have an adversarial relationship with the people cutting the checks. But SAG-AFTRA, DGA, and all the other unions that represent those workers seem to think Big Studio has their backs.
It’s like they have a massive blind spot to just how much Hollywood Accounting is screwing them over, and has been for decades. All they see is a giant © … and then ignore the knife in their back.
Downloading
I don’t download movies, but cases like this make me think, “Why not?”
It’s not like the people making the movie will get more if I buy the Blu-Ray. Only greedy jerks who I would rather not enrich.
Re: Downloading
Download the movie and then send Richard Dreyfuss some cash.
Re: Re: Downloading
Check out a copy from your library, or buy a used copy from a pawn store. Screw the lot of them.
Re: Downloading
This is one reason why any moral argument made by studios against movie piracy falls flat on it’s face. You simply cannot claim the moral high ground on piracy while at the same time committing a level of fraud that would most likely be found illegal if it were properly exposed in a court of law.
Re: Re: Downloading CRAP makes you full of CRAP.
Re: Re: Re: Re:
There once was an out_of_the_blue
Who hated the process of due
Each film that he’d paid
Was DMCAed
And shoved up his ass with a screw
Re: Re: Re: Re:
Not forgetting, you didn’t use a horrible TOR-based pun nickname or change your IP address, and everyone can still figure out it’s still you.
A pile of shit would be more useful than you.
Re: Re: Re: Downloading CRAP makes you full of CRAP.
You make an awful lot of unsubstantiated and incorrect claims about me…
Re: Re: Re:2 Downloading CRAP makes you full of CRAP.
Do tell. We’re waiting with breathless anticipation.
Re: Re: Downloading
“It says here you’re intelligent, honest and reliable. What makes you think you’d be an asset to this company?”
— Herman.
Re: This is why piracy gets to retain its jolly reputation...
Of crime on markets of dubious legitimacy. The recording industry has similarly been screwing artists despite their You wouldn’t steal a bear anti-piracy campaign and their repeated pronouncements that they support the artists from which they profit.
As pirates preyed on the Spanish silver train and supplied restaurants with low price but quality oysters, media and software pirates are one for all for one. We’ll share share and share alike with you and love you like a son.
Honest, brave and free!
The soul of decency!
You know, we’re like all that.
Percentage of net
At this point, if you sign a contract that entitles you to a percentage of net and actually expect to get anything from it, you and your managers are idiots.
Yes, I know that it blaming the victim, but come on: fool me once …., etc..
Re: Percentage of net
Depending on the job you may not have a choice.
Re: Percentage of net
Of course, the movies being discussed are from the 25 years ago. A little while before “this point”.
Re: Re: Percentage of net
So you think it’s better now? Not sure I follow.
Re: Re: Re: Percentage of net
The post i am responding to says that if today you signed a contract for percentage of net you are an idiot. I am pointing out those contracts were not recent contracts but from 25 years ago. If anything I was implying that its worse now. But I was intending to do nothing of the sort, merely indicate that knowledge of the practice may not have been as widespread.
Re: Percentage of net
Yes, this is the practical approach. Assume the advance is all you’re going to see.
The judge needs an order that specifies that all details
be filed with the court, regardless of any confidentiality agreement, with specific language to preclude sealing of the file or clearing of the court.
New version of old story. The first version I remember is a 60 minutes piece on how someone involved in the movie Coming to America hadn’t received any money because the studio claimed it had lost money. The studio probably still lists that movie as a money loser.
Lesson learned: Any contract with a media studio should only involve numbers like percent of (world wide gross proceeds + books sales + toy sales + video + cable + what ever else might make the studio money).
Re: this BS
Has gone on for so long it is time for it to be stopped.
Re: Re:
You are referring to the Art Buchwald vs Paramount Studios lawsuit.
http://en.wikipedia.org/wiki/Buchwald_v._Paramount
Buchwald wrote “Coming To America” and was entitled to a percentage of the net profits. Yet somehow this successful movie never made one cent in profit.
Sadly, the studio blinked and paid off Buchwald before their entire “Hollywood Accounting” scheme could be exposed.
We’re gonna need a bigger boat.
Re: Re:
We’re gonna need more copyright maximalists.
And there’s another major problem. We talk about “corporate sovereignty” in the context of ISDS and international trade treaties, but this is what it looks like here at home. The First Amendment guarantees the people the right to have their day in court, and the Constitution trumps all other laws in the USA, including contract law. Therefore, isn’t any contract that strips a person of their right to petition the Government for redress of grievances unenforceable per se?
Re: Re:
No, it’s not. It is perfectly legal (and common) for you to sign away constitutional rights in a contract. An NDA, for example, is you signing away your first amendment right.
Those binding arbitration clauses are poison, though. When you agree to binding arbitration, you are essentially agreeing to give up any hope of winning in a dispute.
Re: Re: Re:
An NDA, for example, is you signing away your first amendment right.
Really? Because I thought that NDAs were agreed with private companies, not the government…
Re: Re: it surprises me that binding arbitration clauses and NDA have any legitimacy.
This reminds me of an old thief-finder scam (in which they got paid by the execution). He’d hire his marks, make them swear an oath (at risk of eternal Hellfire, which they believed) not to discuss the nature of their work. He’d then have them commit some crime (e.g. minting counterfeit coin) and then turn them in.
For sake of their souls, they’d stay silent to the gallows. It took the intervention of a clever bishop to crack the scam after countless victims.
NDAs are the same thing.
And binding arbitration pretty much assures you’re going to be betrayed by the one forcing the clause. By signing into such an agreement, you’re essentially stating you are doing so out of legal necessity, which should not only void the binding arbitration clause, but the entire contract.
People don’t sign away their rights unless they have no choice but to do so. Morally its the same realm as extortion.
Re: Re:
“The First Amendment guarantees the people the right to have their day in court”
Lol, no it doesn’t.
Re: Re: Re:
It guarantees freedom of religion (twice), freedom of speech, freedom of the press, “the right of the people peaceably to assemble,” and the right “to petition the Government for a redress of grievances.” This last one is known in the modern lexicon as “having your day in court.”
Re: Re: Re: Re:
No, it is not.
You could cite the due process clauses of the 5th and 14th Amendment, or the right to jury trial of the 7th Amendment, and at least have a colorable argument. I have no idea why you’re doubling down on the 1st Amendment. Just admit you made a mistake. It’s not the end of the world.
If you’re interested in a discussion of the issue you raised that is based on actual legal documents, try this: http://archive.law.fsu.edu/journals/lawreview/frames/244/mannfram.html.
Or you could keep on with this: http://www.theonion.com/articles/area-man-passionate-defender-of-what-he-imagines-c,2849/
Re: Re:
the Constitution trumps all other laws in the USA, including contract law.
Except NDAs with Harris Corp, those trump everything
Re: Re: The US Constitution < Harris Corp NDAs < The long arm of the law
…by which I mean assault rifles in the hands of law enforcement officers.
Heads I win tails you lose, from Disney’s view
We need to get rid of the "Biggest Grossing Movie" list
It’s nonsense. What we really need is a Biggest Netting Movie” list and promote those. That would really start to show the insanity to the people that watch the movies.
Maybe there ought to be an Oscar category for movies that make a net profit, since that seems to be as outstanding of a performance as anything anyone else does.
Re: We need to get rid of the "Biggest Grossing Movie" list
That would actually be pretty cool. Or alternatively all of the “highest grossing” lists need an “net earnings” column.
Re: Third-party non-profit intervention?
Since Hollywood shenanigans are policy, maybe an external non-profit organization that runs audits on top grossers.
That might shine some sunlight on the Hollywood inner workings, and raise awareness for the public where their box office dollar goes.
I dunno, maybe the public doesn’t care, but I’m disinclined to watch a movie that was made with puppy scalps and spinal fluids of forsaken children.
Simple Proof by conservation of money
I don’t even think an audit is required to prove the falsity of “Hollywood Accounting”. They admit that their intake exceeds their expenditures. Have them assign all intake to specific “properties”, and all their expenditures to “properties”. Wanna bet the numbers don’t match, especially when compared to the statements on the contracts???
The Simple Fix Is...
to not work for the studios that won’t let you audit and or won’t do proper accounting.
Simple. Easy. Effort-free.
so the courts will be as guilty as Disney for keeping the truth from becoming public (or at least a lot less hidden than at present!) the really annoying thing is that people like this can avoid payment to employees and the tax man for years and when caught get away with paying nothing to the employees and only a pittance to the tax man. any ordinary person gets shafted good and proper for more than they should but cant afford to fight the government to get any over charge returned. the studios basically ‘pay’ their way out of everything by snuggling up to the politicians it knows will be on their side
Rule #1 in Hollywoodland: NEVER take “net profits” from the moguls. ALWAYS take the GROSS ones!
These poor souls were clearly poorly advised. (Maybe they can sue for that.)
What do you expect?
This is the same art profession that celebrates its criminal accounting practices with musicals like “The Producers”.
Re: The producers was supposed to be a joke citing an egregious example of exploitation
The same way, I suppose, The Shield was supposed to be a gritty story about bad cops in a bad precinct.
Both were supposed to be extreme, outrageous examples. One for humor, one for edge. It just turns out Hollywood writers don’t research enough or understand reality.
In the Gotham pilot, in a precinct that is supposed to be corrupt from the lowest beat officer to the commissioner, Gordon and Bullock fret over shooting an innocent man and getting fired for it. That is, a man innocent of the Wayne murders, but still a guy with a rap sheet who bolted, fired shots and fought.
Gotham debuted after Ferguson and the epidemic of unconvicted murders by law enforcement officers in the news. For a cynic like me it was hilarious naivete on part of the scriptwriter.
Re: Re: crap.
Forgive my sloppy markups.
If any of your corporate accounting is in question then all of your accounting is in question. It it’s time to invoke Sarbanes Oxley because weep knows what fraud they are pulling on the share holders.
Typical liberal tactics
Lie, deny. When caught, lie and deny more. Just ask Obama, Hillary, Bill, John Kerry, Pelosi, Reid, etc.
Re: Typical liberal tactics
Lie, deny.
When caught, lie and deny more.
Just ask Bush, Condi, Cheney, John Bolton, Boehner, Graham, etc.
Re: Typical liberal tactics
Still trying to blame the other people?
Oh Google?
For a tech blog, you seem to be very much attached to the mundane – the literal small fry.
No great investigations into Google? We know that they have used every tax dodge and offshoring option possible to avoid paying their fair share of taxes. Many major tech companies have done similar things (did anyone look at Facebook’s results yesterday?). They didn’t rip off some overly entitled producer or artiste, but rather screwed the public directly.
From what I understand, the taxes avoided by these corporations in the US alone would be enough to pay for a college education for everyone currently in the education system.
Who cares about hollywood accounting? It’s small potatoes in the real world.
Re: Oh Google?
It is the little things that determine the big things. Simply because the number of little things will far outweigh the big things.
You need to care about both. Google works within the confines of the various laws it deals with. Those who argue it should be paying more into the government coffers have turned the blind eye to the simple fact that it is the same governments who have created the environment in the first place. There the one’s who made it the acceptable way of doing business.
What’s that old now. Oh Yeah If you sleep with a pig, you cannot expect to get up spotless in the morning
Unfortunately, even your moniker says it all about you – a complete lack of empathy and understanding about the real world and its problems.
I can only hope that you are not a father or a husband or in charge of any group of people. They will be suffering a great deal from you attitude and outlook.
Re: Re: Oh Google?
What’s that old now. Oh Yeah If you sleep with a pig, you cannot expect to get up spotless in the morning
and the pig liked it…
Re: Oh Google?
No great investigations into Google? We know that they have used every tax dodge and offshoring option possible to avoid paying their fair share of taxes. Many major tech companies have done similar things…
You should be careful which way your deflections are headed.
Corporate tax dodging isn’t limited just to tech companies you know. I’ll bet you dollars to donuts that Disney also does the exact same things reduce their tax liabilities.
Re: Re: Oh Google?
I agree with you completely. There is no intent for deflection, only to point out that the workings of a private contract between a studio and a producer is really just not important when compared to the massive amounts of tax that are avoided by corporations in the US and around the world.
I don’t worry about jaywalking when someone is shooting at me. Priorities. Getting all uppity about the jay walking it to miss the scale of the offence under the circumstances. There are bigger fish to fry (including the studios and record labels that do the same sorts of tax avoidance tricks). Let’s focus on what matters to the people, not the private dealings of the rich and stupid.
Re: Re: Re: Oh Google?
And you immediately turned your focus to Google, which from your comment history anyone can tell you have a massive ax to grind against.
Seriously – you complain whether or not Google does business in Europe. If that’s the extent of your priorities, that’s just sad.
Re: Re: Oh Google?
Two wrongs don’t make a right. Instead of the mysteriously vague ad hom warning — “You should be careful which way your deflections are headed.” What does that even mean? — you should state something positive.
Re: Re: Re: Oh Google?
Two wrongs don’t make a right. Instead of the mysteriously vague ad hom warning — “You should be careful which way your deflections are headed.” What does that even mean? — you should state something positive.
Umm….Ok. How’s this:
I’m positive that Whatever was trying to deflect the conversation away from Hollywood accounting and onto Google and that he should be careful because the big studios do the same type of things he’s accusing Google of.
(PS: I’m sorry you weren’t intelligent enough to figure that out for yourself.)
Re: Oh Google? >>> "No great investigations into Google?"
You’re new here. You are at the wrong blog for Google-bashing. Someone really persistent has nagged Masnick for years about Google, working questions in everywhere possible to point up Masnick’s lack of interest in actually criticizing Google. The only time Masnick runs anything (even mildly) bad about Google is after the NYTimes has vetted it.
Google directly funds Masnick, though that won’t be revealed here by Masnick. But just go to his latest flop-to-be, the “Copia Institute”, and there’s Google’s logo. How much? No telling, but Masnick isn’t expensive for his “tech” darlings, if ya know what I mean.
Re: Re: If your going to lie and throw out personal attacks, at least put some Effort into it
You… do know that the site has a search function right? As in it takes all of 10 seconds to find the articles covering Google on TD, good and bad? Mike and the others that write for TD may praise Google, or any other company when they do something that they agree with, but they are also more than willing to criticize them when they screw up, and have done so repeatedly.
As for the Copia Institute being ‘evidence’ that Google is paying him off? You may not have noticed, since you seem to have an obsession with Mike and Google, but Google is only one of those listed as sponsors/members, alongside MacArthur Foundation, Yelp(which TD has also been critical of in the past), USV, Automattic, and several others.
Really, can’t you lot ever come up with new material? If you’re going to be pests and toss out personal attacks, and ad-homs, you could at least be creative doing so, not just toss out the same old rubbish all the time.
Re: Re: Re: Re:
out_of_the_blue has no idea what he’s talking about, so he can’t come up with no material.
Hasn’t stopped trolls like him and Slonecker from fantasizing about each other. I suspect inbreeding.
Re: Re: Oh Google? >>> "No great investigations into Google?"
“Someone really persistent has nagged Masnick for years about Google”
Yes, they have. An anonymous coward such as yourself, who refuses to accept any of the answers given, repeatedly asks the same questions that have been answered, and refuses to accept the existence of the many posts critical of Google. He demands personal attention and whines when his posts (among hundreds or thousands posted each day) don’t get immediate personal attention, while posting obvious lies that can be debunked in moments.
Why should the claims of such a person be trusted?
“The only time Masnick runs anything (even mildly) bad about Google is after the NYTimes has vetted it.”
Oooh this is a new line of bullshit! Cite?
“Google directly funds Masnick, though that won’t be revealed here by Masnick.”
Possibly because it’s not true? I’m yet to see evidence beyond “Google sponsored a place where Mike gave a talk” and “Mike was named by Google in a lawsuit against Oracle” (during which he disclosed that some articles had been sponsored by Oracle – funny how morons don’t get their panties twisted over that company. I wonder why? Maybe because MPAA shills don’t get paid to attack them despite the same evidence as their Google claims?)
So, are you going to furnish us with any facts, or are the rantings of an obsessed anonymous proven liar meant to be a smoking gun?
“But just go to his latest flop-to-be, the “Copia Institute”, and there’s Google’s logo”
One of many. Is it your opinion that Mike is also paid to shill for the MacArthur Foundation, Yelp, Automattic and a number of venture capital firms? Or, are you cherry picking data to pretend you have a point?
Re: Re: Oh Google? >>> "No great investigations into Google?"
Fuck off! Mike listed a bunch of articles published here bashing Google just the other day, and they were just his choice picks. Get lost, goof.
Re: No, it's not always about Google
Who cares about hollywood accounting? It’s small potatoes in the real world.
Well let’s see, given the go-to excuse for why stuff like copyright infringement is so bad is that it hurts creators by keeping them from making any money, and hollywood accounting hurts creators by keeping them from making any money, that should be you, what few honest studios there are(assuming there are any), and everyone else.
If you think copyright infringement is bad because it potentially deprives artists of a sale they would have otherwise made(sometimes it does, sometimes it doesn’t, sometimes it does both), how about intentionally screwing people over via accounting tricks, such that residual payments that people would have gotten, were the profits gained by movies honestly recorded, are instead no-where to be found, and the movie is instead, on one set of books at least, treated as though it’s never profitable, and therefor no payments are required.
For someone theoretically on the side of ‘protecting’ artists and creators, you sure seem to be dismissive of dirty accounting specifically designed to screw them over.
Re: Re: No, it's not always about Google
I think you went a long way to make a point that is entirely irrelevant. You almost got back on track, but you lost your way.
If people sign deals for “percentage of net” without knowing what is involved in going from gross income to net profits, then they had pretty bad legal advice up front. Movies like Star Wars franchise films are rarely net profitable for many reasons. One thing is licensing (characters, screen play, and the like) which is an upfront and ongoing cost. A percentage or even a fixed amount per unit sale / rental / distribution is paid on all of the income from these movies. Done right, it means that the rights holders are generally the ones making most of the money long before the net is calculated.
It’s pretty much the same deal that large corporate entities use to shift income off of their books, by creating expenses that need to be paid to offshore companies that hold rights, provide accounting and administrative services, and the like. Essentially, they “let” the offshore companies bill them for enough to syphon off much of the income long before the question of profits come into play.
What you call “hollywood accounting” is just “big business accounting”, nothing more and nothing less. Producers, actors, and others sign contracts for percentage of net without having an idea what the gross to net calculations will be.
Hollywood does have one good trick however, which is where major players in a film get a percentage of gross over a certain level of sales or income. As an example, a movie might cost 50 million to make, and at 150 million of income, the leading actor(s) split a percentage of the income over that point. Producers and directors are often on this sort of deal, which not only pays them handsomely in the short term for a films success, but keeps on paying them in the future as long tail sales keep coming in. Since it’s calculated BEFORE the net generally, it means less actual profits. If you have a handful of different players (investor, producers, directors, stars, writers, etc) on this sort of plan, when combined with licensing and such it can pretty much render any project as unprofitable on a net level.
Again, big corporations have different variations on this sort of idea, but the song remains the same – it’s all accounting, and it’s all about avoiding paying the little guy or “the people” their due. Uncle Sam has no choice, the tax laws generally address net profits and not gross income. Actors and producers do have a choice, and those who (foolishly) take net percentage deals get pretty much the same thing Uncle Sam gets… nada.
Re: Re: Re: No, it's not always about Google
“If people sign deals for “percentage of net” without knowing what is involved in going from gross income to net profits, then they had pretty bad legal advice up front”
So, by that logic, musicians who signed a contract for royalties, rather than a fixed fee upfront, had bad legal advice and only have themselves to blame if they can’t feed their families from work they did 50 years ago?
That’s a interesting view coming from you. I’ll bear that in mind in other threads.
“One thing is licensing (characters, screen play, and the like) which is an upfront and ongoing cost”
Erm, you do realise that they get paid for the licencing, often both in upfront fees and royalties? How in the hell are they a net cost?
“It’s pretty much the same deal that large corporate entities use to shift income off of their books”
Ah, so you admit that studios are using the same tactics as Google! Why, then did you try to derail the thread to attack that company when you admit that entire industries are doing the same thing? Almost as if you have an agenda by posting here. Hmmm…
Re: Re: Re:2 No, it's not always about Google
Nice to see you are still around Paul. You still have reading issues, I gather, but that’s a different issue for next month.
“So, by that logic, musicians who signed a contract for royalties, rather than a fixed fee upfront, had bad legal advice and only have themselves to blame if they can’t feed their families from work they did 50 years ago?”
You don’t know the difference? Royalties are a “before the net” thing and not an after the net thing. Record gets sold, band gets royalties. They aren’t waiting for profit. Most bands also get a major up front that has to get paid off first, but that is a very different game. Bands generally are not on “net profit only” basis.
“That’s a interesting view coming from you. I’ll bear that in mind in other threads.”
Only keep in mind that you didn’t understand (again).
“Ah, so you admit that studios are using the same tactics as Google!”
I never said otherwise. My original point is only that the studios and such do it on what is a very small scale. Google does it with BILLIONS of income, not millions. Moreover, they aren’t using offshore to move money around to avoid tax as much as to avoid paying certain people and to profit others. Google (and other big companies) do it to avoid paying tax, which harms all of us.
Go have a look how much search and ad business Google does in your country, and then try to figure out how much tax they paid in your country. If your country has higher corporate taxes (more than 5%) then you can almost be certain that most of the money went offshore long before tax time. This harms you directly, why worry about how a studio counts their beans when it doesn’t really harm you?
Re: Re: Re:3 No, it's not always about Google
“Royalties are a “before the net” thing and not an after the net thing.”
So, you’re saying that no current record contract includes royalties? I assume you have a cite for that claim, as that sounds rather ridiculous?
“My original point is only that the studios and such do it on what is a very small scale. Google does it with BILLIONS of income, not millions.”
So do the studios. Universal Studios, part of a huge multinational corporation, has just taken in over $1 billion worldwide for a single movie (Furious 7), which takes their current year to nearly $2 billion worldwide. In case you didn’t notice, it’s still only April, Universal still have several movies that look to be guaranteed moneymakers coming up, and Furious 7 is still the highest grossing movie in the US. If they end the year with less than $4-5 billion in gross, I’ll be very surprised – and those are just the figures that are easy to get publicly (it’s much harder to get accurate figures for DVD sales, licencing, merchandising, etc. – although as ever if anyone has such sources I’ll be very happy to examine them)
How is this “only millions”, especially once you start to consider the rest of the group’s income? That’s just one studio, there are others likely to rake in similar amounts this year. The domestic US box office alone has been worth around $10 billion every year for the last few years, and the US is increasingly worth less than 40% of the total gross for most movies.
But, why let actual facts get in the way of your bare assertions, huh? Only millions? Please, I don’t even need to check another page to know you’re full of shit.
“This harms you directly, why worry about how a studio counts their beans when it doesn’t really harm you?”
Because the studios are doing EXACTLY the same thing. I don’t give a crap what Google does individually when it’s something that’s standard for all corporations. Want me to sign on to something to stop all corporations from doing this? I’m on board. Want me to pretend that Google is somehow uniquely evil and we should ignore the actions of every other corporation? Nope.
Re: Re: Re:4 No, it's not always about Google
“So, you’re saying that no current record contract includes royalties? I assume you have a cite for that claim, as that sounds rather ridiculous?”
I didn’t say that. Royalties are paid “before profit” and not after. They are percentage of gross, or sometimes the percentage of a fixed net (ie, the costs towards the net don’t change). Royalties are generally not paid on profit, they are paid on income.
“So do the studios. Universal Studios, part of a huge multinational corporation, has just taken in over $1 billion worldwide for a single movie (Furious 7),”
Yes, and Google took in 15 plus billion in the same quarter. Scale is important here. Universal may or may not make about 8% of the income of Google (we won’t mention Facebook and other online billionaire companies in the discussion).
You can read here if you want to understand better (just read slowly do you don’t miss anything):
http://qz.com/240511/heres-how-much-tax-google-paid-on-its-european-operations-last-year/
“I don’t give a crap what Google does individually when it’s something that’s standard for all corporations.”
You need to understand that this is not standard for all corporations. It’s something created quite recently all considered by tech companies who were looking to move money from high tax areas (where they do business) to low tax areas (where they do almost no business).
Nobody was claiming unique evilness – only scale. I would think a Tech blog would be more interested in the goings on at Tech companies, not old line movie companies.
Anyway, enough fun for this month, you can talk to yourself now, see you sometime in May or June.
Re: Re: Re:5 No, it's not always about Google
“Yes, and Google took in 15 plus billion in the same quarter”
So? How does that make your assertion that studios make million and not billions somehow true?
Yes, we get it, you have such an irrational hatred of Google that you’ll forgive all the sins of other corporations. But, stick to facts and not laughable fictions, OK?
“You need to understand that this is not standard for all corporations. It’s something created quite recently all considered by tech companies who were looking to move money from high tax areas (where they do business) to low tax areas (where they do almost no business). “
Citations. I’m sorry, you’re such a poor liar that I can’t take your word at face value. Focus on how this affects them internationally, by the way, not some localised rule since you seem to be switching between local and global figures on a whim. Especially focus on how only tech companies are able to do this.
“I would think a Tech blog would be more interested in the goings on at Tech companies, not old line movie companies.”
Why would they not, given that these “old” companies are directly trying to change laws to cripple tech companies in order to protect their own businesses? That’s even without considering the amount of tech that these companies depend on (what, did you miss digital projection and the CGI used in the movies themselves, for example)?
But, you can’t pretend that the studios don’t make billions any more, so deflect, deflect, deflect!
“Anyway, enough fun for this month, you can talk to yourself now, see you sometime in May or June.”
I’ll be here to debunk the pathetic lies you spew in the same way, see ya!
Re: Re: Re:5 No, it's not always about Google
Royalties are paid “before profit” and not after. Epic Games (and may others) would like a word with you. XD Royalties can be paid both before and after profit, it depends on the contract.
Now back to the legal mumbo-jumbo. IIRC Google’s tax practices may be SHADY and IMMORAL but they are NOT ILLEGAL, so if you want something to change, it’s to change THE LAW that allows this in the first place.
On the other hand “Hollywood Accounting” may or may not be illegal. It’s never been truly tested in court and Hollywood wants it to stay that way.
So it’s not comparing jaywalking with murder. It’s comparing a potential misdemeanor (Google) to potentially full-blown financial fraud (Hollywood) involving multiple parties (actors, set staff and even shareholders).
Re: Re: Re:4 No, it's not always about Google
Oh, one last thing:
http://www.boxofficemojo.com/studio/?view=company&view2=yearly&yr=2015&p=.htm
You may want to reconsider your billion dollar numbers, unless they had an amazing amount of sales since Monday.
Re: Re: Re:5 No, it's not always about Google
You might want to consider the fact that I was quoting WORLDWIDE revenue, not the domestic figures you linked to.
Unfortunately, Box Office Mojo doesn’t have a worldwide breakdown per studio, but here’s the worldwide figures for the year per film:
http://www.boxofficemojo.com/yearly/chart/?view2=worldwide&yr=2015&p=.htm
As you can see, at the time of writing, Furious 7 has made $1,156.7 million and Fifty Shades made $568.8 million. That’s 1.73 BILLION for two films, 4 months into the year for a single studio. Tell me again how the industry doesn’t rake in billions.
After your hiatus, try to at least develop the ability to read your own links and consider that arguments being made. You’ve failed miserably here.
Re: Re: Re:6 No, it's not always about Google
Actually, after posting that, I noticed that you can filter on that page per studio.
http://www.boxofficemojo.com/yearly/chart/?view2=worldwide&yr=2015&sort=wwgross&order=DESC&studio=universal.htm
At the time of writing, Universal have made $1,920.9 million worldwide on 6 films. They still have a number of blockbusters such as Jurassic World and Minions to come along with numerous smaller films. But, this doesn’t count as billions of revenue in your world. Got it.
Re: Re: Re:5 No, it's not always about Google
If you look at
http://www.boxofficemojo.com/movies/?id=fast7.htm
you’ll see that FF7 brought in ~870 million from foreign markets for a total of $1.1 billion.
Re: Re: Re:3 No, it's not always about Google
When was the last time Google sued people to the tune of several thousand dollars per alleged offense, based on shoddy evidence that has never been cleared by a court, and subsequently pocketed said settlement money that was claimed to have been “stolen” from artists?
When was the last time Google demanded an extension of copyright laws and insisted on pulling stuff out of the public domain?
When was the last time Google lobbied in favor of laws to make consumer decisions and actions illegal with legitimately purchased goods?
Really, if your best excuse is “But Google is richer and I hate them”, that’s pathetic.
Re: Re: Re: No, it's not always about Google
If people sign deals for “percentage of net” without knowing what is involved in going from gross income to net profits, then they had pretty bad legal advice up front.
Or they were given the ultimatum of ‘Sign on our terms, or get out’. Or they didn’t expect to be screwed to the point that the method doing it has it’s own name it’s so infamous at this point. Whatever the reason, it doesn’t change the fact that the method they’re being screwed with is pure slime at best.
Studio rakes in the profits, which can be extensive, but funny thing, when it comes to paying the actors, or even the director, why, would you look at that, suddenly there’s not a cent to be found, as the movie goes from highly profitable to still not even close to recouping the ‘costs’.
One thing is licensing (characters, screen play, and the like) which is an upfront and ongoing cost.
You seem to be a bit confused as to how licensing works. If a studio makes a movie, and another company wants to license the characters or the movie universe for game/toys/whatever, that company pays the studio for that, not the other way around.
As for screenplay costs, well, let’s talk about how that’s worked out before.
The movie ‘Forest Gump’ was based upon a book written by Winston Groom, who was paid $350,000 for the screenplay rights to his book, along with a contract for 3% of the net profits. The film itself cost $55M to make, and brought in ‘total of $677,387,716 worldwide.’ Subtract production costs from theater profits, and so far we’re looking at $622M in profits.
Now according to Paramount(the studio that released it), ‘costs’ clocked in at $62M(though if you believe that number I’ve got some lovely lunar property I’m sure you’d be interested in purchasing). However, assume for the moment that every last bit of that was legitimate costs, which brings the profits down to $560M.
Now, here’s the $560M dollar question: How much do you think the writer who was promised 3% of the net profits was paid? Even taking the cost to produce, and the other ‘costs’ that the studio tacked on, the film still made over half a billion dollars, so take a guess how much his 3% of the net was?
There may have been one ‘upfront cost’, but the only ‘ongoing’ one was trying not to laugh in the author’s face when he asked when he’d be seeing his cut, and if they did it once, I have no doubt they’ve done it time and time again since.
What you call “hollywood accounting” is just “big business accounting”, nothing more and nothing less. Producers, actors, and others sign contracts for percentage of net without having an idea what the gross to net calculations will be.
Yeah, I mean, what idiots right, not realizing ahead of time the myriad ways massive profits can be spun as horribly losses when it comes to paying them. /s
Once again: You are defending intentional actions who’s sole purpose is screwing people out of money they are owed. Coming from someone who is constantly saying how terrible piracy is, how it’s taking money out of the creator’s pockets… well, the double-standard is rather striking.
It’s okay for a large company to screw people out of money(“It’s their fault, they should have bargained harder with the clout they didn’t have and expected us to cook the books!”), and that’s not something to get upset about, but if a regular person does it, now suddenly it’s a terrible, immoral crime?
Tax dodges by companies may be an issue worth discussing, and they may be all sorts of dodgy, but that isn’t the topic of the article, hollywood accounting, and how it leads to people being screwed over, is.
Even if tax dodges do involve much more money, it does not change the fact that running two sets of books, one for when it comes time to pay the studio, and one for when it comes time to pay the actors, directors, and others involved in a film, is an incredibly sleazy way to avoid paying out, and coming from the same groups that are always crying out about how concerned they are about protecting creators, and how not paying people for their work is just so terrible, and needs the direst of punishments… well, that kind of hypocrisy needs to be pointed out.
Re: Oh Google?
Ah, there it is. I was wondering which troll would try and defend this. But, you can’t so deflect, deflect, deflect!
“We know that they have used every tax dodge and offshoring option possible to avoid paying their fair share of taxes.”
…and the movie studios haven’t? Please…
“They didn’t rip off some overly entitled producer or artiste”
Neither did Hollywood, unless your definition of “entitled” now means “terms agreed in a legally binding contract”. If you don’t care about those, why do you care about other legally binding contracts like, say, copyright or tax law?
“everyone currently in the education system”
Jealous of those who had an education in the real world, rather than the fantasy world you seem to inhabit?
Re: Re: Oh Google?
Shhhh. You’re going to scare The Anti-Mike/horse with no name/Just Sayin’/My Name Here/bobmail/fitta if you keep throwing facts around like that.
Re: Oh Google?
Who cares about hollywood accounting?
Who cares about your opinion? It’s small potatoes in the real world.
Re: Oh Google?
So, she’s saying Disney should pay?
Thanks for agreeing, dear.
iNTERESTING
Think about a pro Auditor, may not be able to figure some of this out..
How about the IRS??
How about the IRS with a 30% cut in financing…
Where is the governement!!!!!
Serious question, why is the government agencies that should be investigating them for tax fraud and selective accounting???
I certainly hope that somehow a case can go forward and massive fines are given and corruption uncovered, imagine the money that would be returned to other actors of they could prove that there were crimes committed to cover up their income.
Moda
http://www.modadiom.com/
Jack Black on Piracy
https://www.youtube.com/watch?v=-LkWKvMCzqA
Disney has no rocket sauce for you Jack, lulz.