FarSky wrote:
No matter the box office, I imagine it's very hard to lose money on major tentpole releases. Home video sales, merchandising, tie-ins, product sponsorships, premium cable, basic cable, and broadcast licensing...and none of that has any bearing on box office. That's all icing.
Thanks to hollywood accounting, you would be ASTOUNDED what films haven't turned a profit on paper.
Hollywood accounting (also known as Hollywood bookkeeping) refers to the opaque accounting methods used by the film, video and television industry to budget and record profits for film projects. Expenditures can be inflated to reduce or eliminate the reported profit of the project thereby reducing the amount which the corporation must pay in royalties or other profit-sharing agreements, as these are based on the net profit.
Forrest Gump - Worldwide Gross: $677,387,716Winston Groom's price for the screenplay rights to his novel Forrest Gump included a share of the profits; however, due to Hollywood accounting, the film's commercial success was converted into a net loss, and Groom received nothing. That being so, he has refused to sell the screenplay rights to the novel's sequel, stating that he "cannot in good conscience allow money to be wasted on a failure".A WB receipt was leaked online, showing that the hugely successful movie Harry Potter and the Order of the Phoenix ended up with a $167 million loss on paper.
Hollywood accounting is not limited to movies. An example is the Warner Bros. television series Babylon 5 created by J. Michael Straczynski. Straczynski, who wrote 90% of the episodes in addition to producing the show, would receive a generous cut of profits if not for Hollywood accounting. The series, which was profitable in each of its five seasons from 1993–1998, has garnered more than US$1 billion for Warner Bros., most recently US$500 million in DVD sales alone. But in the last profit statement given to Straczynski, Warner Bros. claimed the property was $80 million in debt. "Basically", says Straczynski, "by the terms of my contract, if a set on a WB movie burns down in Botswana, they can charge it against B5's profits."
However, that doesn't mean it's not making a mint for the studio. Just that it's not a profit, or a financial success, on paper.Pulled most of that from here (but I'd read quite a bit of it in previous articles)
https://en.wikipedia.org/wiki/Hollywood_accounting