Revenue is a better measure. 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 royalties bill and boom their taxable income is slashed significantly.
Comment on What the AMPTP is refusing to grant the WGA vs. their profits
average_internet_enjoyer@lemmy.world 10 months ago
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 end
IWantToFuckSpez@kbin.social 10 months ago
average_internet_enjoyer@lemmy.world 10 months ago
“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
kitonthenet@kbin.social 10 months ago
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
FlyingSquid@lemmy.world 10 months ago
I agree, but that came directly from a WGA statement.
glockenspiel@lemmy.world 10 months ago
Thank you for sharing! I probably wouldn’t have seen it otherwise.
glockenspiel@lemmy.world 10 months ago
Revenue 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.
TWeaK@lemm.ee 10 months ago
Exactly this. The classic example:
The reality is much more complicated than that, but that’s the gist of it - and the Hollywood entertainment industry aren’t the only ones doing it anymore.
glockenspiel@lemmy.world 10 months ago
Great breakdown! Given that this is Lemmy and we trend toward more tech focused, people might gel better with Apple and Microsoft. They both do this sort of thing, but Apple is well known for their Irish tax haven holding all of their IP and other rights so Apple can lease it back from themselves and account for pure profit as expenses. That’s also how Amazon pays little to no taxes. Or sometimes these company’s pay negative tax rates meaning they get government welfare to buy billionaires fudge rounds presumably, in conservative populist parlance.
FlyingSquid@lemmy.world 10 months ago
Although, as the chart shows, Apple is also a production company now, so it also needs to start paying residuals.
billiam0202@lemmy.world 10 months ago
Hollywood accounting doesn’t apply to studios that are publicly traded, only their projects:
2022 profits
Some thoughts:
FlyingSquid@lemmy.world 10 months ago
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.