You Asked For It!

I'm starting 2014 with a question!

In my last post about the big flops of 2013, I talked about how hard it is to get concrete prints and advertising numbers and have to guess-timate based on the size of the movie in question which led to these questions:

Rainforest Giant asked: 

Is that due to the creative accounting or general business secrecy? How much of a budget is real? Meaning if megastar gets 20 mill on paper but see's a fraction of that do they count that as part of the budget even though it's never paid?

Let's break this down into easily answerable chunks, first about the mysteries of P&A:

Is that due to the creative accounting or general business secrecy?

Short answer: A little of both.

Long answer: Prints and advertising, like everything else in the movie business is needlessly and nonsensically complicated.

I am the Guru of Know-It-Allism

In the old days the distributor had to get "prints" made to be run through projectors that can cost thousands of dollars each, and when you're releasing multiple films to 2,500+ theatres at the same time it can add up to many millions.

Things have changed. Instead of costly reels of film, the distributors now put the "films" on hard drives that are delivered to the theatres. Hard drives and digital copies have to be cheaper, but finding the actual numbers is hard, because the distributors don't like to let out those little details, because they need the secrecy to play silly buggers with the bookkeeping.

Advertising and marketing is even murkier.

Most studios and distributors are cogs in huge diverse media conglomerates. We're talking about movies, TV, magazines, newspapers, websites, and hundreds of other outlets.

That means that a good chunk of the advertising and marketing budget will be spent "in house" in terms of the studio's parent company. Now the studios will tell you that this brings about "synergy" which allegedly makes marketing and advertising movies cheaper.

Somehow I doubt that since they're not exactly bragging to the world how much money synergy is saving them.

On to the next part…

How much of a budget is real? Meaning if megastar gets 20 mill on paper but see's a fraction of that do they count that as part of the budget even though it's never paid?

I'm going to assume you're talking about the production budget, otherwise known as the cost of actually making the damn movie, and specifically star salaries.

Now most stars have deals arranged by their agents and managers that put all, or the bulk, of the money promised in the contract in their account on day one of shooting. 

If the cheque doesn't clear the star is well within their rights to walk off. If actors are on a payment schedule where set amounts are paid at set times, a minimum amount of money must be in an escrow account overseen by a third party, usually a union. If a payment is missed, or the producer fails to deposit the minimum amount, they too are allowed to walk without violating their contracts.

Companies that try to play fast and loose with the salaries paid during the making of the movie usually find it harder and harder to get people to work with them who are not litigation attorneys.

That's why the big studios pay, eventually, the people they have to pay to get a movie made. The trickery usually involves things that don't involve outside parties. 

Tricks like:

1. An oldie, but a goodie is to have the "studio" and the "distributor" incorporated as technically separate entities, adding an extra layer of payouts to themselves before paying profit-shares to others.

2. Another trick is for the studio to "borrow" the money to make the film from the parent conglomerate on terms that pretty much eat up all profits.

3. Another classic in the conglomerate era is to pay way more for prints and advertising from other subsidiaries of the same parent company than they should in a competitive and honest market.

I hope I answer your question.