There were two interesting examples of the make-believe accounting used by entertainment companies published this week
The New York Times reports that even after the movie Crash, made for a cost of $7.5 million won the Oscar for Best Picture, took in $55 million at the domestic box office, $39 million in foreign box office sales and sold $85 million worth of DVD’s, the film’s actors and director and co-producer Paul Haggis have received very little money from its backers. Haggis and the film’s eight principal actors, including Sandra Bullock, Matt Dillon and Don Cheadle deferred their usual salaries in exchange for a percentage of the film’s profits. So far little money has been distributed and now US distributor Lionsgate is trying to arrange for intern payments lest the Haggis and the actors get upset at it.
But at least the people behind Crash can hope to be eventually paid. In talking about his plans for a spin-off direct to DVD collection of 20 minutes stories set in the Babylon 5 science fiction universe, series’ creator J. Michael Straczynski mentioned just how odd the financial accounting for the series is:
The biggest announcement I'll paraphrase: Every 6 months, I get together with WB to discuss what to do something with B5. The DVD sales have raised over 500 million in revenue. Now, I produced B5s 110 episodes at about 90 million dollars. Somehow, B5 is still 50 million in the red. Every time I mention that to WB they say We made a good deal, huh?
JMS previously mentioned this in a newgroup posting that is used as an in the Wikipedia entry on Hollywood Accounting and many of the tricks used to minimize profits are discussed in Edward Jay Epstein’s book The Big Picture: Money and Power in Hollywood.