'Hollywood Accounting' Losing In The Courts

[piratePenguin]

http://www.techdirt.com/articles/20100708/02510310122.shtml

If you follow the entertainment business at all, you're probably well aware of "Hollywood accounting," whereby very, very, very few entertainment products are technically "profitable," even as they earn studios millions of dollars. A couple months ago, the Planet Money folks did a great episode explaining how this works in very simple terms. The really, really, really simplified version is that Hollywood sets up a separate corporation for each movie with the intent that this corporation will take on losses. The studio then charges the "film corporation" a huge fee (which creates a large part of the "expense" that leads to the loss). The end result is that the studio still rakes in the cash, but for accounting purposes the film is a money "loser" -- which matters quite a bit for anyone who is supposed to get a cut of any profits.
[...see article for leaked harry potter accounts]

As the first commenter dutifully put it:

If I were looking for a reason to absolutely ignore morality pleas from the movie studios, I think this would take the cake...."

Wait...if they claim they are losing money on every copy they sell, aren't the pirates saving them money?

It's a funny world.

[Kintaro]

This is interesting but really lame. Anti-trust first started distorting the price system in Hollywood in the 50s, but most of it can attributed to a bloated tax system. An article that doesn't point out how big government encourages this is kinda masturbation. I wish I knew moar about the US tax system. *Cue worker coming in here with "I am an American and thus I am expert"*

[piratePenguin]

This is not the US government investigating tax matters, it is individuals who have been defrauded, subsequently suing, and subsequently winning the case.

I know a tonne of people who are becoming accountants, and indeed some of them have conveyed that their job is essentially to work around the rules insofar as possible in the interest of the company. It would be a different world if we could criminalize this as an attitude.

We don't even have people acting fairly in our sports, we will NOT have it in the world in which we are currently living.

Btw Kintaro, thread lightly if you want a discussion.

[Kintaro]

I know a tonne of people who are becoming accountants, and indeed some of them have conveyed that their job is essentially to work around the rules insofar as possible in the interest of the company. It would be a different world if we could criminalize this as an attitude.

Yes, and where do rules and financial regulation come from?