Last summer, Deadline released this balance-sheet (“participation statement”) detailing the alleged financial state of the corporate entity struck to run the Warner Bros movie “Harry Potter and The Order of the Phoenix.” The movie, which had grossed nearly $1B at the time, was nevertheless running $167M in the red. The losses are largely attributable to to prints and advertising/marketing – and, as many commenters on the original post point out, a major recipient of that marketing budget would have been Warner’s itself, in the guise of its other media divisions. Another culprit is high interest fees, though the film didn’t have outside financing, so Deadline speculates that the loan note was also held by Warner’s.
The original post holds this out as an example of why only a fool accepts “net-participation” compensation for work associated with a film, but I think this is also a great example of why all financial numbers released by the entertainment industry should be treated as fiction until proven otherwise. Especially piracy “loss” figures, alleged contributions to national GDP, and job creation numbers.