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Even Harry Potter Pic Loses Money [Updated 7/8] Even Harry Potter Pic Loses Money Because Of Warner Bros’ Phony Baloney Net Profit Accounting


EXCLUSIVE: Signing a deal that makes anyone a net profit participant  in  a Hollywood movie deal has always been a sucker’s bet. In an era where studios have all but eliminated first dollar gross and invited talent to share the risk and potential rewards, guess what? Net profit deals are still a sucker’s bet. I was slipped a net profit statement (below) for Harry Potter and The Order of the Phoenix, the 2007 Warner Bros sequel. Though the film grossed $938.2 million worldwide, the accounting statement below conveys that the film is still over $167 million in the red.

It’s long been known that you shouldn’t take a “net profit” share of a movie since no movie with such a deal will ever make a profit.

More reasons why the alternative to major studios are better.

[Update] Techdirt (and others) are commenting on the leaked accounting and add that juries are no longer falling for “Hollywood Accounting” having awarded $270 million against Disney for Celador (the originator of the Millionaire Franchise) and $23 million to Don Johnson for profits owed on “Nash Bridges”.

Now, that’s all fascinating from a general business perspective, but now it appears that Hollywood Accounting is coming under attack in the courtroom… and losing. Not surprisingly, your average juror is having trouble coming to grips with the idea that a movie or television show can bring in hundreds of millions and still “lose” money. This week, the big case involved a TV show, rather than a movie, with the famed gameshow Who Wants To Be A Millionaire suddenly becoming “Who Wants To Hide Millions In Profits.” A jury found the whole “Hollywood Accounting” discussion preposterous and awarded Celador $270 million in damages from Disney, after the jury believed that Disney used these kinds of tricks to cook the books and avoid having to pay Celador over the gameshow, as per their agreement.

On the same day, actor Don Johnson won a similar lawsuit in a battle over profits from the TV show Nash Bridges, and a jury awarded him $23 million from the show’s producer. Once again, the jury was not at all impressed by Hollywood Accounting.