In a recent blog post about the feud between Peter Jackson and the Tolkien estate, it was stated,
Like many quarrels in Hollywood, the Tolkien/Warner Bros. spat can be narrowed down to an argument about money. Part of the author’s estate’s contract with the film studio said that a percentage of the profits from any adaptation of Tolkien’s work would go back to them, and it became a bit of a controversy following the release of The Lord of The Rings trilogy. The three movies made a reported $2.9 billion at the global box office, but when those box office totals were combined with project’s expenses, the studio claimed that the movie didn’t make a profit – thus reportedly shortchanging the Tolkien estate. In an interview with Le Monde back in 2012, Tolkien Estate lawyer Cathleen Blackburn recounted, “These hugely popular films apparently did not make any profit! We were receiving statements saying that the producers did not owe the Tolkien Estate a dime.”
This isn’t an entirely rare thing in Hollywood. In 2010, a net profit statement for Harry Potter and the Order of the Phoenix (another Warner Bros. film) was leaked and reported that despite the movie’s $934 million box office take, the studio actually lost $167 million when the final calculations were made.
A very revelatory post by The Furious D Show elaborates on the kind of jiggery-pokery that Hollywood studios engage in to avoid having to pay actors and other involved parties, and offers a few well-considered suggestions.
“A major summer blockbuster can, through the magic of ‘colourful accounting’ lose a fortune because the studio’s corporate parent lost money on cattle futures in Argentina. What survives this whittling, or to be more exact, hacking, is called the ‘net profit.’ Except there is never a net profit. The net is a myth. It’s a fantasy. It’s the corporate equivalent of bigfoot. Traces have been reported, but no one has ever actually caught one.”
Stop playing games with the money. Make a plan so that if the film really does make a profit on its own merits, that those profits are divided equitably among all involved. Trust me, playing with the books costs more money than it saves, ask Enron.
Pay actors what they’re worth. I’m not saying that you pay them scraps, but pay them a salary based on their real box-office appeal, not just the number of times Mary Hart drops their name or how many magazine covers they get. It has to be based on bums on seats, and if they are box-office gold, they’re profit more from a intelligently run profit sharing system and won’t demand the immense up front money.
Simplify the business plan. You see when studios offer a mission statement, they always talk about ‘paradigms’ and ‘maximizations’ and other pointless buzzwords that have nothing to do with making movies. The real business plan of a studio is to tell stories and sell stories. Remember that and you can’t go wrong.
For any rational human to believe that the Lord of the Rings, or any Harry Potter movie, actually lost money is to ask one to believe in the tooth fairy. Hollywood and their legions of accountants and attorneys would do well to go back to school for some remedial work in corporate ethics. But I’m not holding my breath.
The Old Wolf has spoken.