I can't find a way to start a new topic so I will be using this old thread since the topic is very similar. I hope that's okay.
So this is the famous example of Harry Potter and the order of Phoenix. Where studio claimed money was actually lost on it. Now, creative accounting isn't the purpose of my post. We all know they made money, otherwise sequels wouldn't have been made.
But can someone help me interpret some of these lines?
There is that first short column. "% FEE". Under it, it says 30 for Theatrical domesitc defined gross. I don't know what that is. It's not percentage of overall gross as the movie grossed 292 million in North America. So 30% should be 87 million. Even if 30% is what's NOT earned by the studio, that's still 70%, or 204 million. And as we see, neither of those figures are correct, as the paper cites 162 million as cumulative theatrical gross. That's roughly 55% of the box office earnings, though, which is actually quite close to what one can usually read on how much do studios take from NA box office.
What is "non-theatrical"? it also has a 30 fee. and just 2 million dollars cumulative.
Television? what do those figures 25 / 35 / 40 represent? And why is gross to date zero? Since that document was from 2010 or late 2009, there MUST have been TV earnings by that point.
Foreign grosses again have some FEE numbers i don't understand 15/35/40? and its cumulative gross seems to be 45% of overseas grosses. Which, again, is very close to what can one usually read on how much do studios get to keep to themselves.
Only 2 million for TV rights on foreign soil? How's that possible? Keep in mind this is 2008-2010, tv rights were still a thing back then. Harry potter 1 had its world TV premiere sold to ABC, for unknown number of showings over ten years, for 70 million! http://webcache.googleusercontent.com/search?q=cache:aiByY8oMWZIJ:articles.latimes.com/2001/nov/30/business/fi-9781&hl=en&gl=hr&strip=1&vwsrc=0 That's for a single network. Imagine multiple network just in NA, even if other rights are far, far less costly. Imagine premiere rights all over the world. BBC paid some 10+ million for UK rights for 10 movies, some of them old, some of them blockbusters at one point when they licenced a Harry Potter film. It should add up.
What is PAY TV category? IT says 42 million were earned from it. Is that old cable pay per view?
Video cassests refers to, I assume, complete home video etertainment. DVDs and such. For 87 million. This site doesn't have Order of Phoenix but it does have Half Blood Prince sales. https://www.the-numbers.com/home-market/packaged-media-sales/2010 119 million in 2009 and another 27 million in 2010. That's gross sales of course. Assuming order of phoneix earned similar money (Deathly hallows did) thats roughly 87 million out of 146 million. That's 60%. So studio makes just 60% of disc sales? Really? I would have thought retailer markups are less than that. Also, those the-numbers numbers are just North America. What about rest of the world disc sales? Surely it should add at least that much? But then what, did studio earn just 87 million out of 300 million? So studio earns just 30% of total disc sale gross? That too sounds very unlikely.
Merchandising at just 15 million also sounds suspiciously low for a movie like harry potter, but lets leave it at that.
So then we have all those earnings combined and we get to 609 million. Then there's suddenly a distributor's fee of 211 million. So distributor takes 34% ??? In this case, distributor is WB, but who is producer? Heyday films and.... Warner Bros. itself. Fine, there's stuff to be paid to distribute the film, I get it.
So we get to Prints costing 29 million,
Dubbing, subbing 5 million
Marketing 131 million
Taxes and various dues to trade associations 10 million
Freight, insurance, shipping etc 5 milliion
Guild and union payments 10 million. Just what are these for? Who is getting paid here for what work done on the film? (since it's clearly not part of production budget)
So we get to total expenses of actually getting the movie to cinemas, to home etertainment, marketing, etc (that's expenses OVER the production budget) of 191 million. And... that TOO gets deducted from the earnings.
So... the producers have to pay for ALL that. And the distributor doesn't seem to pay anything??? Yet it gets 34%? How does that work? What does the distributor do then, since they get 34% of earnings? It would seem logical they pay at least in part for marketing and distribution but it seems... no. They don't pay a penny in this example. It's all charged up to the producers.
So now when we deduct those costs from the 609 million earnings as well we get 206 million earnings.
But we have the production costs to cover.
315 million for what is labeled as negative costs and/or advance? Just what is that? I assume it MUST be the production costs but it's clearly something else as well. What? Why so high?
And then on top of everything else there's 57 million cost of interest. Huh? Does that suggest that producers didn't have the money, so they went and borrowed money from someone else and then they had to pay 57 million of interest to that investor??? That's ripe for malversation. I imagine the investor was a WB shell company itself.
So in the end, with 360 million of costs, we get a negative 167 million. A loss.
I imagine the REAL accounting up to today, with a decade worth of various tv rights and streaming licencing was something closer to this:
162 million BO domestic
298 million BO overseas
50-100 million TV rights worldwide
100+ million disc sale profits
Merchandising and other 15-20 million
Total earnings 650 million
Total marketing and distribution expenses for BO and home entertainment 200 million.
NO distributor fee. Of if some, then a fairly small 5-10% true fee for various overhead costs.
Production costs 150 million. (I just used Box office mojo figure)
No costs for interests or such.
So 200+150+50 million costs. 400 million total, leading to 250 million profit. Even with full 35% taxes paid, (which is in itself questionable, with large companies evading taxes left and right) there should still be 160 million of pure money in pockets to those who have an actual stake in earnings.
But, as i said, lets leave the creative accounting aside. Are the earnings, as WB reported them, correct? Do they make sense?