Deleting and destroying finished movies(rogerebert.com)
rogerebert.com
Deleting and destroying finished movies
https://www.rogerebert.com/mzs/coyote-vs-acme-canceled
361 comments
Seems like a less controversial solution would be to allow the same tax write-off if the studio releases the film for free distribution (e.g. via the Internet Archive), either into the public domain, or under a license like Creative Commons Noncommercial if there's concern about implicitly allowing derivative works by competitors or similar.
Could we not just skip the 30 years of copy right protection or whatever
it is now and just release it to the public domain?
No money will be made, but if people should want to they can view it.
I am sure Internet Archive or some organization would be willing to host such movies, and not make any attempt at making a profit from it.
Even better would be to turn all the assets that went into the creating it into the public domain as well.
They should be able to say "Well this movie is total sh*t and we want a tax write off, once it is all done and we have recovered that money we will make it available to the public (at no cost to us))
Is the problem that if anyone was allowed to watch it, they may conclude that the movie had potential and thus the tax write off is not made in good faith?
No money will be made, but if people should want to they can view it.
I am sure Internet Archive or some organization would be willing to host such movies, and not make any attempt at making a profit from it.
Even better would be to turn all the assets that went into the creating it into the public domain as well.
They should be able to say "Well this movie is total sh*t and we want a tax write off, once it is all done and we have recovered that money we will make it available to the public (at no cost to us))
Is the problem that if anyone was allowed to watch it, they may conclude that the movie had potential and thus the tax write off is not made in good faith?
Commenting before I've read the article:
That's ridiculous. There's no obligation for anyone to bring something to market regardless of how far along it is.
After I read the article:
Still not persuaded. It reads like motivated reasoning, the person doesn't like things not getting released and says that governments should step in. There's some mention of taxes and lost work, but nothing tht holds water.
As an example: if it cost you $100M to make a film and you write that off you could reduce your tax burden by as much, netting a $15M lower tax bill if your rate was 15%.
By contrast if you release it you've no guarantee of that $15M, especially once promotion and other costs are factored in. If it's a trash movie that'll also damage the firm's reputation---something that's tough to quantify but no less real.
That's not great, but its I wouldn't want to live in a society where that was criminal.
Then there's this:
> nobody who did any sort of work on a project that consumed years of their lives will ever be able to point to it as evidence of what sort of work they’re capable of doing
That's the status quo in most jobs. Things don't ship all the time.
It's a bummer, yeah, but that's it.
That's ridiculous. There's no obligation for anyone to bring something to market regardless of how far along it is.
After I read the article:
Still not persuaded. It reads like motivated reasoning, the person doesn't like things not getting released and says that governments should step in. There's some mention of taxes and lost work, but nothing tht holds water.
As an example: if it cost you $100M to make a film and you write that off you could reduce your tax burden by as much, netting a $15M lower tax bill if your rate was 15%.
By contrast if you release it you've no guarantee of that $15M, especially once promotion and other costs are factored in. If it's a trash movie that'll also damage the firm's reputation---something that's tough to quantify but no less real.
That's not great, but its I wouldn't want to live in a society where that was criminal.
Then there's this:
> nobody who did any sort of work on a project that consumed years of their lives will ever be able to point to it as evidence of what sort of work they’re capable of doing
That's the status quo in most jobs. Things don't ship all the time.
It's a bummer, yeah, but that's it.
Destroying it should be legal. Writing that off as a loss should be considered fraud, especially when there's an offer for it.
To me, the weird thing is that the tax write-off doesn't even seem to make sense.
Let's say you spend $80M making a film and you write it off for a $30M benefit. You're still in the hole $50M. Let's say that you sell the film for $20M and write off the remaining $60M loss for a $23M benefit. In the latter case, you're only in the hole $37M instead of $50M. That's a lot better.
Is there some weird accounting rule where you're allowed to write off full losses, but not partial losses? I understand writing off losses: if you make $100M on one project and lose $50M on another project, you pay taxes on the $50M you've made - but you're only getting a fraction of the money back. It's better to get 100% of $20M plus a fraction of $60M than getting a fraction of $80M.
No one seems to be explaining how this is working in Warner Bros Discovery's favor. Sure, I get canceling popular shows where the actors might be looking for more expensive contracts. I might think it's short sighted given that you need popular shows to keep your subscribers, but I get what they're trying to do. I understand licensing content to a competitor for a quick pay day. Again, it seems short sighted, but I get what they're trying to do. What I don't get is why it's better for them to completely scrap content than to let it flop upon release. The only possible explanation I can see is that they'd be able to claim the tax relief earlier. If they released it in late 2023, they'd have to wait to claim any losses since they'd be making money off it into 2024. If they cancel it in 2023, they can take the write off for 2023. It must be something else, right?
Let's say you spend $80M making a film and you write it off for a $30M benefit. You're still in the hole $50M. Let's say that you sell the film for $20M and write off the remaining $60M loss for a $23M benefit. In the latter case, you're only in the hole $37M instead of $50M. That's a lot better.
Is there some weird accounting rule where you're allowed to write off full losses, but not partial losses? I understand writing off losses: if you make $100M on one project and lose $50M on another project, you pay taxes on the $50M you've made - but you're only getting a fraction of the money back. It's better to get 100% of $20M plus a fraction of $60M than getting a fraction of $80M.
No one seems to be explaining how this is working in Warner Bros Discovery's favor. Sure, I get canceling popular shows where the actors might be looking for more expensive contracts. I might think it's short sighted given that you need popular shows to keep your subscribers, but I get what they're trying to do. I understand licensing content to a competitor for a quick pay day. Again, it seems short sighted, but I get what they're trying to do. What I don't get is why it's better for them to completely scrap content than to let it flop upon release. The only possible explanation I can see is that they'd be able to claim the tax relief earlier. If they released it in late 2023, they'd have to wait to claim any losses since they'd be making money off it into 2024. If they cancel it in 2023, they can take the write off for 2023. It must be something else, right?
I wonder what would happen if a bunch of extremely bankable talent - the Christopher Nolan, Greta Gerwig, Tom Cruise crowd - quietly got in touch with Warner Bros and made it clear that they would avoid working with any studio that had a track record of cancelling completed projects for a tax write-off.
Without commenting on the larger issue the article brings up, this specific point doesn't survive scrutiny to me:
Some of the company’s tactics post-merger were garden-variety ruthless, like eliminating 87 series from its streaming platform Max, so that they won’t have to pay union-mandated residuals to the talent that created already-existing programs or pony up funds to produce more seasons of existing ones (such as “Our Flag Means Death,” one of the company’s most popular and critically acclaimed comedies—canceled after just two seasons).
Can anyone with an accounting background explain what is actually happening on the books to make this economically advantageous? By forfeiting any revenue on these films, the studio is reducing its tax burden but isn’t it increasing its overall economic loss?
The contrary argument, that a creator has the right to destroy their creation, is made in the Gary Cooper movie "The Fountainhead" (1949).
Criminal fraud issues aside, I would think that all of the artists had a reasonable expectation that the work they were doing would be released, and would then become part of their resume.
Since it didn't get released, they collectively and/or individually might very well bring a civil suit against the company for lost compensation (where compensation is defined as some combination of cash and reputational gains, and this latter part became zero).
Since it didn't get released, they collectively and/or individually might very well bring a civil suit against the company for lost compensation (where compensation is defined as some combination of cash and reputational gains, and this latter part became zero).
If we eliminated the accounting fiction called "depreciation", and instead simply had all expenses deductible in the year they were incurred or paid on a cash basis (with net losses carrying-over to future years), this wouldn't have happened.
So how do these tax write offs actually work?
I'm assuming that when the film is produced, they spend money to receive an asset, no different than e.g. buying a machine.
With a machine, they could write it off over time, or (I assume) they can delete the movie/scrap the machine to immediately book the remaining value as a loss?
If they don't do that, I think a machine is valued according to the purchase price and written off over X years. How does a movie get valued and written off?
There's a good argument for banning write-offs for salvageable assets that are scrapped (regardless of whether it's machines, inventory or movies) - I've heard the tax impact argument made for the destruction of still-usable assets too.
I'm assuming that when the film is produced, they spend money to receive an asset, no different than e.g. buying a machine.
With a machine, they could write it off over time, or (I assume) they can delete the movie/scrap the machine to immediately book the remaining value as a loss?
If they don't do that, I think a machine is valued according to the purchase price and written off over X years. How does a movie get valued and written off?
There's a good argument for banning write-offs for salvageable assets that are scrapped (regardless of whether it's machines, inventory or movies) - I've heard the tax impact argument made for the destruction of still-usable assets too.
Does WB get the whole writeoff in one year, but only if they value the movie at zero and destroy it without ever releasing it? Otherwise I don’t see how doing this is better for them than recouping whatever they might.
"One of WBD’s most notorious post-merger decisions was deleting an entire finished feature, “Batgirl,” that had an estimated budget of $90 million, to claim a tax write-off"
I feel like if someone reads that in a thousand years they're going to look at us the same way we look at some ancient tribe worshipping idols. Years of work and cultural artifacts destroyed for the accounting department, that's nuts.
I feel like if someone reads that in a thousand years they're going to look at us the same way we look at some ancient tribe worshipping idols. Years of work and cultural artifacts destroyed for the accounting department, that's nuts.
Kinda weird to bring legislation into it. Should my employer not be allowed to delete my code because it's my special little snowflake?
If they released the movie to the public domain and set up a torrent, wouldn't the value of it be zero to them? And that in an even more irrevocable manner than destroying the copies they have (since you can never be sure that anyone has squirreled it away). Then they would get literally all the critics off their back.
Isn't Hollywood very well known money laundering machine?
Companies invest money to create products. Some turn into a profit, some don't, some don't even make it to the market. At the end of the year they sum revenues and expenses and either a profit or a loss. If a movie makes zero money it's only an expense and that already reduces the taxes on the revenues. SO why do studios have that tax write-off on top of normal tax on the revenues - expenses figure?
IDK if meta comments are ever allowed but: it appears HN has changed this headline, dropping the imperative clause “…should be a crime”. Why? I get that they want polite conversation on here, but pretending that the whole thesis of this essay doesn’t exist seems like an ineffective and terribly obscurative way to do that. But I’m probably missing something?
This article screams a lack of understanding of finances.
A finished movie doesn't cost $0 to release. There is considerable spend on promotion, distribution, etc. If you don't do it, then movie revenues would be much lower.
It doesn't make sense to spend $10M to make say $30M, when just destroying the film gets you $30M in tax benefits.
A finished movie doesn't cost $0 to release. There is considerable spend on promotion, distribution, etc. If you don't do it, then movie revenues would be much lower.
It doesn't make sense to spend $10M to make say $30M, when just destroying the film gets you $30M in tax benefits.
WBD is a public company, can the shareholders sue or otherwise punish the board/CEO? I'm not sure where those boundaries are, just top of mind because of the recent Musk action. That seems like the appropriate source of any enforcement on this angle, as shareholders are most affected by these decisions and have standing.
I wonder, is it even possible to truly delete a movie?
I am surprised Batgirl didn't leak. How do you even prevent that?
It's just bits.
I am surprised Batgirl didn't leak. How do you even prevent that?
It's just bits.
the part that I dont understand is why the production costs aren't always deductible, no matter what happens to the movie.
When I run my company, I can deduct labor and material costs. I dont have to resort to any special measured to qualify for them.
Is this about some accelerated ammonization schedule?
When I run my company, I can deduct labor and material costs. I dont have to resort to any special measured to qualify for them.
Is this about some accelerated ammonization schedule?
"Why deleting finished programs should be a crime."
Be honest, at least some of you have finished a project before deciding to axe it instead of publishing it. It is any creators right to decide not to publish something.
If the issue is the tax treatment of these circumstances, then fix that.
Be honest, at least some of you have finished a project before deciding to axe it instead of publishing it. It is any creators right to decide not to publish something.
If the issue is the tax treatment of these circumstances, then fix that.
This argument reminds me Robert Rauschenberg's, Erased de Kooning
https://www.sfmoma.org/artwork/98.298/
"... deeming it bad-to-the-point of un-releasability (how they could prove this when no one outside the production had seen it remains a mystery"
Not a mystery at all, the name is enough.
Not a mystery at all, the name is enough.
Hey, it's just like in the plot of GTA V :D
I thought it's something absurd Rockstar made just for the plot, but apparently it's a common thing.
I thought it's something absurd Rockstar made just for the plot, but apparently it's a common thing.
I think the issue here isn't that they are deleting the movie, it's that they're deleting other people's work.
Remember, a corporation is a group of people joining together to create something they couldn't individually. Yes, there's a bunch of contract law we pile on top of that to make the concept borderline worthless, but bear with me.
If the employees created the movie, and the broader corporation declares it a failure and attempts to write it off, the people who created it should then be given the copyright or the copyright should be revoked such that those individual artists can do with it as they please.
Anything else is just someone coming over and stomping on your sandcastle because employee contract law is insane.
Remember, a corporation is a group of people joining together to create something they couldn't individually. Yes, there's a bunch of contract law we pile on top of that to make the concept borderline worthless, but bear with me.
If the employees created the movie, and the broader corporation declares it a failure and attempts to write it off, the people who created it should then be given the copyright or the copyright should be revoked such that those individual artists can do with it as they please.
Anything else is just someone coming over and stomping on your sandcastle because employee contract law is insane.
Isn’t this how game companies operate often? They guard their brand by not putting out mediocre products.
It's the tax write off for destruction that's fucked up, as @cnees says. Failures are part of the process of creation. If the producer says the market value of the work is zero, they've committed tax fraud if it's not.
The solution to their "attribution" problem was found by directors a long time ago when they didn't want their names on a film: it's directed by "Alan Smithee."
https://www.imdb.com/name/nm0000647/?ref_=fn_al_nm_1