Why are box office numbers easy to find but post-theatre revenue isn't?

[Gatsby77]

I don't understand why Congress doesn't crack down on Hollywood accounting practices (okay -- I do, but I don't like it) because it's no different from the sham accounting of Enron or what I saw in my brief time working for a private equity fund.

 

Each film is set up as a separate investment vehicle that's specifically designed to lose money through shady charges back to the parent company that make sale lease-backs that are common in real estate / PE deals look like roses in comparison.

 

Given the amount of regulatory oversight of other industries (particularly public companies) I just can't believe the movie studios are still allowed to skirt the rules with regard to "profit" the way they do.

[jaybuck43]

http://www.amazon.com/Fatal-Subtraction-Inside-Buchwald-Paramount/dp/0787104949

 

A great book for a fascinating story and probably still the most important court case on what constitutes "net profits"

[fantastic_four]

I don't understand why Congress doesn't crack down on Hollywood accounting practices (okay -- I do, but I don't like it) because it's no different from the sham accounting of Enron or what I saw in my brief time working for a private equity fund.

 

Each film is set up as a separate investment vehicle that's specifically designed to lose money through shady charges back to the parent company that make sale lease-backs that are common in real estate / PE deals look like roses in comparison.

 

Given the amount of regulatory oversight of other industries (particularly public companies) I just can't believe the movie studios are still allowed to skirt the rules with regard to "profit" the way they do.

 

Because when Enron or fund managers lie millions of people are affected. When a movie company lies, only their business partners get screwed. There's no compelling public interest from a legal perspective in accurately knowing how much money a movie makes.

 

If they're hiding total profits at the corporate level from the IRS or their investors, then that's another matter. I'm guessing their income reporting is quite different from the wildly_fanciful_statement they report to the public and their business partners about how much a single movie makes.

[Bosco685]

http://www.amazon.com/Fatal-Subtraction-Inside-Buchwald-Paramount/dp/0787104949

 

A great book for a fascinating story and probably still the most important court case on what constitutes "net profits"

 

That's really cool! I forgot about that case, and how Art Buckwald ended up being recognized for the -script treatment.

 

And yet studios still get away with manipulating the individual movie balance sheets to the point they can inform profit-sharing partners a movie was a bust.

 

[fantastic_four]

And yet studios still get away with manipulating the individual movie balance sheets to the point they can inform profit-sharing partners a movie was a bust.

 

 

If they think the cost of getting sued is less than paying up, then it becomes a business decision on their part. If they know the people they're screwing either can't afford lawyers or aren't likely to pay them more than the studios know they can pay theirs, then I'm guessing that's when the creative accounting kicks in.

 

Peter Jackson was getting screwed by New Line when they under-reported profits on the Lord of the Rings films, and for years he claimed he'd never work with them again. But the Hobbit movies ended up getting made anyway, so I'm guessing they gave him restitution at some point. You'd think Paramount would do something similar for the Forrest Gump author to get the rights to a sequel.

[Brian48]

And yet studios still get away with manipulating the individual movie balance sheets to the point they can inform profit-sharing partners a movie was a bust.

 

 

If they think the cost of getting sued is less than paying up, then it becomes a business decision on their part. If they know the people they're screwing either can't afford lawyers or aren't likely to pay them more than the studios know they can pay theirs, then I'm guessing that's when the creative accounting kicks in.

 

Peter Jackson was getting screwed by New Line when they under-reported profits on the Lord of the Rings films, and for years he claimed he'd never work with them again. But the Hobbit movies ended up getting made anyway, so I'm guessing they gave him restitution at some point. You'd think Paramount would do something similar for the Forrest Gump author to get the rights to a sequel.

 

If I recall correctly, I think Tom Hanks tried to sue the studio about Forrest Gump. He was supposed to get a percentage of the take instead of a normal salary or something to that extent. Of course, he can't get paid if the film loss money, right?

[Bosco685]

I forgot about the messiness of Forrest Gump until this thread.

 

Box office performance

 

Produced on a budget of $55 million, Forrest Gump opened in 1,595 theaters in its first weekend of domestic release, earning $24,450,602. Motion picture business consultant and screenwriter Jeffrey Hilton suggested to producer Wendy Finerman to double the P&A (film marketing budget) based on his viewing of an early print of the film. The budget was immediately increased, per his advice. The film placed first in the weekend's box office, narrowly beating The Lion King, which was in its fourth week of release. For the first ten weeks of its release, the film held the number one position at the box office. The film remained in theaters for 42 weeks, earning $329.7 million in the United States and Canada, making it the fourth-highest grossing film at that time (behind only E.T. the Extra-Terrestrial, Star Wars IV: A New Hope, and Jurassic Park).

 

The film took 66 days to surpass $250 million and was the fastest grossing Paramount film to pass $100 million, $200 million, and $300 million in box office receipts (at the time of its release). The film had gross receipts of $329,694,499 in the U.S. and Canada and $347,693,217 in international markets for a total of $677,387,716 worldwide. Even with such revenue, the film was known as a "successful failure"—due to distributors' and exhibitors' high fees, Paramount's "losses" clocked in at $62 million, leaving executives realizing the necessity of better deals. This has, however, also been associated with Hollywood accounting, where expenses are inflated in order to minimize profit sharing. It is Robert Zemeckis' highest-grossing film to date.

 

GUMP A Huge Hit - Still Not Raking In Huge Profits

 

Paramount Studios, which made "Forrest Gump," contends that despite having sold more than $660 million in tickets worldwide, the film has not yet earned back all the money the studio spent making and marketing it.

 

Tom Hanks, the star, has so far got about $31 million for his work on the movie; so has the director, Robert Zemeckis. But Winston Groom, the novelist whose book was the basis for the film, has yet made only $350,000, part of an arrangement that also calls for him to earn 3 percent of the net profits, profits that Paramount says it doesn't yet have.

 

What a dirty business.

[media_junkie]

So if the studios always claim they never make money on these films why do Actors/Writers/whoever work deals to get paid on the "back-end" (which I am assuming means profit sharing)?

[Bosco685]

So if the studios always claim they never make money on these films why do Actors/Writers/whoever work deals to get paid on the "back-end" (which I am assuming means profit sharing)?

 

Most probably because creators and actors assume it won't happen to them. And when you read the stories of those that worked, it is a huge win in the end.

 

Wisest Business Decisions Made By Actors

 

Jack Gets the Last Laugh

When Jack Nicholson accepted the role of the Joker in 1989's "Batman" for $6 million instead of his then-average salary of $10 million, part of the deal was that Nicholson would earn a percentage of the film's total earnings, including merchandise sales. "Batman" was an overwhelming success, grossing $411 million worldwide (or just over $500 million domestically after adjusting for inflation), and Nicholson ended up earning more than $50 million for the role.

 

Tom Hanks in Forrest Gump

Like Nicholson, Hanks agreed to star in 1994's "Forrest Gump" in exchange for a portion of the box office earnings. It was an inspired move by the actor, as "Forrest Gump" took in over $680 million worldwide (a little more than $620 million domestically when adjusting for inflation) and Hanks earned over $60 million for his part. The role not only earned Hanks a large amount of money, but also the 1994 Academy Award for Best Actor.

 

Impossible Earnings

Tom Cruise earned an impressive $75 million for his role as a producer and actor in 2000's "Mission: Impossible II," thanks to a deal that gave him 30% of the film's gross sales. In 2012, Cruise topped Forbes 100 Most Powerful Actors list after making $75 million between May 2011 and May 2012, partly due to his role as an actor and producer in "Mission: Impossible - Ghost Protocol." Cruise also produced and starred in the other two films in the franchise. The series has earned around $2 billion worldwide at the box office.

 

Cruise earned 30% of the profits to star in "Vanilla Sky" in addition to his $20 million salary as an actor. The film grossed over $200 million worldwide. He has also earned a percentage of the profits for "The Last Samurai" and "Knight and Day."