Here’s a basic example of Hollywood Accounting: A studio makes a movie. The studio distributes the movie itself, and although the distributor is technically a separate company, they both belong to the same parent company. Also, the distribution arm sets whatever fees it wants. If they want to charge themselves eleventy quintillion dollars for distribution, they totally can. Then, even if the film earns billions of dollars in box office receipts, they’re still technically in debt (to themselves) and thus haven’t turned a profit. --
Winston Groom, the writer of Forrest Gump was told that the film based on his work wasn’t profitable. Of course, he got the last laugh when they came to him asking if they could turn the sequel, Gump and Co. into a film as well, and he reportedly told them, ”I cannot, in good conscience, allow money to be wasted on a failure.” In other words, “Go fuck yourself.”
http://www.filmschoolrejects.com/features/6-things-the-film-industry-doesnt-want-you-to-know-about.php
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