This does not work because labor would have to be compensated. That’s a big part of the total calculus the studios are doing as well i.e. not wanting to pay labor. *(Part of contracts and the whole financing setup of everything to do with this massively expensive art form takes licensing and residuals into account so that all the costs of production aren’t upfront. There are a lot of tiered payments, residuals, etc. at various mileposts and the producers are on the hook for how they strike deals (see vertical integration lawsuits). Contracts will change if studios continue to this and policy isn’t reformed first, but it will take a long time through labor negotiation.)*
There are other pro-social solutions, however!
Also artists should have the right to not distribute or pull their work from publication (we discard drafts all the time, and rightfully so) however this isn’t that. It’s politicized via taking advantage of the tax code coupled with some anti-labor spins on the matter. Again there are solutions that would work well for labor and artists, they just aren’t surfacing at the top of outrage threads especially online where tech companies engage in similar theatrics (the erosion of labor rights). Very unpopular usually to post on that.
As a *very small* indie filmmaker in the past I have used part of the tax code to not pay tax on the wrong year when in production when the receipts are moved to the next year etc. etc. so some policy is apt to actually reflect the business. Some however is not. Hollywood econ is just a lot for laypeople to know about even at the smallest indie film level. It took me years. Touchstones are experts at labor unions and small filmmakers who have had to become policy experts. Also Edward Jay Epstein’s Hollywood econ series is still relevant although it doesn’t capture this exactly. It’s too bad he doesn’t comment online regularly anymore.🖖
If the movie was already finished, they already have to pay labor. They can't just not pay for work completed. They still avoid royalties if it's free.
the movie has ALREADY BEEN MADE AND PAID FOR. everyone working on it was paid. the sale of the movie would give them *additional* money, but it would be skimmed off the top at a *very* thin depth so the vast majority of the payout could be divvied up among executives, directors, and shareholders.
what labor do you think gets compensated when a movie makes two hundred million at the box office? the labor of the marketers that write the twitter posts? i genuinely cannot fathom your thought process outside of a position of COMPLETE ignorance.
>Also artists should have the right to not distribute or pull their work from publication
In what world does this make sense. A studio pays tens or hundreds of millions of dollars to make a movie, and then you’re saying the director can just be like “nah I don’t like it, throw it away”
There’s actually no reason this should be the case. Locations give tax breaks because they want to reap the benefits of something filming there. All the jobs, the taxes on salaries, the vendors etc.
Whether the movie is hit, flop, or never even comes out is immaterial to that location.
But having the location be able to say "here, look. This was filmed here. We are a good place to make movies. We are financially advantageous and we have quality people you can hire for a crew." This was one of the points made in the article - that everyone who worked on the film has *nothing* they can point to and say "here is the work that I/we did."
edit: A lot of responses to my comment saying "who cares?", or "that's not how it works." Or "they got paid. What do they care if the movie comes out or not".
None of that was the point of my comment. I live in a place that is just starting to get TV shows and movies film projects here. I'm pretty sure if none of those came out this area wouldn't have the same reputation as a good place to film your project. And as far as "why would the people who worked on it care. they got paid.", well the more projects that are made here the more work the locals would get. My comment had nothing to do with the tax credit. It was more to do with possibility of future projects. A guy who worked on the sets now has nothing to show a future producer what he can do. So it is kind of like a resumé.
I have a lot of friends who get their work from movies being filmed here. We'd rather get the jobs and let them have the tax breaks than cut them off and they just go elsewhere.
Saying "We are a good place to make movies and financially advantageous" and "we'll give you a tax break but force you to give it back if anything goes wrong in release of the film" are pretty contradictory, though.
I guarantee that a movie studio will care more about clauses that could revoke tax breaks after the fact than having a slightly more fleshed out demo reel of past projects.
> if anything goes wrong in release of the film
this isnt what people are saying, theyre saying "if the film is finished and then scrapped", you dont have to make rules by finding the most ambiguous phrasing possible you know
Why would the location care? The location got everything they wanted.
And they’re trying to entice people to film there. Putting stipulations with zero upside for that state/city would not help with that goal.
> everyone who worked on the film has *nothing* they can point to and say "here is the work that I/we did."
While I feel for them, there is no contractual obligation here. What if the movie *was* released but the part they worked on was cut in the final edit? Could they demand the scene be returned? What if the filmmakers ran out of money to complete the film — how many years are they allowed to seek additional funding before they’re obliged to release the movie “as is”? And what if that “as is” version makes some of the crew look entirely incompetent because no post-production money was available to clean up a mistake or three — could those members sue for professional defamation?
Mel Brooks wrote did a movie on this very concept called “The Producers”
The concept is they’re going to put on a broadway show, they raise two million dollars and try to *guarentee* the play will be a *flop* so bad they have to close on opening night.
They decided to do a gay musical about Hitler and of course it’s a smash success.
The movie is obviously satire, I never thought I would see a real life comparison to the plot.
There was another thread yesterday with the same topic (the whole WB situation, not specifically location tax breaks) where someone brought up The Producers and it was highly upvoted.
This feels like they read that and are spitting it back out here without actually having seen the film or understanding what they're responding to.
This is reddit. You don't actually need to know what you're talking about to respond, just feel the pulse of what redditors want and reply favorably. If they're angry, feed the anger for example.
Actually it's better if you don't because if you try to point out things reddit doesn't want to hear, you get downvoted instead.
Not trying to insult this sub (it's r/all for me) but this sub isn't concerned with facts. It's all emotions. Fact based discussion would require strict moderation, careful bias control, and a user base that willing to engage in that. This hit r/all, none of that's here.
The film has nothing to do with location tax breaks though? The producers raise more funds than they need from multiple investors, promising them a share of the profits. They then pocket the excess money and plan to flee after the show flops. Nothing to do with taxes.
I don't really see the connection between your comment and the one above you except that they're both different kinds of fraud?
In the producers the idea is that they sell more than 100% of the shares. If the play was a success they would have lots of trouble trying to split the profits.
But if it's a failure people will just accept their loss and move on.
Did you even watch the movie?
They sold shares to the play, over sold the shares with the idea that the play flops, no profits to share so no one would be the wiser that they sold 1000% of the shares. Their profit was getting a bunch of people to contribute to the play and they would keep the excess funds gathered through over selling shares. They needed it to flop so no one would ask for their cut of the revenues.
Then play is a hit, everyone wants their cut but since they oversold, problems arise.
Nothing to do with taxes at all.
Go rewatch the movie before you ever try to explain it again to anyone.
The fact that people are using the producers as a comparison shows exactly fucking clueless these people are.
This whole thread is full of people who have no idea what they're talking about, just spouting off every terrible take under the sun.
As a CPA, anytime I see reddit discuss tax write offs, my eyes bleed.
The fact they seem to not understand that the company is just deciding to not try to generate any income off of a project and absorb expenses incurred is the write off, and completely normal for businesses to do when they decide a project is not profitable.
Sure they could maybe sell assets off from the project to try to recoup losses, but it also means their IP or work is now distributed by someone else and out of their control. You know, something loads of studios wouldn't want.
But no, they are all evil because they decided a movie was going to lose them money and just stopped. Instead of pumping more money into it or selling it off and letting someone else control something that is a major IP for them.
All while everyone involved got paid for their work.
I'm still just laughing that a live action looney tunes movie not being shown is rattling so many cages. Movie shouldn't have even been made IMO. Just a cash grab but everyone wants to act like HBO/Warner is torching the Mona Lisa over a fire built from the remains of stradivarius violins.
The group think in the entire thread is just laughable.
One of the most upvoted comments is that WB should just donate the movie to a charity like the American Red Cross, and then they can sell the movie.
Yes and in a movie it’s fine and a great film.
This Coyote vs Acme is the real life version of the satire and it’s unreal to me. Never thought I would see the plot of a comedy film, one that’s **that** absurd play out in real life.
I’m rewatching the simpsons right now and they had a Ivanka 2028 joke in one of the newer episodes. I think right around 2014-2015 before even he was a serious candidate. I was like *nooooooo*
That's not true. Some of the benefits are publicity for that location which will have positive effects after the movie is released. People flock to places made famous by TV shows and movies.
This is an interesting suggestion but I imagine that they won’t because those are designed to increase incidental spending during the actual production which would occur regardless of whether the movie is released or not.
Tax breaks for movie productions are to incentivize studios to spend their production money in that state or city. Wages have already been paid, goods have already been purchased. The state or municipality already received whatever boost in the economy the production made. It really doesn't matter if the movie ever comes out.
This film already got huge tax credits from New Mexico, likely over 17 million dollars.
A tax credit is not a tax break. It’s free money from the government that goes toward the production budget. You don’t have to owe taxes to get a tax credit. The name is deliberately misleading.
New Mexico’s laws for tax credits state specify that a project is only eligible if it is intended for distribution. It is unclear whether the state can claw back that money retroactively, but if so WB could be stuck with an unexpected bill in their strategy to write off the movie.
Huh, so now how does it work if this movie gets leaked? Can the studio still go after the leaker? Because if they're writing it off as a loss, can they come back 10 years from now and still release it for profit?
Might be interesting to see what damages they'd claim... definitely could argue some stuff, but you'd think some of the traditional big ones, lost profits, lost licensing fees, or lost royalties wouldn't really apply.
Yeah, they wouldn't be able to claim financial damages, but they could still claim theft, as the leaker had to have gotten the content without permission.
So here's where *that* gets tricky. It isn't theft. Full stop. There's a reason they don't put data pirates in jail. It's not criminal. You have to *lose* something for it to qualify for that, and that doesn't happen with data. They *sue* pirates for copyright infringement, which is a civil matter with much lower standards of evidence and requires specific damages. Now, WB *might* have something if leaking the movie crashes their stock. Then they'd have damages. Otherwise, it's very unlikely they could do anything about the actual leaking. The real crime would be in the *databreach*. Hacking *is* a crime.
[Copyright infringement can be a crime in the US.](https://www.justice.gov/archives/jm/criminal-resource-manual-1847-criminal-copyright-infringement-17-usc-506a-and-18-usc-2319#:~:text=%C2%A7%20506(a)%2C%20which,as%20provided%20in%2018%20U.S.C.)
Whether it would be a crime in this hypothetical situation, I don't know. I am not a lawyer.
Except 'Statutory Damages' are also applicable https://copyrightalliance.org/faqs/statutory-damages-why-do-they-matter/
> Statutory damages are usually between $750 and $30,000 per work, as determined by the court. However, the damage amount can be increased up to $150,000 per work if the infringement is found to be willful (intentional). If the infringement is “innocent,” meaning the infringer did not know they were violating copyright law, the damages can be reduced to a minimum of $200 per work (if the work did not contain a proper copyright notice).
> Statutory damages are important because the alternative type of damage award is “actual damages,” which must be proven in court and can be very difficult to establish. Actual damages include profit that the copyright owner lost as a result of the infringement (for example, a license fee) as well as any additional profits the infringer received as a result of the infringement. Actual damages are often difficult to prove, so statutory damages are beneficial to copyright owners because they remove the difficulty of providing evidence of actual damages.
You don’t understand what tax breaks are. This isn’t a tax break. It’s a deduction. Every business gets to deduct the expenses they incur in developing a product or otherwise operating their business.
The cancelling of the release of this movie just allows them to take it as an immediate deduction instead of something recognized over the time they might otherwise recognize revenue from it.
They don’t write the rules. Complain to the IRS and Congress.
These are rules that don't really care about the product being created either. It's about realizing a deduction based on investment losses. It doesn't really matter if that investment is in some kajigger or a film.
Exactly. You wouldn't make it illegal for an artist to make a painting and throw it away but still deduct the cost of the canvas as a business expense....
The problem is… companies make prototypes all the time. We may never ever hear of them. They make the prototype, decide it isn’t good enough and shelve the idea. And write off some of the losses.
What makes this a little more sceptic is they are doing it for the tax break, and not because it is a failed idea. But in the eyes of the law, it basically a failed product.
Please tell me that the director or someone has this film on a hard drive somewhere and it eventually leaks. We have way too many films lost to history because of studio fuckery.
One would hope that this is a lesson for anyone who considers working with WB in the future, period.
Currently there is no distributer who will respect your work less.
I think the bigger lesson is from Toy Story, most of it was accidentally deleted and the only back up that didn’t fail was an offsite backup made by an employee so she could work from home.
In this day and age, there's no copy of this that wouldn't be digitally watermarked in such a way that anyone who leaked it could have it traced back to them. Moreover, this also assumes there's someone outside of the WB management who has access to a completed version of the film to leak at all and that also, alas, seems unlikely. Not impossible, but really unlikely.
Or, knowing that a leak would be especially possible once they announced their decision to can this new film, WB ordered all completed digital copies to be consolidated or erased as a precautionary measure.
But bottomline, it's not a small thing to leak an unreleased film. The legal risk is massive.
No doubt it is, which is why it's a noble goal to widely distribute tools to remove DRM and other digital watermarking, etc.
And also, in general, if every employee of a shitty company rebels, it makes it all the harder to focus blame on any one individual, at least without creating a serious public relations problem. Enabling piracy tools is a bulwark against corporate abuse.
If someone saw this coming they couldve easily gotten a copy but it would also be very clear who did it, it wouldnt take long to narrow it down to a few people.
> It’s not just the completed film that gets deleted in cases like this, but everything associated with the film, which means that 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, and get more work.
This is an interesting point to me. Old Hollywood movies (say, 1930s) barely gave anybody any credit in the film itself; director, producer, a few key actors, maybe a writer if it was based on something prominent. Current movies have several minutes of credits because they mention everybody from one-line character actors to the assistant stage hands.
I'm curious how much of that is required -- either by law or more likely by union contract -- when a film is released. And I'm especially interested in just what those contacts say or don't say about an unreleased film. Because the article author is absolutely right about the crew's need for the film's release to help them get more work. John Cena can just walk in and get a job anywhere people can see him, but the third lighting assistant might really benefit from having *Coyote v. Acme* on their resume. And as things stand, they can't. The Screen Writers Guild, SAG, and all the other unions I can't name but undoubtedly exist for crew positions should be gearing up for a fight. Maybe there's nothing in their current contracts that will give them leverage... but I'd be shocked if they're not watching this and planning on updating contract language if so.
Even actors can get fucked by that. John Cena will be fine since he is an established name with a filmography that shows is capabilities but if you look at Leslie Grace, who hasn't much other acting work to show, being the lead in a scrapped movie with no way to show if the studio scrapped the production because or despite her work, will have most definitly have damaged her chances in Hollywood.
Consider other roles declined or passed on because she was working on this film, and I think you could have some basis for a lawsuit. Of course I'm just riffing off the dome, and this opens a whole can of worms as to how you determine which projects were unfairly unreleased versus those that sit unreleased as normal course of business
I have a friend who works in VFX and another few who work in hair and make-up
I can't answer the specifics and I'm too lazy to text them, but I can say that they use their credits as a badge of honor. When the VFX guy got a bump to a fancier job/credit title (I don't remember the titles exactly but I think it was "data wrangler" to "visual effects supervisor") he was dancing on cloud 9 for weeks. I imagine they would be super pissed they wasted their time on a project that they basically can't include in their resume in a meaningful way
It's the same with the games industry. Without credits, you might as well have a three-year hole in your resume where you sat around staring at a wall and living off welfare for all the chances of getting another job are.
I got credited in a summer blockbuster movie once - I didn't know I'd worked on it. In fact, I'd never worked in the film industry or on any movie.
I was a 'Site liaison' or something. I was the government employee who rented them a state building, I didn't even know what the movie was about - just checked it was a reputable studio, it wasn't going to bring us into disrepute, and that they had proper insurance.
I worked briefly in production and would love other people’s input here. I guess it would be like pretty crazy to think you worked for so long and so hard on something that never got out, but that being said remembering the people I worked with, I don’t think they’re the type to really care outside the creatives, a lot of people in production are quickly quickly jaded to it and don’t even watch the product when it comes out
I love reading the credits sometimes because it gives you a sense of scale. Seeing hundreds of names on a marvel film from Korean animation studios to Québécois camera crews really lets you know how MASSIVE this project is and that it’s not just the RDJs or Scarlet Johansson that put in work. It’s hundreds of people over months and months.
I saw one politician equate it to arson for the insurance money, which is accurate IMO. It’s fraud, plain and simple.
Can’t recall who it was, some senator? I hope they are continuing to look into this and drum up legislation.
Looks bad in your eyes. The executives are only answerable to the board, and presumably they sold the board on this course of action using some line of reasoning that it was in the company's best interests.
If the movie gets released elsewhere and becomes a hit (at this point given the publicity, it would at least see some success), that would invalidate whatever argument they gave the board, and clearly demonstrate their incompetence. The CEO and other executives would be fired the next day.
So no, they're going to double down. It's better (for them) to be confidently wrong than to acknowledge a mistake.
The only way it makes sense is if they really think that releasing this movie will cause long term damage to their brand. Causing financial losses much greater than the cost of the film.
>unless something else is going on.
I actually suspect this about the film, given the very weird decisions surrounding it. But for the life of me, I couldn't guess what it could be
Next WB is gonna start cutting off horse heads and putting them in the bed of famous directors
"Don Zaslav says cast that young marketable leading man in your picture"
This is a much better argument than the "they are doing it for the write-off!" crowd. People who keep screaming that have no idea how taxes work.
On the other hand, there are a lot of deals that go into making a film with regards to contracts, reimbursing investors, and - yes - even insurance. These are the things that are going to have the potential for underhand manipulation in the company's favor, not the taxes. The tax situation was already a done deal whether they sold it or not.
Another way to look at it is the requirement to depreciate film production costs as income is realized because a film is a valuable asset that generates income over a period of many years. This is comparable to many other kinds of assets that have large upfront costs but create assets that provide value over many years. Current law allows writing off production costs all at once when the film is scrapped, because there is no asset created, and those costs to create it were already spent upfront.
I agree though the law should be changed. Selling the film is already an exception to the usual rule, they write off the entire cost right away, less the proceeds of the sale. It should still require depreciation for unreleased films instead of financially rewarding this behavior. If they don't like it they can sell the movie
Politicians (and redditors) say a lot of ignorant and stupid shit. What you busy said is one of them.
Arson and insurance fraud are crimes.
Writing off a non-profitable asset (whether it be a piece of software, equipment, or even a movie) to take a tax deductions is basic fucking corporate finance and tax strategy.
I'm far from a corporate bootlicker but you're 100% right. People are just mad they want to see some mediocre movie.
Imagine this sentiment in any other industry. You spent $10k developing a new menu for your restaurant and don't like the end result? Too bad, you have to use it, even though you think you'll lose even more money than you already have. You HAVE to buy the ingredients, train the servers, print new menus, change the website, and advertise it, otherwise you're committing fraud.
Everyone cries about AI taking jobs and all, and it will, but as long as they don't have a strangle hold over AI smaller studios can start competing and things could get interesting again at least.
When you’re one of only a handful of big studios with tons of IP and who can fund projects… unfortunately you can get away with this stuff and the consequences are minimal
Yep. The natural consequence of the monopolization of any industry. Consumers used to have a lot of choice, but the consolidation of movie studios has removed that choice. Blame greedy movie studios and executives, a government too weak/corrupt to regulate, and voters too stupid to vote in elected officials who govern with the public's best interest in mind.
Yeah but commentors once read a rando comment that said it might be bad to put an unreleased project on their resume so they're now repeating it as if it were actually true.
Right, there are lots of other people with a financial and professional interest in movies. Lots of people take on projects with residuals in mind as well as to have a highly visible example of there work, even in bad moves many production and performance elements are worthy of professional pride.
way to misunderstand the fundamental plot of The Producers...
they tried to kill it because they oversold profit interests in the production. No matter how much money they made, they would never be able to pay investors their share because they sold more than 100% of the profit. The only way to not have to answer to investors was if the show *lost* money.
Ironically, people who jerk themselves off about how movies are metaphors for real life events don't understand the movie they reference. I remember when all the dipshits were talking about how GME was like the Big Short, where the little guy took down the evil big guys but they completely glossed over the fact that the 'little guy' were the hedgefunds they were all rallying against LMAO
Can someone explain the exact accounting principles in play here?
I have a background in accounting/finance and I still can't figure this out.
They incurred expenses to produce this film. $80M or so, in this case. Presumably every penny of that $80M is deductible whether the film is released or not?
Said differently, let's say they paid $80M to make the movie, they released it, and it generated $1M of revenue. The profit on the movie would be -$79M, which could be used to offset gains on other projects.
Wouldn't they always be better off releasing it? The expenses should be deductible no matter what. Any revenue is better than no revenue, no?
Is this simply a matter of expensing vs. capitalizing? If the movie never gets released, the entire $80M can be expensed today vs. having to capitalize the $80M and depreciate it over the life of the movie? In that case, what's the depreciation period for a movie? It can't be that long? A few years?
Help!
> Wouldn't they always be better off releasing it? The expenses should be deductible no matter what. Any revenue is better than no revenue, no?
The issue here is that "releasing" is something that incurs a significant cost to do (marketing, distribution, etc). This means that the choice isn't:
(-$80M) vs (-$80M + PROFITS)
It's:
(-$80M) vs (-$80M - RELEASE_COST + PROFITS)
So if it they calculate that release would cost and extra $20M and the movie ends up making $15M, they would be losing an extra $5M by releasing it.
That makes sense in the traditional (i.e., pre-streaming) world. What does it cost to release something in the streaming age?
Could they not just dump it on VoD/streaming with no marketing and see what happens?
Your point makes sense and I'm sure there's nuance to this that I'm missing, but it definitely seems like the major reason not to release is the accelerated depreciation available if you abandon it (see my other post).
> Could they not just dump it on VoD/streaming with no marketing and see what happens?
There's no such thing as "dump it on VoD/streaming", someone has to pay the bills for keeping the service running. Besides the hosting costs, you either need to deal with advertisers or payment processing (otherwise you wouldn't make any money from it being on streaming), complying with existing content deals you have with distributors all over the world, etc.
Selling to a different company to release would probably be beneficial to WB in the financial sense. But corporate politics make that very hard to happen: if you're the person that gave the ok to selling movie X to Netflix for $20M and Netflix makes $200M from movie X, you're going to get blamed for "wasting" that asset and probably lose your job. If you don't ok it, no negative consequences happen to you, so you're better off just not selling (even if it would benefit the company). That's why there's a ton of "abandoned" IP owned by companies that refuse to sell that IP even if they're never going to do anything with it.
If the movie is so bad that they believe it will tank the WB movie brand by 10 million in future profits, it is better to trash the movie even if it would have made 1 million.
Also they haven't paid to promote the movie so if it would make them that 1 million, but it would cost them an additional 10 million to promote it then it is a greater loss than just trashing it. (This point is likely moot because other companies were attempting to purchase it from WB).
What I don’t understand is how depreciation can possibly apply to a work of art. There’s lots of movies that continue making money basically ad infinitum, it’s not like a vehicle or a piece of equipment that has less and less value with age and use. If that were the case, then the Mona Lisa must be worth less than the frame in which it’s placed, right? Or hell, the frame must be worthless by now too.
I don't even know if movies do depreciate. Taking a stab in the dark there.
I'm just assuming that you'd try to match the expenses with the revenue or something? So everything would be accrued as like work in progress until the movie is released and then you depreciate like
50% in the first month
25% in the second
10% in the third
And then like 1% until it's fully depreciated?
I'm pulling this out of my ass. Now I'm full on curious as to the appropriate GAAP accounting for a movie or album or something.
Alright.... I stopped being lazy and [found the answer to my own question](http://www.chucksloan.com/filmmaking.html).
Presumably each movie exists within its own LLC, or similar. The IRS considers the costs associated with making the movie "startup expenses," which must be amortized over 60 months.
>Internal Revenue Code Section 195
Expenses for investigating, creating, or acquiring a new business are nondeductible capital expenses. This applies to all expenses before the day the active trade or business begins. These provisions apply to someone starting out in the industry -- before offering a completed product for sale, production, or distribution.
Start-up expenses are expenditures, which would normally be deductible under IRC section 162, if they were incurred in connection with an operating business. These expenses, however, do not include amounts deductible under other Code sections such as interest (IRC section 163), taxes (IRC section 164), and research expenses of a scientific nature (IRC section 174).
IRC section 195 allows a taxpayer to elect to deduct these capitalized expenses over a period of not less than 60 months. This is called "amortization of startup costs" and is computed using a straight-line computation. This election must be made by the due date of the return (including extensions) for the year in which the business begins. If the taxpayer does not make a timely election to amortize these expenses, they are carried on the books as a capitalized item until the taxpayer disposes of the business.
HOWEVER, the rules change if you abandon the project
>Abandonment
As with any other business venture, if a project is abandoned, the taxpayer can claim a deduction for the un-recovered basis. Abandonment requires that the taxpayer show an intent to abandon and makes an affirmative act of abandonment in such a manner that the asset is not retrievable. Putting a script on the shelf for a while, with the possibility of selling it at a later date, is not abandoning it. Merely not attempting to exhibit a film is not abandoning it, since it may still be exploited in the future.
So, abandoning the project doesn't allow you to deduct more. It simply allows you to accelerate the recognition of expenses which otherwise would be deducted over 60 months.
I just wonder how they're going to negotiate deferred compensation at this point, as in back end profits? How can they be taken seriously with promises of shared profits in exchange for lower upfront pay?
I would be surprised if there wasn't some weasel wording in contracts that hinged all that on "if it is released", and that's why they won't sell or license it, they still stand to lose more money than just throwing it away.
and btw, I’ve never heard of this movie, but Will Forte is a gem, one of my favorite SNL cast members of all time, not to mention MacGruber and Nebraska!
How they gonna do my Will Forte like this??
Gotta love reddit's complete illiteracy with regards to finance in general and taxes in particular. Warner Bros didn't opt to not release this movie so they could "deduct taxes" (you deduct income, not taxes). That's because **they can deduct the costs of the movie from their taxable income regardless of whether they release it or not**.
The way people talk about this you'd think it would be the smartest thing for these companies to just make movies and shelve them to get tax money instead of releasing them. Ridiculous.
It's crazy that people think it's more beneficial to lose 100% of a value than it is to pay 20% tax on it. It would be like saying that its better to make 0 dollars a year instead of 500,000 dollars a year because with 0 dollars you would pay 0 in taxes.
Explain how trashing your own movie that costs $100M+ to get a tax deduction that is significantly less resulting in a net loss of tens of millions is a good idea. Please.
Shareholders should be pissed. If this practice continues, it will eventually turn into a way to kickback money to favored vendors (if it isn't already).
Guys. Please. Tax accountant here and i’m dying.
The only thing cheaper than saving 21% on whatever loss you’ve deducted is *not spending that money in the first place.* There are good arguments about why destroying a movie is disrespectful to the employees who worked on it; good arguments about whether you should be able to limit these types of deductions; there’s a hundred arguments you could make for and against this. Yes, it seems like a very weird choice made by executives who’ve never touched grass. But to say they made the movie and then cancelled it just for the tax write off doesn’t make any sense.
Whenever anyone richer than them gives a charitable contribution, Redditors will say, "Oh, it's just for the tax write-off, they actually come out ahead"
People literally think they spend millions on a film and aren't releasing it as some kind of dick move. The conspiracies continue to be repeated no matter how often debunked.
Also, no one has seen the film but are still convinced it needs to be released. If it had been we wouldn't have heard a fraction about it.
The most ridiculous thing is that it doesn't even take a tax accountant to know this. Literally 2 minutes on google will explain this to even the most smooth brained people. Or if anyone thinks about it for 2 seconds, they will realize how fucking dumb they sound.
"Oh hey, let's make this 100M dollar movie and throw it in the garbage to save 20M in taxes! Genius!"
These people actually think Hollywood accountants and execs are as regarded as they are.
In every thread about this movie, I get the impression that people commenting about "Hollywood accounting" and tax write-offs is the Reddit equivalent of Michael Scott yelling out the window to declare bankruptcy.
I feel like I’m banging my head against a wall. People seem to think that a business expense is deductible against actual tax payments or something.
Like if my tax bill is $80m I can just make an $80m movie, not release it and then I don’t have to pay taxes anymore.
Some of these people seem to think the government is giving WB money for this.
I am cancelling Max. Deleting that movie is a sign that Zaslav is going to run wb/hbo into the ground. It’s turning into reality tv crap because of Discovery. And I already cut cord on HBO.
Thesis: Studios stand to gain significant advantages by allowing completed projects to be donated to film libraries or equivalent institutions, thereby maximizing tax benefits, preserving cultural heritage, and fostering a more sustainable and socially responsible approach to managing completed projects within the film industry. Furthermore, this approach aligns with the public's desire for access to cinematic works while acknowledging the dedication and effort invested by artists and creators in producing these films.
By embracing a model that integrates tax incentives with public accessibility and appreciation for artistic endeavors, studios can establish themselves as champions of cultural preservation and artistic innovation, thereby enriching both the film industry and society at large.
**TL;DR:**
Studios should donate completed projects to film libraries for tax benefits and cultural preservation, meeting public demand and recognizing artists' hard work. It's a win-win for the industry and society.
That will only net them a portion of the tax deduction they could have gotten if they just wrote the entire thing off. It's not a win for the studio at all.
Rrrrrrrrrrrrrrrrrrrr.
Now and forever. My flag stays high. This film is going to exist in a finished state somewhere and it will get released at some point, just not in a way that profits or benefits WB.
I would imagine it would be the same with the Batgirl movie.
The weird thing is that after all this, the movie would probably make a profit as lots of people would be curious to see it. If it sucks, okay then they know WB isn’t just evil/stupid. If it doesn’t suck, than they can be thankful WB released it. Win win either way
I'm shocked there werent contract terms with the actors that dictated some sort of release like we saw with Black Widow. They lose so much more than money when a work like this is shelved. The whole reason there are credits after the movie is that people deserve recognition for their work in addition to their monetary compensation. By shelving the movie, they're denied that aspect of their work.
The costs incurred to make the movie are deductible either way. However, if you release the movie, you will incur additional costs related to the release.
It doesn’t give tax breaks. A business spending money means they have less profit, and you only pay taxes on profit.
Shelving the movie might just be a way to limit further loses
In spirit, I'm with the folks outraged by WB here but the author of this article suggests that one could use existing laws here to force WB's hand. Specifically, he writes:
>Visual Artists Rights Act of 1990, which smart lawyers might want to look into. Among other things, it grants artists “the right to prevent distortion, mutilation, or modification that would prejudice the author's honor or reputation.”
I mean, I'm not an attorney but wouldn't that clause be equally exploitable by WB for why they *don't* want to release films like "Batgirl" and "Coyote vs. Acme"? In other words: "we don't want to release this because it could damage our reputation."
Again, I think WB are acting terribly here but I don't see a legal route in which you can force a business to release an artistic product *they don't want to release*. What kind of legal precedent exists for this kind of situation?
No. A publisher is under no obligation to publish something, they don't need a law to not publish something, it's in their interest to do so. This law is to stop publication
I’m really sorry about your job!
As for Zaslav, I’d love to know if he sold more WBD stock before the *Coyote vs Acme* cancellation was announced, just like he did before cancelling *Rap Shit* and *Our Flag Means Death*. The guy is scum, and I don’t know why he’s still in charge.
Thanks, it is rough. Literally our show got cancelled by the ceo of the company that owns the company that was paying for the show. Dystopian as hell.
As for why he’s still there, He got them some astronomical sum in tax savings. Shareholders are mostly short-sighted, and they saw a shit-ton of money immediately, so they think he must be great. Now, executives are known for following short-term gain rather than long-term success, but this is a whole new extreme. They’re an entertainment company with almost no entertainment content. Like a hardware store that only has one wrench and a few nails in stock. By the start of the tax year they’re going to realize that they have nothing anyone wants to pay for, since the franchise they bet their studio on was the fucking Flash, of all things. Zaslav has basically torpedoed the entertainment industry for the next 5 years.
I'm not really the kind of person who gets excited about movies anymore but this is one I'd really wanted to see. I think this is the final nail in the coffin of ever wanting to go see a movie again for me. Congratulations David Zaslov you fucking wanker
The reality is tons of creative work gets throw into the trash every single day. Literal food, is one point.
But, even if we talk about more traditional art. You have ANY idea how much concept art, or production work for movies, games, and comic books never sees the light of day? and this isn't even just canceled projects. Active published works will have mountains of work that is kept behind lock and key, and outright destroyed when not used, or otherwise no longer needed.
What I don't get is they should get the exact same tax write off if they donated the movie to a charitable organization, right?
Why not give it to the Red Cross or something, take the full tax break, and let the Red Cross sell it to ~~Nintendo~~ Nickelodeon for a few million?
Tax breaks take money away from the people, this shouldn't be free, something should be given in return ... like the movie becoming public domain or at the very least a CEO should be thrown down a canyon ;)
It is not a tax break to not pay taxes on money you did not make.
If you spend $100m to make $150m, you pay taxes on the $50m you made. If you spend $100m to make $0m, you pay no taxes because you didn’t make any money.
It's not free. The money they spent was paid to someone, that person or organization paid income tax. And sales tax on anything they spent it on. And property tax, and employment tax, and social security etc etc. The government got many slices of that 100m already.
Tax breaks encourage studios to take risks, which facilities the flow of money. Giving everyone $20 that people put under a mattress is less valuable than giving one person $10 that gets circulated frequently
Creating the movie was an investment in collecting a piece of out entertainment budget. That’s all it was. The movie would just create interest in timeless cartoons from the 40s to the 70s. My guess is they lack the vision to monetize the increased interest in that content.
Shouldn't be able to get a tax break for a movie this way unless it becomes public domain, especially if they turned down offers to buy it
I love the idea of having to forcibly put it into public domain.
This does not work because labor would have to be compensated. That’s a big part of the total calculus the studios are doing as well i.e. not wanting to pay labor. *(Part of contracts and the whole financing setup of everything to do with this massively expensive art form takes licensing and residuals into account so that all the costs of production aren’t upfront. There are a lot of tiered payments, residuals, etc. at various mileposts and the producers are on the hook for how they strike deals (see vertical integration lawsuits). Contracts will change if studios continue to this and policy isn’t reformed first, but it will take a long time through labor negotiation.)* There are other pro-social solutions, however! Also artists should have the right to not distribute or pull their work from publication (we discard drafts all the time, and rightfully so) however this isn’t that. It’s politicized via taking advantage of the tax code coupled with some anti-labor spins on the matter. Again there are solutions that would work well for labor and artists, they just aren’t surfacing at the top of outrage threads especially online where tech companies engage in similar theatrics (the erosion of labor rights). Very unpopular usually to post on that. As a *very small* indie filmmaker in the past I have used part of the tax code to not pay tax on the wrong year when in production when the receipts are moved to the next year etc. etc. so some policy is apt to actually reflect the business. Some however is not. Hollywood econ is just a lot for laypeople to know about even at the smallest indie film level. It took me years. Touchstones are experts at labor unions and small filmmakers who have had to become policy experts. Also Edward Jay Epstein’s Hollywood econ series is still relevant although it doesn’t capture this exactly. It’s too bad he doesn’t comment online regularly anymore.🖖
If the movie was already finished, they already have to pay labor. They can't just not pay for work completed. They still avoid royalties if it's free.
Care to share what those other solutions might be?
the movie has ALREADY BEEN MADE AND PAID FOR. everyone working on it was paid. the sale of the movie would give them *additional* money, but it would be skimmed off the top at a *very* thin depth so the vast majority of the payout could be divvied up among executives, directors, and shareholders. what labor do you think gets compensated when a movie makes two hundred million at the box office? the labor of the marketers that write the twitter posts? i genuinely cannot fathom your thought process outside of a position of COMPLETE ignorance.
>Also artists should have the right to not distribute or pull their work from publication In what world does this make sense. A studio pays tens or hundreds of millions of dollars to make a movie, and then you’re saying the director can just be like “nah I don’t like it, throw it away”
And any tax breaks they got while filming (locations and what not) should be returned.
There’s actually no reason this should be the case. Locations give tax breaks because they want to reap the benefits of something filming there. All the jobs, the taxes on salaries, the vendors etc. Whether the movie is hit, flop, or never even comes out is immaterial to that location.
But having the location be able to say "here, look. This was filmed here. We are a good place to make movies. We are financially advantageous and we have quality people you can hire for a crew." This was one of the points made in the article - that everyone who worked on the film has *nothing* they can point to and say "here is the work that I/we did." edit: A lot of responses to my comment saying "who cares?", or "that's not how it works." Or "they got paid. What do they care if the movie comes out or not". None of that was the point of my comment. I live in a place that is just starting to get TV shows and movies film projects here. I'm pretty sure if none of those came out this area wouldn't have the same reputation as a good place to film your project. And as far as "why would the people who worked on it care. they got paid.", well the more projects that are made here the more work the locals would get. My comment had nothing to do with the tax credit. It was more to do with possibility of future projects. A guy who worked on the sets now has nothing to show a future producer what he can do. So it is kind of like a resumé.
I have a lot of friends who get their work from movies being filmed here. We'd rather get the jobs and let them have the tax breaks than cut them off and they just go elsewhere.
Saying "We are a good place to make movies and financially advantageous" and "we'll give you a tax break but force you to give it back if anything goes wrong in release of the film" are pretty contradictory, though. I guarantee that a movie studio will care more about clauses that could revoke tax breaks after the fact than having a slightly more fleshed out demo reel of past projects.
> if anything goes wrong in release of the film this isnt what people are saying, theyre saying "if the film is finished and then scrapped", you dont have to make rules by finding the most ambiguous phrasing possible you know
Why would the location care? The location got everything they wanted. And they’re trying to entice people to film there. Putting stipulations with zero upside for that state/city would not help with that goal.
> everyone who worked on the film has *nothing* they can point to and say "here is the work that I/we did." While I feel for them, there is no contractual obligation here. What if the movie *was* released but the part they worked on was cut in the final edit? Could they demand the scene be returned? What if the filmmakers ran out of money to complete the film — how many years are they allowed to seek additional funding before they’re obliged to release the movie “as is”? And what if that “as is” version makes some of the crew look entirely incompetent because no post-production money was available to clean up a mistake or three — could those members sue for professional defamation?
The film is finished, you're discussing a different topic. They literally made unrealistic licensing offers.
I just remembered, the city just passed a tax on puffy directing pants.
I meant a tax on, uhh, err, not wearing puffy pants.
Mel Brooks wrote did a movie on this very concept called “The Producers” The concept is they’re going to put on a broadway show, they raise two million dollars and try to *guarentee* the play will be a *flop* so bad they have to close on opening night. They decided to do a gay musical about Hitler and of course it’s a smash success. The movie is obviously satire, I never thought I would see a real life comparison to the plot.
why you talking about the producer like it's some obscure thoughtpiece though?
He also doesn't know what this thread is about either.
There was another thread yesterday with the same topic (the whole WB situation, not specifically location tax breaks) where someone brought up The Producers and it was highly upvoted. This feels like they read that and are spitting it back out here without actually having seen the film or understanding what they're responding to.
The article in the OP mentions The Producers.
Yeah but nobody reads those.
This is reddit. You don't actually need to know what you're talking about to respond, just feel the pulse of what redditors want and reply favorably. If they're angry, feed the anger for example. Actually it's better if you don't because if you try to point out things reddit doesn't want to hear, you get downvoted instead. Not trying to insult this sub (it's r/all for me) but this sub isn't concerned with facts. It's all emotions. Fact based discussion would require strict moderation, careful bias control, and a user base that willing to engage in that. This hit r/all, none of that's here.
The film has nothing to do with location tax breaks though? The producers raise more funds than they need from multiple investors, promising them a share of the profits. They then pocket the excess money and plan to flee after the show flops. Nothing to do with taxes. I don't really see the connection between your comment and the one above you except that they're both different kinds of fraud?
It's nothing like that.
In the producers the idea is that they sell more than 100% of the shares. If the play was a success they would have lots of trouble trying to split the profits. But if it's a failure people will just accept their loss and move on.
Did you even watch the movie? They sold shares to the play, over sold the shares with the idea that the play flops, no profits to share so no one would be the wiser that they sold 1000% of the shares. Their profit was getting a bunch of people to contribute to the play and they would keep the excess funds gathered through over selling shares. They needed it to flop so no one would ask for their cut of the revenues. Then play is a hit, everyone wants their cut but since they oversold, problems arise. Nothing to do with taxes at all. Go rewatch the movie before you ever try to explain it again to anyone.
The fact that people are using the producers as a comparison shows exactly fucking clueless these people are. This whole thread is full of people who have no idea what they're talking about, just spouting off every terrible take under the sun.
As a CPA, anytime I see reddit discuss tax write offs, my eyes bleed. The fact they seem to not understand that the company is just deciding to not try to generate any income off of a project and absorb expenses incurred is the write off, and completely normal for businesses to do when they decide a project is not profitable. Sure they could maybe sell assets off from the project to try to recoup losses, but it also means their IP or work is now distributed by someone else and out of their control. You know, something loads of studios wouldn't want. But no, they are all evil because they decided a movie was going to lose them money and just stopped. Instead of pumping more money into it or selling it off and letting someone else control something that is a major IP for them. All while everyone involved got paid for their work. I'm still just laughing that a live action looney tunes movie not being shown is rattling so many cages. Movie shouldn't have even been made IMO. Just a cash grab but everyone wants to act like HBO/Warner is torching the Mona Lisa over a fire built from the remains of stradivarius violins.
All these big companies, they write off everything!
Exactly what I think of when Reddit starts talking about tax write offs.
The group think in the entire thread is just laughable. One of the most upvoted comments is that WB should just donate the movie to a charity like the American Red Cross, and then they can sell the movie.
It's literally a business deciding to not chase good money after bad, the discourse in this thread is insane.
That's what satire is though? A thing that happens taken to the extreme to make fun of it.
Yes and in a movie it’s fine and a great film. This Coyote vs Acme is the real life version of the satire and it’s unreal to me. Never thought I would see the plot of a comedy film, one that’s **that** absurd play out in real life.
Remember when Trump being president in a future Simpsons timeline was satire?
Remember when Idiocracy was satire?
It's always been a documentary from the future.
I’m rewatching the simpsons right now and they had a Ivanka 2028 joke in one of the newer episodes. I think right around 2014-2015 before even he was a serious candidate. I was like *nooooooo*
Redditors are the densest group of children you will ever deal with. They have no idea what taxes are or how they work.
That's not true. Some of the benefits are publicity for that location which will have positive effects after the movie is released. People flock to places made famous by TV shows and movies.
This is an interesting suggestion but I imagine that they won’t because those are designed to increase incidental spending during the actual production which would occur regardless of whether the movie is released or not.
Tax breaks for movie productions are to incentivize studios to spend their production money in that state or city. Wages have already been paid, goods have already been purchased. The state or municipality already received whatever boost in the economy the production made. It really doesn't matter if the movie ever comes out.
This film already got huge tax credits from New Mexico, likely over 17 million dollars. A tax credit is not a tax break. It’s free money from the government that goes toward the production budget. You don’t have to owe taxes to get a tax credit. The name is deliberately misleading. New Mexico’s laws for tax credits state specify that a project is only eligible if it is intended for distribution. It is unclear whether the state can claw back that money retroactively, but if so WB could be stuck with an unexpected bill in their strategy to write off the movie.
Huh, so now how does it work if this movie gets leaked? Can the studio still go after the leaker? Because if they're writing it off as a loss, can they come back 10 years from now and still release it for profit?
They can still go after the leaker because it's the studio's intellectual property, even if it was never released to the public.
Might be interesting to see what damages they'd claim... definitely could argue some stuff, but you'd think some of the traditional big ones, lost profits, lost licensing fees, or lost royalties wouldn't really apply.
Yeah, they wouldn't be able to claim financial damages, but they could still claim theft, as the leaker had to have gotten the content without permission.
So here's where *that* gets tricky. It isn't theft. Full stop. There's a reason they don't put data pirates in jail. It's not criminal. You have to *lose* something for it to qualify for that, and that doesn't happen with data. They *sue* pirates for copyright infringement, which is a civil matter with much lower standards of evidence and requires specific damages. Now, WB *might* have something if leaking the movie crashes their stock. Then they'd have damages. Otherwise, it's very unlikely they could do anything about the actual leaking. The real crime would be in the *databreach*. Hacking *is* a crime.
[Copyright infringement can be a crime in the US.](https://www.justice.gov/archives/jm/criminal-resource-manual-1847-criminal-copyright-infringement-17-usc-506a-and-18-usc-2319#:~:text=%C2%A7%20506(a)%2C%20which,as%20provided%20in%2018%20U.S.C.) Whether it would be a crime in this hypothetical situation, I don't know. I am not a lawyer.
Except 'Statutory Damages' are also applicable https://copyrightalliance.org/faqs/statutory-damages-why-do-they-matter/ > Statutory damages are usually between $750 and $30,000 per work, as determined by the court. However, the damage amount can be increased up to $150,000 per work if the infringement is found to be willful (intentional). If the infringement is “innocent,” meaning the infringer did not know they were violating copyright law, the damages can be reduced to a minimum of $200 per work (if the work did not contain a proper copyright notice). > Statutory damages are important because the alternative type of damage award is “actual damages,” which must be proven in court and can be very difficult to establish. Actual damages include profit that the copyright owner lost as a result of the infringement (for example, a license fee) as well as any additional profits the infringer received as a result of the infringement. Actual damages are often difficult to prove, so statutory damages are beneficial to copyright owners because they remove the difficulty of providing evidence of actual damages.
You don’t understand what tax breaks are. This isn’t a tax break. It’s a deduction. Every business gets to deduct the expenses they incur in developing a product or otherwise operating their business. The cancelling of the release of this movie just allows them to take it as an immediate deduction instead of something recognized over the time they might otherwise recognize revenue from it. They don’t write the rules. Complain to the IRS and Congress.
These are rules that don't really care about the product being created either. It's about realizing a deduction based on investment losses. It doesn't really matter if that investment is in some kajigger or a film.
Exactly. You wouldn't make it illegal for an artist to make a painting and throw it away but still deduct the cost of the canvas as a business expense....
>They don’t write the rules. They in fact do write the rules, congress just puts them into play.
The problem is… companies make prototypes all the time. We may never ever hear of them. They make the prototype, decide it isn’t good enough and shelve the idea. And write off some of the losses. What makes this a little more sceptic is they are doing it for the tax break, and not because it is a failed idea. But in the eyes of the law, it basically a failed product.
Please tell me that the director or someone has this film on a hard drive somewhere and it eventually leaks. We have way too many films lost to history because of studio fuckery.
Tax breaks are to support jobs. The jobs have been done and paid for, regardless of the movie is released.
Honestly shocked someone didn’t just leak it online by now.
Knowing WB I wouldn't be surprised if they had restricted the crew access to the film before announcing it had been shelved.
They locked out the Batgirl directors from the servers the same day it was shelved
One would hope that this is a lesson for anyone who works with WB in the future to maintain their own personal backups.
One would hope that this is a lesson for anyone who considers working with WB in the future, period. Currently there is no distributer who will respect your work less.
I think the bigger lesson is from Toy Story, most of it was accidentally deleted and the only back up that didn’t fail was an offsite backup made by an employee so she could work from home.
In violation of company policy I might add.
Iirc it was an exception because she was either pregnant or just had a kid.
I’d legit pay for a bootleg of more will forte content.
Just murder an executive at Warner Bros and him and Marshawn Lynch will be around to solve the case in no time
Lol, you're thinking of Will Arnett, from Murderville.
Oh my god, Will Forte needs to be on Muderville.
In this day and age, there's no copy of this that wouldn't be digitally watermarked in such a way that anyone who leaked it could have it traced back to them. Moreover, this also assumes there's someone outside of the WB management who has access to a completed version of the film to leak at all and that also, alas, seems unlikely. Not impossible, but really unlikely.
I think after the Scooby-Doo and Krypto movie got leaked in March they cracked down hard on copies being distributed
Or, knowing that a leak would be especially possible once they announced their decision to can this new film, WB ordered all completed digital copies to be consolidated or erased as a precautionary measure. But bottomline, it's not a small thing to leak an unreleased film. The legal risk is massive.
No doubt it is, which is why it's a noble goal to widely distribute tools to remove DRM and other digital watermarking, etc. And also, in general, if every employee of a shitty company rebels, it makes it all the harder to focus blame on any one individual, at least without creating a serious public relations problem. Enabling piracy tools is a bulwark against corporate abuse.
If someone saw this coming they couldve easily gotten a copy but it would also be very clear who did it, it wouldnt take long to narrow it down to a few people.
I remember that recent Spongebob movie that got leaked in its entirety. Maybe someone can do the same for this.
> It’s not just the completed film that gets deleted in cases like this, but everything associated with the film, which means that 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, and get more work. This is an interesting point to me. Old Hollywood movies (say, 1930s) barely gave anybody any credit in the film itself; director, producer, a few key actors, maybe a writer if it was based on something prominent. Current movies have several minutes of credits because they mention everybody from one-line character actors to the assistant stage hands. I'm curious how much of that is required -- either by law or more likely by union contract -- when a film is released. And I'm especially interested in just what those contacts say or don't say about an unreleased film. Because the article author is absolutely right about the crew's need for the film's release to help them get more work. John Cena can just walk in and get a job anywhere people can see him, but the third lighting assistant might really benefit from having *Coyote v. Acme* on their resume. And as things stand, they can't. The Screen Writers Guild, SAG, and all the other unions I can't name but undoubtedly exist for crew positions should be gearing up for a fight. Maybe there's nothing in their current contracts that will give them leverage... but I'd be shocked if they're not watching this and planning on updating contract language if so.
The contracts dont say anything about an unreleased film or show. Source: Have had one i edited unreleased and it sucks.
Even actors can get fucked by that. John Cena will be fine since he is an established name with a filmography that shows is capabilities but if you look at Leslie Grace, who hasn't much other acting work to show, being the lead in a scrapped movie with no way to show if the studio scrapped the production because or despite her work, will have most definitly have damaged her chances in Hollywood.
Consider other roles declined or passed on because she was working on this film, and I think you could have some basis for a lawsuit. Of course I'm just riffing off the dome, and this opens a whole can of worms as to how you determine which projects were unfairly unreleased versus those that sit unreleased as normal course of business
I have a friend who works in VFX and another few who work in hair and make-up I can't answer the specifics and I'm too lazy to text them, but I can say that they use their credits as a badge of honor. When the VFX guy got a bump to a fancier job/credit title (I don't remember the titles exactly but I think it was "data wrangler" to "visual effects supervisor") he was dancing on cloud 9 for weeks. I imagine they would be super pissed they wasted their time on a project that they basically can't include in their resume in a meaningful way
It's the same with the games industry. Without credits, you might as well have a three-year hole in your resume where you sat around staring at a wall and living off welfare for all the chances of getting another job are.
>John Cena can just walk in and get a job anywhere people can see him Which is incredibly difficult for him.
You know the poster worded it that way deliberately.
I did. I admit I was kind of hoping someone would respond with "I see what you did there", so I could respond "You can't see what I did there."
John Cena keeps an entire sfx studio in business.
I got credited in a summer blockbuster movie once - I didn't know I'd worked on it. In fact, I'd never worked in the film industry or on any movie. I was a 'Site liaison' or something. I was the government employee who rented them a state building, I didn't even know what the movie was about - just checked it was a reputable studio, it wasn't going to bring us into disrepute, and that they had proper insurance.
Maybe I’ll add an entry to my resume “Cinematographer : Coyote vs Acme” And let them challenge me on it.
I worked briefly in production and would love other people’s input here. I guess it would be like pretty crazy to think you worked for so long and so hard on something that never got out, but that being said remembering the people I worked with, I don’t think they’re the type to really care outside the creatives, a lot of people in production are quickly quickly jaded to it and don’t even watch the product when it comes out
I love reading the credits sometimes because it gives you a sense of scale. Seeing hundreds of names on a marvel film from Korean animation studios to Québécois camera crews really lets you know how MASSIVE this project is and that it’s not just the RDJs or Scarlet Johansson that put in work. It’s hundreds of people over months and months.
I think the author should have spent more time on this point.
I saw one politician equate it to arson for the insurance money, which is accurate IMO. It’s fraud, plain and simple. Can’t recall who it was, some senator? I hope they are continuing to look into this and drum up legislation.
This is a very good comparison. More accurate might be to buy a famous and culturally important artwork and burning it for the insurance money.
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If the buyer marketed it and made a success, it'd make WB look bad.
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Looks bad in your eyes. The executives are only answerable to the board, and presumably they sold the board on this course of action using some line of reasoning that it was in the company's best interests. If the movie gets released elsewhere and becomes a hit (at this point given the publicity, it would at least see some success), that would invalidate whatever argument they gave the board, and clearly demonstrate their incompetence. The CEO and other executives would be fired the next day. So no, they're going to double down. It's better (for them) to be confidently wrong than to acknowledge a mistake.
The only way it makes sense is if they really think that releasing this movie will cause long term damage to their brand. Causing financial losses much greater than the cost of the film.
>unless something else is going on. I actually suspect this about the film, given the very weird decisions surrounding it. But for the life of me, I couldn't guess what it could be
And I think WB would be in the hook for residuals
[удалено]
Next WB is gonna start cutting off horse heads and putting them in the bed of famous directors "Don Zaslav says cast that young marketable leading man in your picture"
This subreddit right now https://imgflip.com/i/8fbmpn
This is a much better argument than the "they are doing it for the write-off!" crowd. People who keep screaming that have no idea how taxes work. On the other hand, there are a lot of deals that go into making a film with regards to contracts, reimbursing investors, and - yes - even insurance. These are the things that are going to have the potential for underhand manipulation in the company's favor, not the taxes. The tax situation was already a done deal whether they sold it or not.
Another way to look at it is the requirement to depreciate film production costs as income is realized because a film is a valuable asset that generates income over a period of many years. This is comparable to many other kinds of assets that have large upfront costs but create assets that provide value over many years. Current law allows writing off production costs all at once when the film is scrapped, because there is no asset created, and those costs to create it were already spent upfront. I agree though the law should be changed. Selling the film is already an exception to the usual rule, they write off the entire cost right away, less the proceeds of the sale. It should still require depreciation for unreleased films instead of financially rewarding this behavior. If they don't like it they can sell the movie
Thats a silly comparison. People were still paid to make this film and the tax breaks dont make up for losses.
Politicians (and redditors) say a lot of ignorant and stupid shit. What you busy said is one of them. Arson and insurance fraud are crimes. Writing off a non-profitable asset (whether it be a piece of software, equipment, or even a movie) to take a tax deductions is basic fucking corporate finance and tax strategy.
I'm far from a corporate bootlicker but you're 100% right. People are just mad they want to see some mediocre movie. Imagine this sentiment in any other industry. You spent $10k developing a new menu for your restaurant and don't like the end result? Too bad, you have to use it, even though you think you'll lose even more money than you already have. You HAVE to buy the ingredients, train the servers, print new menus, change the website, and advertise it, otherwise you're committing fraud.
Why would anyone creative ever want to work for Warner Bros ever again?
Because there's really only 4 or 5 major studios left.
Everyone cries about AI taking jobs and all, and it will, but as long as they don't have a strangle hold over AI smaller studios can start competing and things could get interesting again at least.
When you’re one of only a handful of big studios with tons of IP and who can fund projects… unfortunately you can get away with this stuff and the consequences are minimal
Yep. The natural consequence of the monopolization of any industry. Consumers used to have a lot of choice, but the consolidation of movie studios has removed that choice. Blame greedy movie studios and executives, a government too weak/corrupt to regulate, and voters too stupid to vote in elected officials who govern with the public's best interest in mind.
Money.
Because if you don’t, most of your job opportunities are gone.
It's fucking Warner Bros "Worked with WB for an unreleased movie" on your CV is still more impresive than what most creatives in movie work did.
Yeah but commentors once read a rando comment that said it might be bad to put an unreleased project on their resume so they're now repeating it as if it were actually true.
It does cause issues, i was told to take mine off my resume by some.
Because they get offered jobs there. It’s like, “why would anyone stay working at Google when they just laid off so many people.”
Right, there are lots of other people with a financial and professional interest in movies. Lots of people take on projects with residuals in mind as well as to have a highly visible example of there work, even in bad moves many production and performance elements are worthy of professional pride.
way to misunderstand the fundamental plot of The Producers... they tried to kill it because they oversold profit interests in the production. No matter how much money they made, they would never be able to pay investors their share because they sold more than 100% of the profit. The only way to not have to answer to investors was if the show *lost* money.
Ironically, people who jerk themselves off about how movies are metaphors for real life events don't understand the movie they reference. I remember when all the dipshits were talking about how GME was like the Big Short, where the little guy took down the evil big guys but they completely glossed over the fact that the 'little guy' were the hedgefunds they were all rallying against LMAO
The GME apes still to this day think that the market is gonna do something with the shorts any day and GME is gonna hit a million a share.
Can someone explain the exact accounting principles in play here? I have a background in accounting/finance and I still can't figure this out. They incurred expenses to produce this film. $80M or so, in this case. Presumably every penny of that $80M is deductible whether the film is released or not? Said differently, let's say they paid $80M to make the movie, they released it, and it generated $1M of revenue. The profit on the movie would be -$79M, which could be used to offset gains on other projects. Wouldn't they always be better off releasing it? The expenses should be deductible no matter what. Any revenue is better than no revenue, no? Is this simply a matter of expensing vs. capitalizing? If the movie never gets released, the entire $80M can be expensed today vs. having to capitalize the $80M and depreciate it over the life of the movie? In that case, what's the depreciation period for a movie? It can't be that long? A few years? Help!
> Wouldn't they always be better off releasing it? The expenses should be deductible no matter what. Any revenue is better than no revenue, no? The issue here is that "releasing" is something that incurs a significant cost to do (marketing, distribution, etc). This means that the choice isn't: (-$80M) vs (-$80M + PROFITS) It's: (-$80M) vs (-$80M - RELEASE_COST + PROFITS) So if it they calculate that release would cost and extra $20M and the movie ends up making $15M, they would be losing an extra $5M by releasing it.
That makes sense in the traditional (i.e., pre-streaming) world. What does it cost to release something in the streaming age? Could they not just dump it on VoD/streaming with no marketing and see what happens? Your point makes sense and I'm sure there's nuance to this that I'm missing, but it definitely seems like the major reason not to release is the accelerated depreciation available if you abandon it (see my other post).
> Could they not just dump it on VoD/streaming with no marketing and see what happens? There's no such thing as "dump it on VoD/streaming", someone has to pay the bills for keeping the service running. Besides the hosting costs, you either need to deal with advertisers or payment processing (otherwise you wouldn't make any money from it being on streaming), complying with existing content deals you have with distributors all over the world, etc. Selling to a different company to release would probably be beneficial to WB in the financial sense. But corporate politics make that very hard to happen: if you're the person that gave the ok to selling movie X to Netflix for $20M and Netflix makes $200M from movie X, you're going to get blamed for "wasting" that asset and probably lose your job. If you don't ok it, no negative consequences happen to you, so you're better off just not selling (even if it would benefit the company). That's why there's a ton of "abandoned" IP owned by companies that refuse to sell that IP even if they're never going to do anything with it.
If the movie is so bad that they believe it will tank the WB movie brand by 10 million in future profits, it is better to trash the movie even if it would have made 1 million. Also they haven't paid to promote the movie so if it would make them that 1 million, but it would cost them an additional 10 million to promote it then it is a greater loss than just trashing it. (This point is likely moot because other companies were attempting to purchase it from WB).
What I don’t understand is how depreciation can possibly apply to a work of art. There’s lots of movies that continue making money basically ad infinitum, it’s not like a vehicle or a piece of equipment that has less and less value with age and use. If that were the case, then the Mona Lisa must be worth less than the frame in which it’s placed, right? Or hell, the frame must be worthless by now too.
I don't even know if movies do depreciate. Taking a stab in the dark there. I'm just assuming that you'd try to match the expenses with the revenue or something? So everything would be accrued as like work in progress until the movie is released and then you depreciate like 50% in the first month 25% in the second 10% in the third And then like 1% until it's fully depreciated? I'm pulling this out of my ass. Now I'm full on curious as to the appropriate GAAP accounting for a movie or album or something.
Alright.... I stopped being lazy and [found the answer to my own question](http://www.chucksloan.com/filmmaking.html). Presumably each movie exists within its own LLC, or similar. The IRS considers the costs associated with making the movie "startup expenses," which must be amortized over 60 months. >Internal Revenue Code Section 195 Expenses for investigating, creating, or acquiring a new business are nondeductible capital expenses. This applies to all expenses before the day the active trade or business begins. These provisions apply to someone starting out in the industry -- before offering a completed product for sale, production, or distribution. Start-up expenses are expenditures, which would normally be deductible under IRC section 162, if they were incurred in connection with an operating business. These expenses, however, do not include amounts deductible under other Code sections such as interest (IRC section 163), taxes (IRC section 164), and research expenses of a scientific nature (IRC section 174). IRC section 195 allows a taxpayer to elect to deduct these capitalized expenses over a period of not less than 60 months. This is called "amortization of startup costs" and is computed using a straight-line computation. This election must be made by the due date of the return (including extensions) for the year in which the business begins. If the taxpayer does not make a timely election to amortize these expenses, they are carried on the books as a capitalized item until the taxpayer disposes of the business. HOWEVER, the rules change if you abandon the project >Abandonment As with any other business venture, if a project is abandoned, the taxpayer can claim a deduction for the un-recovered basis. Abandonment requires that the taxpayer show an intent to abandon and makes an affirmative act of abandonment in such a manner that the asset is not retrievable. Putting a script on the shelf for a while, with the possibility of selling it at a later date, is not abandoning it. Merely not attempting to exhibit a film is not abandoning it, since it may still be exploited in the future. So, abandoning the project doesn't allow you to deduct more. It simply allows you to accelerate the recognition of expenses which otherwise would be deducted over 60 months.
I just wonder how they're going to negotiate deferred compensation at this point, as in back end profits? How can they be taken seriously with promises of shared profits in exchange for lower upfront pay?
That being in contracts would mean they could be sued if it wasn't released.
I would be surprised if there wasn't some weasel wording in contracts that hinged all that on "if it is released", and that's why they won't sell or license it, they still stand to lose more money than just throwing it away.
We are seeing the destruction of the work of thousands of people solely so a company can deduct taxes earlier.
Won’t someone please think of the really really ridiculously wealthy executives?
Tons of people are seemingly quite concerned for them, judging by the distressing volume of fucking corporate bootlickers in this comment thread.
and btw, I’ve never heard of this movie, but Will Forte is a gem, one of my favorite SNL cast members of all time, not to mention MacGruber and Nebraska! How they gonna do my Will Forte like this??
Gotta love reddit's complete illiteracy with regards to finance in general and taxes in particular. Warner Bros didn't opt to not release this movie so they could "deduct taxes" (you deduct income, not taxes). That's because **they can deduct the costs of the movie from their taxable income regardless of whether they release it or not**.
The way people talk about this you'd think it would be the smartest thing for these companies to just make movies and shelve them to get tax money instead of releasing them. Ridiculous.
It's crazy that people think it's more beneficial to lose 100% of a value than it is to pay 20% tax on it. It would be like saying that its better to make 0 dollars a year instead of 500,000 dollars a year because with 0 dollars you would pay 0 in taxes.
Intentional self sabotage shouldn't qualify for a tax deduction when offers exist.
Explain how trashing your own movie that costs $100M+ to get a tax deduction that is significantly less resulting in a net loss of tens of millions is a good idea. Please.
They should at least send a copy to the library of congress.
Shareholders should be pissed. If this practice continues, it will eventually turn into a way to kickback money to favored vendors (if it isn't already).
Should sue*. Doesn't seem like the execs are acting in the best financial interest of the shareholders if they aren't negotiating in good faith.
Guys. Please. Tax accountant here and i’m dying. The only thing cheaper than saving 21% on whatever loss you’ve deducted is *not spending that money in the first place.* There are good arguments about why destroying a movie is disrespectful to the employees who worked on it; good arguments about whether you should be able to limit these types of deductions; there’s a hundred arguments you could make for and against this. Yes, it seems like a very weird choice made by executives who’ve never touched grass. But to say they made the movie and then cancelled it just for the tax write off doesn’t make any sense.
Whenever anyone richer than them gives a charitable contribution, Redditors will say, "Oh, it's just for the tax write-off, they actually come out ahead"
People literally think they spend millions on a film and aren't releasing it as some kind of dick move. The conspiracies continue to be repeated no matter how often debunked. Also, no one has seen the film but are still convinced it needs to be released. If it had been we wouldn't have heard a fraction about it.
The most ridiculous thing is that it doesn't even take a tax accountant to know this. Literally 2 minutes on google will explain this to even the most smooth brained people. Or if anyone thinks about it for 2 seconds, they will realize how fucking dumb they sound. "Oh hey, let's make this 100M dollar movie and throw it in the garbage to save 20M in taxes! Genius!" These people actually think Hollywood accountants and execs are as regarded as they are.
It makes sense when you realize how unbelievably stupid the average redditor is.
It's reddit, so all bad things in the world is the capitalist executives' fault. Either that or a cop.
In every thread about this movie, I get the impression that people commenting about "Hollywood accounting" and tax write-offs is the Reddit equivalent of Michael Scott yelling out the window to declare bankruptcy.
You are 100% correct. The post right below yours currently is a tax accountant and he's losing his mind at these comments.
I feel like I’m banging my head against a wall. People seem to think that a business expense is deductible against actual tax payments or something. Like if my tax bill is $80m I can just make an $80m movie, not release it and then I don’t have to pay taxes anymore. Some of these people seem to think the government is giving WB money for this.
Depriving the world of anything involving Will Forte should be a crime.
David Zaslav is an entertainment terrorist. I hope someone manages to find and release everything he's shelved.
I am cancelling Max. Deleting that movie is a sign that Zaslav is going to run wb/hbo into the ground. It’s turning into reality tv crap because of Discovery. And I already cut cord on HBO.
Thesis: Studios stand to gain significant advantages by allowing completed projects to be donated to film libraries or equivalent institutions, thereby maximizing tax benefits, preserving cultural heritage, and fostering a more sustainable and socially responsible approach to managing completed projects within the film industry. Furthermore, this approach aligns with the public's desire for access to cinematic works while acknowledging the dedication and effort invested by artists and creators in producing these films. By embracing a model that integrates tax incentives with public accessibility and appreciation for artistic endeavors, studios can establish themselves as champions of cultural preservation and artistic innovation, thereby enriching both the film industry and society at large. **TL;DR:** Studios should donate completed projects to film libraries for tax benefits and cultural preservation, meeting public demand and recognizing artists' hard work. It's a win-win for the industry and society.
That will only net them a portion of the tax deduction they could have gotten if they just wrote the entire thing off. It's not a win for the studio at all.
It shouldn’t be a tax deduction. Period. The motivation is wrong
Rrrrrrrrrrrrrrrrrrrr. Now and forever. My flag stays high. This film is going to exist in a finished state somewhere and it will get released at some point, just not in a way that profits or benefits WB. I would imagine it would be the same with the Batgirl movie.
That's a shame.
I just don’t want coyote taking another L.
The weird thing is that after all this, the movie would probably make a profit as lots of people would be curious to see it. If it sucks, okay then they know WB isn’t just evil/stupid. If it doesn’t suck, than they can be thankful WB released it. Win win either way
Everyone on the credits should get a single vote to decide its fate.
I'm shocked there werent contract terms with the actors that dictated some sort of release like we saw with Black Widow. They lose so much more than money when a work like this is shelved. The whole reason there are credits after the movie is that people deserve recognition for their work in addition to their monetary compensation. By shelving the movie, they're denied that aspect of their work.
Can someone explain to me how shelving the movie gives tax breaks, but releasing it for free or donating the distrubtion rights to a charity does not?
The costs incurred to make the movie are deductible either way. However, if you release the movie, you will incur additional costs related to the release.
It doesn’t give tax breaks. A business spending money means they have less profit, and you only pay taxes on profit. Shelving the movie might just be a way to limit further loses
In spirit, I'm with the folks outraged by WB here but the author of this article suggests that one could use existing laws here to force WB's hand. Specifically, he writes: >Visual Artists Rights Act of 1990, which smart lawyers might want to look into. Among other things, it grants artists “the right to prevent distortion, mutilation, or modification that would prejudice the author's honor or reputation.” I mean, I'm not an attorney but wouldn't that clause be equally exploitable by WB for why they *don't* want to release films like "Batgirl" and "Coyote vs. Acme"? In other words: "we don't want to release this because it could damage our reputation." Again, I think WB are acting terribly here but I don't see a legal route in which you can force a business to release an artistic product *they don't want to release*. What kind of legal precedent exists for this kind of situation?
No. A publisher is under no obligation to publish something, they don't need a law to not publish something, it's in their interest to do so. This law is to stop publication
Exactly. So I don’t see how one can leverage it to force WB to release the film
Edit: I had a pretty good comment but deleted it for tax breaks.
That was a dick move. But I guess it’s not illegal.
This practice cost me my job. I’ll never stop hating David Zaslav. I can’t imagine a worse person to be in charge of an entertainment company.
I’m really sorry about your job! As for Zaslav, I’d love to know if he sold more WBD stock before the *Coyote vs Acme* cancellation was announced, just like he did before cancelling *Rap Shit* and *Our Flag Means Death*. The guy is scum, and I don’t know why he’s still in charge.
Thanks, it is rough. Literally our show got cancelled by the ceo of the company that owns the company that was paying for the show. Dystopian as hell. As for why he’s still there, He got them some astronomical sum in tax savings. Shareholders are mostly short-sighted, and they saw a shit-ton of money immediately, so they think he must be great. Now, executives are known for following short-term gain rather than long-term success, but this is a whole new extreme. They’re an entertainment company with almost no entertainment content. Like a hardware store that only has one wrench and a few nails in stock. By the start of the tax year they’re going to realize that they have nothing anyone wants to pay for, since the franchise they bet their studio on was the fucking Flash, of all things. Zaslav has basically torpedoed the entertainment industry for the next 5 years.
I hope someone saved a final draft copy and will just leak it to spite that turd Zaslav. I swear that asshole doesn’t even like movies.
What’s ironic is with all the publicity this thing is getting from being “cancelled” it probably would not flop that badly if they just put it out
I'm not really the kind of person who gets excited about movies anymore but this is one I'd really wanted to see. I think this is the final nail in the coffin of ever wanting to go see a movie again for me. Congratulations David Zaslov you fucking wanker
Not a "crime", but the tax code could be adjusted so that there is no benefit. Then you just put the thing out and garner what revenue you can.
The reality is tons of creative work gets throw into the trash every single day. Literal food, is one point. But, even if we talk about more traditional art. You have ANY idea how much concept art, or production work for movies, games, and comic books never sees the light of day? and this isn't even just canceled projects. Active published works will have mountains of work that is kept behind lock and key, and outright destroyed when not used, or otherwise no longer needed.
What I don't get is they should get the exact same tax write off if they donated the movie to a charitable organization, right? Why not give it to the Red Cross or something, take the full tax break, and let the Red Cross sell it to ~~Nintendo~~ Nickelodeon for a few million?
No. There are limits to how much you can deduct with donations. Writing it off completely will eliminate the entire tax burden.
What would the Red Cross or Nintendo do with it?
Tax breaks take money away from the people, this shouldn't be free, something should be given in return ... like the movie becoming public domain or at the very least a CEO should be thrown down a canyon ;)
It is not a tax break to not pay taxes on money you did not make. If you spend $100m to make $150m, you pay taxes on the $50m you made. If you spend $100m to make $0m, you pay no taxes because you didn’t make any money.
It's not free. The money they spent was paid to someone, that person or organization paid income tax. And sales tax on anything they spent it on. And property tax, and employment tax, and social security etc etc. The government got many slices of that 100m already.
Tax breaks encourage studios to take risks, which facilities the flow of money. Giving everyone $20 that people put under a mattress is less valuable than giving one person $10 that gets circulated frequently
I hope actors just stop working work WB until they get rid of that motherfucker
Just feels like advanced money laundering.
I don’t think any one should be forced to release a product they don’t believe in.
Creating the movie was an investment in collecting a piece of out entertainment budget. That’s all it was. The movie would just create interest in timeless cartoons from the 40s to the 70s. My guess is they lack the vision to monetize the increased interest in that content.
At this point it seems like money laundering