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Deleting and destroying finished movies

rogerebert.com

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Re: Deleting and destroying finished movies

#221

Post by imgabe »

s1artibartfast wrote: post #217
imgabe wrote: post #213

Earlier quoted context omitted.

They're not real losses. They could sell the movie. They could release it. They're deliberately forgoing those options and deleting it. You don't have a loss until you attempt to generate revenue and find that the revenue is less than your expenses. If you just throw your product away, that's not a loss. Ultimately we write tax policy for the benefit of society, not for Warner Bros. In theory, we could write tax law…

>They're deliberately forgoing those options and deleting it. You don't have a loss until you attempt to generate revenue and find that the revenue is less than your expenses. If you just throw your product away, that's not a loss. That is exactly how it works. You already spent X on an asset. If you throw the asset away, then you just have deductible expenses. Same for the widget factory. You can deduct the material…

Nobody is stopping them from wasting their time and resources. They are free to waste them as much as they want. It's just not a tax-deductible business expense to do so. There is a difference between "we won't allow you to do something" vs. "we won't subsidize you to do something". It's one thing to want to waste your resources, it's another thing to demand that everyone else pay you to do so.

What's to stop the CEO from building a mansion with the company's resources and selling it to himself for $1? Then having the company write it off as a loss? Oops! It was just a bad business decision and the company lost money. Oh well! We can't stop them from wasting their resources if they want to!

Re: Deleting and destroying finished movies

#222

Post by whartung »

JeremyNT wrote: post #198
fred_is_fred wrote: post #102

Earlier quoted context omitted.

I’m with you. People see this as some kind of scam, but this is a basic business loss as far as I read it. Just like making a dumb IoT juice squeezer and losing money on it. Every single company on the planet does this.

But I don't understand why destruction is required for the write off. An IoT juice squeezer is a physical item that costs something to make every additional unit. Every unit you make can actively lose you more money. Compare to a film.The marginal cost of each digital copy of a finished film is basically zero. The money is already spent. The only thing I can come up with here are royalties, but they should be based o…

I’m not a tax attorney but companies have been destroying product for loss purposes for ages.

Motorcycle companies crush inventory to take the losses. I’m sure any company with excess product does similar things. I’m guessing they do it because it gives them the best return. The IRS likely requires it to prevent the company from double dipping.

With movies, I don’t even want to think what obligations trigger on “release”.

Re: Deleting and destroying finished movies

#224

Post by s1artibartfast »

imgabe wrote: post #221
s1artibartfast wrote: post #217

Earlier quoted context omitted.

>They're deliberately forgoing those options and deleting it. You don't have a loss until you attempt to generate revenue and find that the revenue is less than your expenses. If you just throw your product away, that's not a loss. That is exactly how it works. You already spent X on an asset. If you throw the asset away, then you just have deductible expenses. Same for the widget factory. You can deduct the material…

Nobody is stopping them from wasting their time and resources. They are free to waste them as much as they want. It's just not a tax-deductible business expense to do so. There is a difference between "we won't allow you to do something" vs. "we won't subsidize you to do something". It's one thing to want to waste your resources, it's another thing to demand that everyone else pay you to do so. What's to stop the CEO…

Fundamental to the whole premise of taxes is that they are applied to net profit. If a company spends $1 to make $10, they get taxed on $9. If they spend $8 to make $10, they get taxed on $2.

Nobody is giving warner bros money. They arent getting a cash tax refund. They just spent more money and made less profit. If they wanted to make zero profit, and pay zero taxes, that is their choice!

If a commpany wants to sell houses at a loss, that is legal, and happens all the time. If they are self dealing, the shareholders could have an issue with it, or the IRS if the CEO doesn't report it.

Guess what, Companies DO give CEOs many millions of dollars of salary and stock. Every bit of that is tax deductible expense for the company.

>Oh well! We can't stop them from wasting their resources if they want to!

It is literally none of your business because they aren't your resources! It is like complaining your neighbors have fun on Sunday instead of working and paying more taxes.

Re: Deleting and destroying finished movies

#225

Post by yjftsjthsd-h »

pradn wrote: post #165
AlbertCory wrote: post #22

Where do you draw the line? If an artist pays a model and paints her, is the artist to be prohibited from destroying the painting because it sucks, and because the model wants credit? What about a music producer who pays a studio band to record a song that turns out to be terrible -- is the producer prohibited from deleting it? It's the tax write off for destruction that's fucked up, as @cnees says. Failures are part…

Why does someone have to demarcate exactly where "the line" is to make a judgement on this situation? You can simply ask yourself "do I want to live in a world where this happens" - and any decent person would say "no". The presence of a "slippery slope" is not enough to prevent going down a path, even somewhat. A film takes hundreds of people to create - how does it feel for them to just have years of their lives fa…

> A film takes hundreds of people to create - how does it feel for them to just have years of their lives fall into the void?

Were they not paid for their labor? It might not feel great, but I struggle to see a moral problem; if a project or even whole company I used to work on/at goes under I might have feelings about it but in the end I shrug and move on (and this is not a hypothetical for me).

Re: Deleting and destroying finished movies

#226

Post by tpmoney »

Dylan16807 wrote: post #210
tpmoney wrote: post #208

Earlier quoted context omitted.

> It doesn't make any sense to claim that, starting now, the expenses to release are higher than the revenue they would get. Why not? Distribution isn't free. Contracts that specify payment on gross revenue aren't free. Just because the movie itself is manufactured doesn't mean there aren't still more expenses to be realized in release any more than just because your program compiles it means that your company can de…

Distribution isn't free but it's pretty cheap for getting to sell tickets in major theaters. And if it's that bad then why don't you sell to a streaming service for one million dollars? Then you only have to deliver a few files and nothing else. Contracts based on revenue are fine in this situation, aren't they? If you only get moderately low revenue, then you don't pay much into them.

>Distribution isn't free but it's pretty cheap for getting to sell tickets in major theaters.

Last time I saw numbers on something like this, film advertising costs were generally assumed to be another 50-100% of the production costs. After all, those talk show appearances of all your stars don't come cheap. And your "major theaters" are going to insist on advertising. They're not going to block out precious screens and show times for a movie you're not going to advertise. And that's before we talk about actual physical media distribution, replacements for losses or damaged media, tracking and auditing your ticket sales and everything else that goes into getting eyeballs in front of screens turned into cash in your income bucket.

> And if it's that bad then why don't you sell to a streaming service for one million dollars? Then you only have to deliver a few files and nothing else.

On a multi-million dollar film, that's almost certainly less than the value of the tax write-off, and again may incur costs well and above any revenue. You'll need licensing contracts, lawyer time, accounting time, and again, all the various contractual obligations that kick in on release.

>Contracts based on revenue are fine in this situation, aren't they? If you only get moderately low revenue, then you don't pay much into them.

1) They can still make it impossible to recover enough of the expense costs to make releasing the film worthwhile. As a simplified example, if you spend $50 million making a film, spend $10 million distributing it, earn $15 million in gross revenue, and pay $7 million in gross revenue contracts, you're in the hole an additional $2 million, not counting all the expenses incurred tracking and paying on those contracts.

2) You still need to expect to make your expenses back, regardless. Again in the above example, say instead your gross revenue contracts are only $2 million. Great, you've earned $13 million, on an expenses budget of $60 million. Not even close to beginning to pay for the expenses incurred.

Re: Deleting and destroying finished movies

#227

Post by nox101 »

pradn wrote: post #165
AlbertCory wrote: post #22

Where do you draw the line? If an artist pays a model and paints her, is the artist to be prohibited from destroying the painting because it sucks, and because the model wants credit? What about a music producer who pays a studio band to record a song that turns out to be terrible -- is the producer prohibited from deleting it? It's the tax write off for destruction that's fucked up, as @cnees says. Failures are part…

Why does someone have to demarcate exactly where "the line" is to make a judgement on this situation? You can simply ask yourself "do I want to live in a world where this happens" - and any decent person would say "no". The presence of a "slippery slope" is not enough to prevent going down a path, even somewhat. A film takes hundreds of people to create - how does it feel for them to just have years of their lives fa…

Should this apply to everything? Someone buys a cupcake. Instead of eating it they throw it away. Is the person that made the cupcake owed something more than the $ they already got for it because the cupcake was not eaten and so their time fell into the void?

How about all the people that built a house or car that a movie production destroys? (less often now that everything is CGI).

Also, if the movie sucks, it often reflects badly on all of those people. They try to get work on a new movie, people look at the old movie, see it sucks, don't hire them.

Re: Deleting and destroying finished movies

#228

Post by imgabe »

s1artibartfast wrote: post #224
imgabe wrote: post #221

Earlier quoted context omitted.

Nobody is stopping them from wasting their time and resources. They are free to waste them as much as they want. It's just not a tax-deductible business expense to do so. There is a difference between "we won't allow you to do something" vs. "we won't subsidize you to do something". It's one thing to want to waste your resources, it's another thing to demand that everyone else pay you to do so. What's to stop the CEO…

Fundamental to the whole premise of taxes is that they are applied to net profit. If a company spends $1 to make $10, they get taxed on $9. If they spend $8 to make $10, they get taxed on $2. Nobody is giving warner bros money. They arent getting a cash tax refund. They just spent more money and made less profit. If they wanted to make zero profit, and pay zero taxes, that is their choice! If a commpany wants to sell…

> Fundamental to the whole premise of taxes is that they are applied to net profit. If a company spends $1 to make $10, they get taxed on $9. If they spend $8 to make $10, they get taxed on $2.

Yes, the key word there is net profit, and the ways to calculate net profit for tax purposes are prescribed by law. Not every single penny a company spends is automatically a deductible business expense. Some things are, some things partially are, some have to be amortized over time, some are not deductible at all. There's thousands of pages of tax law delineating this and it is not in the slightest without precedent to declare a particular expense non-deductible.

Re: Deleting and destroying finished movies

#229

Post by littlestymaar »

jb1991 wrote: post #191
ronsor wrote: post #178

Earlier quoted context omitted.

You're off by almost an order of magnitude there. It's 95 years of copyright protection nonsense, not a mere 30. Edit: very few would complain if it were only 30

That is much less than “almost an order of magnitude.“

Had it been 105 year it would have been an order of magnitude. Being only 5 years off an order of magnitude justified the “almost an order of magnitude”.

Re: Deleting and destroying finished movies

#230

Post by troupo »

nox101 wrote: post #227
pradn wrote: post #165

Earlier quoted context omitted.

Why does someone have to demarcate exactly where "the line" is to make a judgement on this situation? You can simply ask yourself "do I want to live in a world where this happens" - and any decent person would say "no". The presence of a "slippery slope" is not enough to prevent going down a path, even somewhat. A film takes hundreds of people to create - how does it feel for them to just have years of their lives fa…

Should this apply to everything? Someone buys a cupcake. Instead of eating it they throw it away. Is the person that made the cupcake owed something more than the $ they already got for it because the cupcake was not eaten and so their time fell into the void? How about all the people that built a house or car that a movie production destroys? (less often now that everything is CGI). Also, if the movie sucks, it ofte…

> Someone buys a cupcake.

In this case someone made a cupcake. Instead of selling it to potential customers, they destroy the cupcake and claim it was a tax-deductible expense

> Also, if the movie sucks, it often reflects badly on all of those people. They try to get work on a new movie, people look at the old movie, see it sucks, don't hire them.

So why are so many bad movies released then?

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