by cialowicz on 2/11/24, 9:35 PM with 361 comments
by AlbertCory on 2/11/24, 10:30 PM
It's the tax write off for destruction that's fucked up, as @cnees says. Failures are part of the process of creation. If the producer says the market value of the work is zero, they've committed tax fraud if it's not.
The solution to their "attribution" problem was found by directors a long time ago when they didn't want their names on a film: it's directed by "Alan Smithee."
by blincoln on 2/11/24, 10:21 PM
by ThinkBeat on 2/12/24, 3:36 AM
No money will be made, but if people should want to they can view it.
I am sure Internet Archive or some organization would be willing to host such movies, and not make any attempt at making a profit from it.
Even better would be to turn all the assets that went into the creating it into the public domain as well.
They should be able to say "Well this movie is total sh*t and we want a tax write off, once it is all done and we have recovered that money we will make it available to the public (at no cost to us))
Is the problem that if anyone was allowed to watch it, they may conclude that the movie had potential and thus the tax write off is not made in good faith?
by loughnane on 2/11/24, 10:45 PM
That's ridiculous. There's no obligation for anyone to bring something to market regardless of how far along it is.
After I read the article:
Still not persuaded. It reads like motivated reasoning, the person doesn't like things not getting released and says that governments should step in. There's some mention of taxes and lost work, but nothing tht holds water.
As an example: if it cost you $100M to make a film and you write that off you could reduce your tax burden by as much, netting a $15M lower tax bill if your rate was 15%.
By contrast if you release it you've no guarantee of that $15M, especially once promotion and other costs are factored in. If it's a trash movie that'll also damage the firm's reputation---something that's tough to quantify but no less real.
That's not great, but its I wouldn't want to live in a society where that was criminal.
Then there's this:
> nobody who did any sort of work on a project that consumed years of their lives will ever be able to point to it as evidence of what sort of work they’re capable of doing
That's the status quo in most jobs. Things don't ship all the time.
It's a bummer, yeah, but that's it.
by cnees on 2/11/24, 10:18 PM
by mdasen on 2/11/24, 10:56 PM
Let's say you spend $80M making a film and you write it off for a $30M benefit. You're still in the hole $50M. Let's say that you sell the film for $20M and write off the remaining $60M loss for a $23M benefit. In the latter case, you're only in the hole $37M instead of $50M. That's a lot better.
Is there some weird accounting rule where you're allowed to write off full losses, but not partial losses? I understand writing off losses: if you make $100M on one project and lose $50M on another project, you pay taxes on the $50M you've made - but you're only getting a fraction of the money back. It's better to get 100% of $20M plus a fraction of $60M than getting a fraction of $80M.
No one seems to be explaining how this is working in Warner Bros Discovery's favor. Sure, I get canceling popular shows where the actors might be looking for more expensive contracts. I might think it's short sighted given that you need popular shows to keep your subscribers, but I get what they're trying to do. I understand licensing content to a competitor for a quick pay day. Again, it seems short sighted, but I get what they're trying to do. What I don't get is why it's better for them to completely scrap content than to let it flop upon release. The only possible explanation I can see is that they'd be able to claim the tax relief earlier. If they released it in late 2023, they'd have to wait to claim any losses since they'd be making money off it into 2024. If they cancel it in 2023, they can take the write off for 2023. It must be something else, right?
by simonw on 2/11/24, 10:31 PM
by lbarrow on 2/11/24, 10:46 PM
Some of the company’s tactics post-merger were garden-variety ruthless, like eliminating 87 series from its streaming platform Max, so that they won’t have to pay union-mandated residuals to the talent that created already-existing programs or pony up funds to produce more seasons of existing ones (such as “Our Flag Means Death,” one of the company’s most popular and critically acclaimed comedies—canceled after just two seasons).
by anon373839 on 2/12/24, 1:40 AM
by delichon on 2/11/24, 9:41 PM
by philsnow on 2/11/24, 10:56 PM
Since it didn't get released, they collectively and/or individually might very well bring a civil suit against the company for lost compensation (where compensation is defined as some combination of cash and reputational gains, and this latter part became zero).
by compumike on 2/12/24, 4:18 AM
by tgsovlerkhgsel on 2/12/24, 3:34 AM
I'm assuming that when the film is produced, they spend money to receive an asset, no different than e.g. buying a machine.
With a machine, they could write it off over time, or (I assume) they can delete the movie/scrap the machine to immediately book the remaining value as a loss?
If they don't do that, I think a machine is valued according to the purchase price and written off over X years. How does a movie get valued and written off?
There's a good argument for banning write-offs for salvageable assets that are scrapped (regardless of whether it's machines, inventory or movies) - I've heard the tax impact argument made for the destruction of still-usable assets too.
by erik_seaberg on 2/12/24, 12:35 AM
by Barrin92 on 2/11/24, 10:19 PM
I feel like if someone reads that in a thousand years they're going to look at us the same way we look at some ancient tribe worshipping idols. Years of work and cultural artifacts destroyed for the accounting department, that's nuts.
by kuratkull on 2/11/24, 10:52 PM
by kryptiskt on 2/12/24, 9:48 AM
by pk-protect-ai on 2/11/24, 10:48 PM
by pmontra on 2/12/24, 8:41 AM
by bbor on 2/12/24, 5:41 AM
by refurb on 2/12/24, 10:52 AM
A finished movie doesn't cost $0 to release. There is considerable spend on promotion, distribution, etc. If you don't do it, then movie revenues would be much lower.
It doesn't make sense to spend $10M to make say $30M, when just destroying the film gets you $30M in tax benefits.
by merrywhether on 2/11/24, 11:43 PM
by chx on 2/11/24, 10:20 PM
I am surprised Batgirl didn't leak. How do you even prevent that?
It's just bits.
by s1artibartfast on 2/11/24, 11:22 PM
When I run my company, I can deduct labor and material costs. I dont have to resort to any special measured to qualify for them.
Is this about some accelerated ammonization schedule?
by lupusreal on 2/11/24, 10:35 PM
Be honest, at least some of you have finished a project before deciding to axe it instead of publishing it. It is any creators right to decide not to publish something.
If the issue is the tax treatment of these circumstances, then fix that.
by ecocentrik on 2/11/24, 10:53 PM
by EVa5I7bHFq9mnYK on 2/12/24, 6:02 AM
Not a mystery at all, the name is enough.
by AndriyKunitsyn on 2/12/24, 11:07 AM
I thought it's something absurd Rockstar made just for the plot, but apparently it's a common thing.
by AnarchismIsCool on 2/12/24, 8:27 AM
Remember, a corporation is a group of people joining together to create something they couldn't individually. Yes, there's a bunch of contract law we pile on top of that to make the concept borderline worthless, but bear with me.
If the employees created the movie, and the broader corporation declares it a failure and attempts to write it off, the people who created it should then be given the copyright or the copyright should be revoked such that those individual artists can do with it as they please.
Anything else is just someone coming over and stomping on your sandcastle because employee contract law is insane.
by plastic3169 on 2/12/24, 6:32 AM
by jimjimjim on 2/12/24, 12:55 AM
by cryptonector on 2/12/24, 5:49 AM
by kingkawn on 2/12/24, 1:15 PM
by bradley13 on 2/12/24, 8:42 AM
So how, exactly, do they get an additional write-off for destroying the film? If you deliberately destroy something of value, why should you get to write that off your taxes? Consider: They certainly own a lot of computers. If the CEO walks through the building smashing all the computers with a sledgehammer, the IRS is not going to let them write off the destruction. That would be stupid.
So why can they do this with a movie?
by bhickey on 2/11/24, 10:17 PM
by froh on 2/11/24, 10:53 PM
I've seen the movie and it made ma watch a local play and I loved both.
when I tried to get hold of the DVD years later I learned that the heirs to the author Ken Campbell had withdrawn all rights. this removed all prints from all libraries too. the thing is _gone_. because the heirs hated their gene provider so much.
I was amazed this is possible... "freedom of speech"? nope. intellectual property.
by areoform on 2/11/24, 10:47 PM
One revolves around corporations deleting works that they've paid for.
The second centers on the rights of artists (and is framed via first person, therefore it's at the human level).
The third focuses on corporations, the government and society writ large.
The offered prescriptions and takes on each differ by each scenario.
It's important to recognize that it's, most likely, not possible to create a rule, or even a set of rules, that fits all scenarios for the above categories. But it is likely worth asking questions about the scenario at hand; an executive removed from the production & artistic creation process has decided to use deletion of art works as an accounting strategy to offset debt from a Leveraged Buy Out. A question worth asking is what other irregularities are going on,
> Financial engineering has always been central to leveraged buyouts. In a typical deal, a private-equity firm buys a company, using some of its own money and some borrowed money. It then tries to improve the performance of the acquired company, with an eye toward cashing out by selling it or taking it public. The key to this strategy is debt: the model encourages firms to borrow as much as possible, since, just as with a mortgage, the less money you put down, the bigger your potential return on investment. The rewards can be extraordinary: when Romney was at Bain, it supposedly earned eighty-eight per cent a year for its investors. But piles of debt also increase the risk that companies will go bust.
>
> This approach has one obvious virtue: if a private-equity firm wants to make money, it has to improve the value of the companies it buys. Sometimes the improvement may be more cosmetic than real, but historically private-equity firms have in principle had a powerful incentive to make companies perform better. In the past decade, though, that calculus changed. Having already piled companies high with debt in order to buy them, many private-equity funds had their companies borrow even more, and then used that money to pay themselves huge “special dividends.” This allowed them to recoup their initial investment while keeping the same ownership stake. Before 2000, big special dividends were not that common. But between 2003 and 2007 private-equity funds took more than seventy billion dollars out of their companies. These dividends created no economic value—they just redistributed money from the company to the private-equity investors.
>
> As a result, private-equity firms are increasingly able to profit even if the companies they run go under—an outcome made much likelier by all the extra borrowing—and many companies have been getting picked clean. In 2004, for instance, Wasserstein & Company bought the thriving mail-order fruit retailer Harry and David. The following year, Wasserstein and other investors took out more than a hundred million in dividends, paid for with borrowed money—covering their original investment plus a twenty-three per cent profit—and charged Harry and David millions in “management fees.” Last year, Harry and David defaulted on its debt and dumped its pension obligations. In other words, Wasserstein failed to improve the company’s performance, failed to meet its obligations to creditors, screwed its workers, and still made a profit. That’s not exactly how capitalism is supposed to work.