HBO Max/Discovery+ Merger

[lakebum431]

and it says this-

Experts say that the company decided to "cut its losses" rather than release a film that did not align with the DC and HBO Max brand, while also giving itself a hefty tax write-off.

So yes or no, did Warner benefit from shutting down the movie with regard to taxes.

All the News stories say yes, some guy on a forum says no.

Now taxes are not my expertise, statistics and trends are what my job requires me to go when I have to do my reports.

I'm not sure how else to say the same thing to you. You don't see to fully understand how taxes work (which is totally fine) and think that "something needs to be changed" but you can't articulate what.

Is there a lower taxable income (which results in a tax benefit) as a result of not releasing the film/television series noted above? The answer is dependent on which time period you are looking at. If you are talking about the single year, then yes as they would have only recognized a portion of the cost of the film/show in that year. If you are talking about over time, then the answer is no as they would have recognized the rest of the expense in following periods thereby reducing taxes for those years. They didn't receive any extra tax benefit for writing off the content above the amounts they already spent.

You seem to think that they somehow got credit on their taxes for lost revenue and that is not true. However, they could have mitigated some of those losses with revenue and therefore potentially increased their taxable income (but only if the revenues were more than the cost to release/air).

 

[Bruce]

I'm not sure how else to say the same thing to you. You don't see to fully understand how taxes work (which is totally fine) and think that "something needs to be changed" but you can't articulate what.

I have articulated many times, I do not feel it is fair to get a tax benefit/write off just because they decide to not release/pull content.

Is there a lower taxable income (which results in a tax benefit) as a result of not releasing the film/television series noted above? The answer is dependent on which time period you are looking at. If you are talking about the single year, then yes as they would have only recognized a portion of the cost of the film/show in that year. If you are talking about over time, then the answer is no as they would have recognized the rest of the expense in following periods thereby reducing taxes for those years. They didn't receive any extra tax benefit for writing off the content above the amounts they already spent.

Never posted any of the above, all I wrote was they were receiving Tax Benefits/write offs.

You seem to think that they somehow got credit on their taxes for lost revenue and that is not true. However, they could have mitigated some of those losses with revenue and therefore potentially increased their taxable income (but only if the revenues were more than the cost to release/air).

This is where I feel you are talking out of both sides of your month, first you write it is not true, then they could have.

Simple yes or no answer, do they (studios) receive Tax Benefits/write offs by not releasing content, pulling content and/or then locking it away?

 

[lakebum431]

I have articulated many times, I do not feel it is fair to get a tax benefit/write off just because they decide to not release/pull content.

So any company who tries to make a product that is bad or doesn't work should not get to expense the costs associated with the development of that product? This is no different than a company who spends money to develop a product that they decide not to release because it isn't up to their quality standards and it would hurt their reputation by releasing a shoddy product.

Never posted any of the above, all I wrote was they were receiving Tax Benefits/write offs.

This is where I feel you are talking out of both sides of your month, first you write it is not true, then they could have.

Simple yes or no answer, do they (studios) receive Tax Benefits/write offs by not releasing content, pulling content and/or then locking it away?

Reading comprehension is key. NO, they did not receive any total tax deductions above the total tax deductions that they would have received because these deductions are based on what they spent.

 

[Bruce]

So any company who tries to make a product that is bad or doesn't work should not get to expense the costs associated with the development of that product? This is no different than a company who spends money to develop a product that they decide not to release because it isn't up to their quality standards and it would hurt their reputation by releasing a shoddy product.

Yes, if you make a shoddy product, why should you be able to benefit then with taxes because of it.

I used to owe a furniture store after I left Comcast, if i ordered 10 Sofas I thought looked great, sold only one at full price, the 9 I sold at a discount because most thought it was ugly and it did not sell at full price.

Does that mean I can write it off for the difference I could not get except for the one I sold at full price.

Or is that the risks of a free and open market, rules that Hollywood does not seem to follow.

Reading comprehension is key. NO, they did not receive any total tax deductions above the total tax deductions that they would have received because these deductions are based on what they spent.

Again, you are adding stuff that I never posted.

Straight dollar for dollar, if Batgirl costs $100 million to make, do they get that $100 Million back in tax benefits/write offs.

Not more then, which I never posted.

Every news story seems to disagree with your opinions by the way, including
James M. Bandoblu, Jr., a partner at New York-based law firm Hodgson Russ, who is head of his firm's tax dispute department.

All links that I have posted.

 

[navychop]

Oversimplified, if you bought ten sofas for $100, you could expense $1,000. No connection to sales price.

Now let’s say you bought ten durable goods, such as trucks, for $10,000 each. Yes, low balled for simple math. That’s $100,000 you would depreciate that over the expected (defined by IRS) life. But if one truck was totaled, you could expense the remaining undepreciated amount for that one truck in the year of the loss.

If I remember my Accounting correctly. I have been a town Finance Administrator (Fund Accounting) and a small business “CFO.” Amongst many other things. I am not, and have never been, a CPA. Different story there. I am now retired.

Cash basis is counting the money as it actually comes in and goes out. Human beings are on cash basis. Accrual sort of pretends on the cash flow, presumably in an attempt to match writing down asset values “equally” (don’t go there, it’ll blow some folks minds if they hear “double declining balance”) over the useful life of the asset. That asset may not last that long, or it may last longer. But the repercussions are best left out of this discussion.

And “Depletion Allowance” as used in the oil industry is, IMHO, a way of “stealing” money via Accounting legerdemain. They get to write down past that 100% mark. I’d like to see that go away. THEN you’ll see a more accurate cost of gasoline!

 

[savarese04]

Straight dollar for dollar, if Batgirl costs $100 million to make, do they get that $100 Million back in tax benefits/write offs.

No, they do not. Corporate taxes do not work like personal taxes. Corporate taxes are revenue-expenses=profit. You get taxed on profit. Personal taxes are income-writeoffs=AGI. you get taxed on AGI.

I think people toss around the term "write-off" as if it's some sort of magical thing that explains everything companies do. It's not a thing that practically exists in the corporate world. The correct term would be a "write-down" in which you would take an asset off your balance sheet by accelerating it's deprecating value. That just means that rather than take $100M in loss over 3 years (or whatever period you state - this is not arbitrary btw and if you change it, you have to restate and refile your income statements for past periods), you make a clear statement that you are taking the $100m charge now, in which case you don't get to claim expenses on that thing ever again. Sometimes it makes more sense for a company to take a huge expense hit sooner (aka in a year when they're making more money). This is exactly how 401(k) works for individuals, just so you know.

There are loopholes, yes, that exist that allow some companies to play games with their tax bills or negotiate tax breaks. That is an entirely different situation than what is happening here.

Following your example, if Batgirl costs $100M to make and they release it and it makes $50M, they get to say they had a $50M loss. All they are doing by not releasing the movie is saying, "hey we know this thing is a pile of garbage. In order to make that $50M, we'll need to pump in another $50M in marketing and distribution costs. So rather than take a $100M loss ($50M box office minus $150M costs = -$100M) and tie up all sorts of other corp resources just to lose the same amount of money, we'll just take the full $100M now and call it a day"

From what I'm gathering, you want every company in the world to be taxed on revenue, which is absolutely crazy. That would put every company out of business as tax bills would quickly bankrupt everyone, yes, even Apple. Putting that aside, it would eliminate R&D/innovation because no company would ever be able to afford to develop new products or perform speculative research.

 

[Bruce]

From what I'm gathering, you want every company in the world to be taxed on revenue, which is absolutely crazy. That would put every company out of business as tax bills would quickly bankrupt everyone, yes, even Apple. Putting that aside, it would eliminate R&D/innovation because no company would ever be able to afford to develop new products or perform speculative research.

Never posted any such thing.

This thread has turned into what others think I believe, even if I never posted anything close to that..

I have only posted tax benefit/write offs and asked a few questions, that is it.

And everything i have posted has had a link to it, unlike all the other conflicting responses, there is no tax benefit, the rules are loose, there are tax benefits but the amount is different then what you believe ( even if I posted no such amount), etc, etc.

Not one response has had a link proving what they say is correct, not even a news story.

Here is another-

What Warner Bros. Discovery’s army of accountants called “content impairment and development write-offs” are part of greater “pre-tax restructuring charges” recognized in its fiscal third quarter, totaling between $3.2 billion and $4.3 billion.

That’s one way to balance the balance sheet. WBD performed what it called “strategic content programming assessments” to come up with the $2 billion-plus in write-offs of TV series and movies.

‘Batgirl’ Was Just the Beginning: Warner Bros. Discovery to Write Off $2 Billion in Content in Q3

Batgirl was just the beginning: Warner Bros. Discovery revealed on Monday it will write off $2 billion-$2.5 billion in content in Q3.

www.indiewire.com

 

[lakebum431]

No, they do not. Corporate taxes do not work like personal taxes. Corporate taxes are revenue-expenses=profit. You get taxed on profit. Personal taxes are income-writeoffs=AGI. you get taxed on AGI.

I think people toss around the term "write-off" as if it's some sort of magical thing that explains everything companies do. It's not a thing that practically exists in the corporate world. The correct term would be a "write-down" in which you would take an asset off your balance sheet by accelerating it's deprecating value. That just means that rather than take $100M in loss over 3 years (or whatever period you state - this is not arbitrary btw and if you change it, you have to restate and refile your income statements for past periods), you make a clear statement that you are taking the $100m charge now, in which case you don't get to claim expenses on that thing ever again. Sometimes it makes more sense for a company to take a huge expense hit sooner (aka in a year when they're making more money). This is exactly how 401(k) works for individuals, just so you know.

There are loopholes, yes, that exist that allow some companies to play games with their tax bills or negotiate tax breaks. That is an entirely different situation than what is happening here.

Following your example, if Batgirl costs $100M to make and they release it and it makes $50M, they get to say they had a $50M loss. All they are doing by not releasing the movie is saying, "hey we know this thing is a pile of garbage. In order to make that $50M, we'll need to pump in another $50M in marketing and distribution costs. So rather than take a $100M loss ($50M box office minus $150M costs = -$100M) and tie up all sorts of other corp resources just to lose the same amount of money, we'll just take the full $100M now and call it a day"

From what I'm gathering, you want every company in the world to be taxed on revenue, which is absolutely crazy. That would put every company out of business as tax bills would quickly bankrupt everyone, yes, even Apple. Putting that aside, it would eliminate R&D/innovation because no company would ever be able to afford to develop new products or perform speculative research.

This is spot on! Bruce just doesn't get it. I give up with him. He is wrong weather he will ever realize it or admit it.

 

[Bruce]

This is spot on! Bruce just doesn't get it. I give up with him. He is wrong weather he will ever realize it or admit it.

When you tell someone is incorrect, you might want to check your spelling.

All about Corporate and Personal Taxes he posted, I never brought up, it is like you guys are trying to correct me for things I never posted.

This is what I have said, Warner and other studios are getting Tax Benefits/write offs for pulling content, that is it.

Everything I have posted I have backed up with links, you have not.

Here is another on a new movie-

Some have already seen a screening of the Warner Bros. squashed live-action hybrid animated movie Coyote vs. Acme, and they’re giving a big endorsement on social. As we reported the Warner Bros new motion picture administration of Michael De Luca, Pam Abdy and animation head Bill Damaschke axed the film for a $30M tax writedown.

‘Coyote Vs. Acme’: Lord & Miller, Paul Scheer Catch Early Screening: “Best Version Of The Looney Tunes On The Big Screen”

'Coyote vs. Acme' Screening Wins Praise From Lord & Miller, Paul Scheer

deadline.com

 

[Scott Greczkowski]

Man has this one got off track a bit. Lol.

Maybe I should change the subject back to does anyone remember when HBO used to be good?

 

[lakebum431]

Straight dollar for dollar, if Batgirl costs $100 million to make, do they get that $100 Million back in tax benefits/write offs.

I said I was done, but I can't let this one pass. Because it so clearly shows that you don't understand how taxes work. A write-off of an asset (in this case Batgirl) does not result in a tax CREDIT. It is a reduction to their taxable income just like all of their expenses. So as savarese04 correctly pointed out, this means you take their overall revenue minus all of their expenses to get taxable income. Then you multiply that by the tax rate. So if their tax rate is 21% then they get a tax benefit of $21m not $100m (which they would have received anyway over the life of the asset).

 

[Bruce]

I said I was done, but I can't let this one pass. Because it so clearly shows that you don't understand how taxes work. A write-off of an asset (in this case Batgirl) does not result in a tax CREDIT. It is a reduction to their taxable income just like all of their expenses. So as savarese04 correctly pointed out, this means you take their overall revenue minus all of their expenses to get taxable income. Then you multiply that by the tax rate. So if their tax rate is 21% then they get a tax benefit of $21m not $100m (which they would have received anyway over the life of the asset).

Hence why I asked the question, any tax knowledge I learned when going for my degree is long gone from my brain.

But you finally answered, they do get a tax benefit /write-off when they pull content, which is all I have posted.

 

[Bruce]

Here is where Disney is going the same thing-

Disney to Take $1.5 Billion Content Write-Off Charge in June Quarter After Pulling Dozens of Titles From Streaming Services

Disney, after removing dozens of shows and movies from Disney+ and Hulu, said it will incur a $1.5 billion impairment charge for its June quarter.

variety.com

 

[lakebum431]

Hence why I asked the question, any tax knowledge I learned when going for my degree is long gone from my brain.

But you finally answered, they do get a tax benefit /write-off when they pull content, which is all I have posted.

hahahaha, no. you still haven't understood. No ADDITIONAL benefit.

 

[Bruce]

hahahaha, no. you still haven't understood. No ADDITIONAL benefit.

Again, never said that.

 

[Scott Greczkowski]

Congressman Slams Warner Bros. for Canceling ‘Coyote vs. Acme,’ Calls for Federal Investigation

Texas Rep. Joaquin Castro calls for the Justice Department and Federal Trade Commission to look into whether the studio violated antitrust guidelines in tax write-off plan: "It's predatory and anti-competitive."

www.hollywoodreporter.com

Sent from my iPhone using Tapatalk

 

[Bruce]

Congressman Slams Warner Bros. for Canceling ‘Coyote vs. Acme,’ Calls for Federal Investigation

Texas Rep. Joaquin Castro calls for the Justice Department and Federal Trade Commission to look into whether the studio violated antitrust guidelines in tax write-off plan: "It's predatory and anti-competitive."

www.hollywoodreporter.com

from the link-

Texas Rep. Joaquin Castro took to X to blast the studio for its original plan to shelve the movie for a tax break.

“The WBD tactic of scrapping fully made films for tax breaks is predatory and anti-competitive,” the San Antonio Democrat wrote. “As the Justice Department and @FTC revise their antitrust guidelines they should review this conduct. As someone remarked, it’s like burning down a building for the insurance money.”

So a Congressman is mad that a studio is canceling/shelving content for tax breaks, those same tax breaks someone here keeps posting without prove (links) that they cannot do that and everyone else is wrong.

 

[navychop]

Even our pollies don’t understand it. Or they’re playing to the crowd, God forbid.

 

[savarese04]

Bruce - I just want to point out that there is no hostile intent here. I think you're a good dude and generally agree with most of your takes. Most of this is simply an attempt at education gone askew. No one is trying to put words in your mouth.

My only point is that you keep posting links from news articles as your counter argument that these are magical tax credit "write-offs" and that nobody has posted anything to counter those. That's a fair point, but you have to realize nobody wants to copy and paste the tax code lol.

While these articles are factually correct on the surface, you can't depend on outlets like indiewire and hollywood reporter to properly outline the correct tax structure being used here. They're going to opt toward the more click-baity "tax write-off" verbiage because that's what gets people riled up. Plus, and i know you know this, all it takes is one of these people to post something and the rest will post the exact same thing in a race to the bottom.

All that said, I'm glad this Coyote vs Acme thing is blowing back hard. It says a lot about how these studios are thinking about movies ("no one will want to watch a fun, weird cartoon comedy instead of big boom bang action movie") that they're willing to write down a well-tested movie versus take the chance of releasing it. They really need to go back to the polling room and see that audiences are not binary - we can like BOTH!

 

[David Ortiz]

When you tell someone is incorrect, you might want to check your spelling.

???