Today, I'm going to tackle a couple of related topics which seem to come up frequently in reader questions and comments - how is a cinema's box office income distributed, and how much of it ends up with the filmmakers?
"This is partly because the studio distribution companies are legally separate entities but also because it reduces the official profit, thereby reducing the amount they have to pay out to people with a profit share."
What? How? Doesn't that count as accounting fraud?
Because contracts between two parties can be defined however you want.
If you, as a profit participant, agree to deal in which "profit" means only certain income, or uses a particular calculation, then that's legal. It doesn't matter if that differs from the general understanding of the word or if the studio has different definitions of "profit" for other parties.
"Hollywood Accounting" isn't about doing illegal things (there would be no long-term business model in that). It's about making morally questionable things legal.
Hi Stephen, thanks for the insights you shared. I’m just wondering how things in the industry may have changed since you wrote this article? It seems that the Production company always comes off worse as far as the profits go. Would for instance, self-distribution really work to bring in profits above the levels highlighted in the article?
"This is partly because the studio distribution companies are legally separate entities but also because it reduces the official profit, thereby reducing the amount they have to pay out to people with a profit share."
What? How? Doesn't that count as accounting fraud?
Because contracts between two parties can be defined however you want.
If you, as a profit participant, agree to deal in which "profit" means only certain income, or uses a particular calculation, then that's legal. It doesn't matter if that differs from the general understanding of the word or if the studio has different definitions of "profit" for other parties.
"Hollywood Accounting" isn't about doing illegal things (there would be no long-term business model in that). It's about making morally questionable things legal.
Hi Stephen, thanks for the insights you shared. I’m just wondering how things in the industry may have changed since you wrote this article? It seems that the Production company always comes off worse as far as the profits go. Would for instance, self-distribution really work to bring in profits above the levels highlighted in the article?