No, Our Accounting Has Just Become More Selective

The actors and director who created This Is Spinal Tap are suing the film’s distributor for back royalties they claim are due to them.

The complaint alleges that between 1989 and 2006, Vivendi reported that the total income from soundtrack music sales was just $98.

It also claims that Vivendi reported that the four creators’ share of total worldwide merchandising income between 1984 and 2006 was $81, despite music and merchandise linked to the film racking up “tens of millions of dollars” in revenue.

None of the band’s drummers were available for comment.

17 thoughts on “No, Our Accounting Has Just Become More Selective

  1. Hollywood accounting is so bizarre that in any other industry it would result in people getting slammed into prison.

    • I’ve never figured out how it is that the various studios haven’t been sued up the wazzo, or audited by the IRS until dead. If their accounting is that Byzantine that they can claim movies that made like Return of the Jedi or Coming to America have never turned a profit they must be hiding cash from the government.

      • The IRS largely doesn’t care because the profit still exists, it just changed ownership.

        Lets say that ROTJ made a profit of $300mm and LucasFilm made a profit of $100mm. With Hollywood accounting, ROTJ loses $100mm and LucasFilm made a profit of $500mm. There’s still $400mm in profits to be taxed.

        I assume LucasFilm believes that this lowers the total taxes, which the IRS likely is not happy about. But do you really want to empower the IRS to determine who is and is not a legitimate corporation given their history?

      • I hope the Spinal Tap lawsuit is merely the beginning of something big.

        And Hollywood accounting is why I don’t feel bad at all when I read about piracy costing Hollywood “millions of dollars” (allegedly). The people who deserve the money from the film aren’t getting it anyway, so why do I care if one set of thieves (the studios) get money stolen from them by another set of thieves (people who download their movies without paying)? It doesn’t make movie piracy right, don’t get me wrong about that — but it does make me completely indifferent to it. Hollywood losing money? Sounds like good news to me.

        • Pretty much my sentiments. It’s damned hard for me to get excited over digital piracy when you know there are accountants out there who can juggle the numbers sufficiently to show that Forrest Gump lost money.

    • 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.” [8]

      From: Examples of Hollywood Accounting

      They have a separate set of books for the tax man, the actors/set workers and the money men.

  2. Every film is a separate corporation, and every entity that supports the film has an incentive to charge as much as possible to the specific film corp so at the end of the day the FilmCorp has zero profit, which means that any participant who accepts a percentage of the net profits of the film is an idiot with bigger idiots for agents and lawyers…

    When I say as much as possible, think billing support staff, dog walking services, etc. Hell, the distributors probably still charge for printing film projection copies for distribution even though many theaters are now fully digital..

    Directors are the 3rd most creative people in Hollywood. Writers come second, but the accountants are far and away the most creative.

  3. This is why the wisest words in entertainment are “get your money up front”, and “take a percentage of the gross not the profit”.

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