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This is a great post,
but I'd argue that evaluating the company's net profit is better as it's the actual profits the company makes at the endEdit: Nope, revenue is more important. See this postRevenue is used because this industry is notorious for “Hollywood accounting” to avoid having any actual profits to avoid residuals based on net.
Some of the biggesr blockbusters of all time are, thanks to Hollywood accounting, net losers. Forrest Gump is a classic example: it made almost a billion dollars in revenue vs a $55 million budget. But thanks to tax evasion techniques the movie is actually a huge financial loser on paper, losing more than $65 million if you look at net.
You can’t trust non-workers, who exist entirely off the wealth they can cheat out of workers, to be honest.
So that is why gross revenue is used in Hollywood.
Edit: to add on to that Gump example, the author was supposed to be paid based on net. He got totally fucked which is why no sequel was made. His IP created a billion+ dollars out of thin air, but blood sucking capitalist parasites leech it all away with tax evasion.
Hollywood accounting doesn't apply to studios that are publicly traded, only their projects. But anyway, because they're public, we know what their profits are:
2022 profits
- Disney (NYSE: DIS) $28.321 billion
- Netflix (NASDAQ: NFLX) $12.447 billion
- Warner Brothers Discovery (NASDAQ: WBD) $13.375 billion
- Paramount Global (NASDAQ: PARA) $10.309 billion
- NBC Universal/Comcast (NASDAQ: CMCSA) $44.951 billion
- Amazon (NASDAQ: AMZN) $-2.722 billion
- Sony (NYSE: SONY) "Almost $7 billion"
- Apple (NASDAQ: AAPL) $99.8 billion
Some thoughts:
- Some of these are obviously corporate figures and don't necessarily reflect how well the production department of each corp is doing. Still, it reflects the fact that these corporations could easily (well, mostly) absorb the costs of what SAG-AFTRA/WGA are asking for.
- Sony has all their fiscal year information published but not collated by calendar year, and I couldn't be bothered to dig it up myself, so I just took their word for it.
That's really interesting. Thanks for explaining that, it was something I was totally unaware of. Now I have changed my mind and I think the WGA listed the right numbers.
Revenue is better. Actual profits is very hard to measure since the numbers are obfuscated. These companies often stash their IP rights in a tax haven under a different company. Like how Apple uses the island of Jersey. End of the year the offshore company sends a massive license fee bill and boom their taxable income is slashed significantly.
"Ah I see now!" said the blind man Seriously though, that makes a lot more sense about why they use revenue instead of net profit
I agree, but that came directly from a WGA statement.
Thank you for sharing! I probably wouldn’t have seen it otherwise.
Well, no since this should be considered one of the expenses the companies will have to pay, revenue is the appropriate metric. I wouldn’t judge the cost to switch from aluminum to carbon fiber at Boeing against its profits, I’d measure it against revenue