If you have a passing interest in film and animation, you’ve likely heard of Coyote Vs. Acme, a feature film in the Roger Rabbit tradition of blending 2D animation with live action focusing on characters from Warner Brothers’ Roadrunner cartoons. The film would have focused on Wile E. Coyote suing the ubiquitous Acme corporation after decades of selling him faulty products, and by all accounts appeared to be a passion project from everyone involved. The movie was, in fact, complete and ready for release- only for Warner Brothers to kill it at the last possible second in the name of a multi-million dollar tax writeoff.
Can anyone ELI5 how it’s preferable for these studios to write off finished productions like this vs. releasing them and making additional profits?
Make 10 things for $10.
Try to sell each for $100, say only one sells.
Rather than take a lower price, you write off the 9.
Your taxable income is now $10. And your average profit per thing is $90. Which is good for stock prices.
Mix in Hollywood accounting, and you might even still not have a taxable income. Plus, those other 9 aren’t competing against the 1 that made it. They’re concentrating all the profits in one thing, which makes marketing easier
But really, it all comes down to manipulating stock price.
But you didn’t try to sell the other 9? You made them for $10 each and then threw them straight in the trash.
That’s not what happens here…
They were trying to sell this for 80 million, no one want d to pay that.
It didn’t cost 80 million, they could have sold it for less.
But that would dilute the market and lower prices for other films.
It’s like luxury goods destroying their own product rather than lowering the price to move all their inventory. It’s not about selling as many as possible, it’s about having the highest profit margin.
Like, why are you trying to argue that this isn’t profitable? These studios spend millions on lawyers and accountants to ensure profits are maximized.
You think you know more than them?
The solution is legislation to prevent this bullshit from being more profitable than releasing them.