About: Hollywood Accounting   Sponge Permalink

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Hollywood Accounting is how a production studio weasels out of paying royalties or anything else based on a percentage of profit: just over-estimate your expenses, and bingo, there is no profit, or at least a lot less of it - at least on paper, even if the gross reaches into the billions. The "expenses" are charged to a separate entity or aspect of the filmmaking process, such as marketing, even though both entities involved are owned by the same film studio. So the studio basically "charges" itself "$100 million" in expenses, pays itself, and avoids having to claim that it made any gross profits. Some really outrageous cases have led to lawsuits.

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  • Hollywood Accounting
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  • Hollywood Accounting is how a production studio weasels out of paying royalties or anything else based on a percentage of profit: just over-estimate your expenses, and bingo, there is no profit, or at least a lot less of it - at least on paper, even if the gross reaches into the billions. The "expenses" are charged to a separate entity or aspect of the filmmaking process, such as marketing, even though both entities involved are owned by the same film studio. So the studio basically "charges" itself "$100 million" in expenses, pays itself, and avoids having to claim that it made any gross profits. Some really outrageous cases have led to lawsuits.
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  • Hollywood Accounting is how a production studio weasels out of paying royalties or anything else based on a percentage of profit: just over-estimate your expenses, and bingo, there is no profit, or at least a lot less of it - at least on paper, even if the gross reaches into the billions. The "expenses" are charged to a separate entity or aspect of the filmmaking process, such as marketing, even though both entities involved are owned by the same film studio. So the studio basically "charges" itself "$100 million" in expenses, pays itself, and avoids having to claim that it made any gross profits. Some really outrageous cases have led to lawsuits. For this reason, the smart actors in Hollywood will insist on getting a percentage of "gross points" in their contract, i.e. the money directly made before the studio profits are calculated. That Other Wiki has a more in-depth article on the subject found here. See also Box Office Bomb where the movie makes low gross revenue for real, not just on paper. Examples of Hollywood Accounting include:
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