Corrupt Hollywood Accounting

There’s an old joke in the movie industry about the 1997 movie “Titanic” which was the highest grossing movie ever made. The joke goes something like this: “Titanic was the first movie in Hollywood to have ever made any money.”

You see, Hollywood movies never make money…at least not on paper or in what is reported to the government. Of course this must be a mistake since cinema is a multi-billion dollar business. However, for accounting purposes, movies lose money.

Mel Brooks, the famed director and Broadway producer, actually wrote a play about it. “The Producers” follows a Broadway producer whose star is fading. He stumbles onto the fact that a terrible play can actually make more money than a great one and so proceeds to write the worst musical comedy ever. The scheme fails because his play actually becomes a surprise hit leaving him in financial ruin.

This whole notion is explored in detail in a fascinating book, “The Hollywood Economist” which delves into the accounting practices of movie making. The write-offs, tax breaks and deals in which everybody gets paid but nobody makes any money is laid out for all to see. Further, the book explores the political correctness that pervades everything in today’s society. It points out that big business is the only “enemy” that has no lobbyist fighting on its behalf.

Then there’s the irony and paradox: Hollywood loves to make movies about the evils of capitalism and the many ways businesses rob and hurt the little guy. Here is just a tiny sample of famous movies where big business was portrayed by Hollywood as pure evil:
*Wall Street — Michael Douglas plays the ruthlessness of a Wall Street financier.
*Avatar — Sigourney Weaver battles a ruthless corporation that tries to mine minerals on a distant planet.
*Erin Brockovich — Julia Roberts takes on the malfeasance of an energy company and the damage done to the environment.

The “chutzpah” of making of these types of movies is unbelievable! A Hollywood director making a movie about the evils and greed of big business while financing it in such a way that is completely unethical and deceitful… for the purposes of evading income tax obligations.

If you think hedge funds are ruthless, “The Hollywood Economist” cites numerous examples of how Hollywood’s power brokers fleeced many a hedge funds through chicanery. Even these masters of finance were unaware of the depths of corruptions that exist in Hollywood. Yet, these same power brokers make films and TV shows about how hedge funds fleece the American public while they themselves fleece the hedge funds! Most recently, check out “Billions” on Showtime.

This “entertainment economy” reminds me of the famous painter M.C. Escher whose paintings made it hard to distinguish which way is up. In his painting “Relativity” a maze of stairs interconnects, each with a different orientation to gravity. The paths wind and intertwine. There is no “up” or “down.”

Filmmakers making movies about corruption while financing movies in a corrupt manner make it hard to tell which end is up.
Ironically, you would have thought Hollywood to be one of the best places to work given the abundance of films about championing the underdog. For decades, those protectors of women and gays wore their righteous indignation for all to see and applaud; yet, it t urns out Hollywood is engulfed in sexual harassment scandals that objectified women and gays during those same decades. What hypocrisy!

Famed producer Harvey Weinstein, who produced some of the biggest hits in Hollywood, seems to be the poster boy for everything wrong in the industry. For years he was lauded for his contributions to the Democratic Party: “Party of the Oppressed.” All the while his disgusting behavior was apparently well known, documented and joked about. The entire industry was complicit. One of the most powerful actresses of stage and screen , Meryl Steep, once compared Harvey Weinstein to God. Yet she had no problem denouncing Donald Trump for his poor behavior towards a man with disability (later found to be untrue) or rally to support women who allege harassment by him.

In 2013, TV producer Seth McFarlane read the list of female actresses nominated for award recognition and actually joked (on live T.V.) that the real award was that that “they no longer had to sleep with Harvey Weinstein.” How do Meryl Streep and other powerful women in the film industry claim they had no knowledge about his predatory ways? If Streep had real courage she would have spoken about what she surely knew. But she didn’t. Why? Because it would have hurt her career and her income. Rather than take the truly courageous step and expose the abuse she weighed her options, reviewed her finances and remained silent

Good art is meant to challenge us. It serves a purpose by mirroring society in order to challenge conventional wisdom, shine a light upon the oppressed and, hopefully, elevate the human condition. Having been a connoisseur and champion of the arts, I feel saddened by the great lengths members of the film industry have gone to amass their fortunes and cover-up the exploitation of women. The arts (not unlike the press) have their roles as critics of society. When it comes to Hollywood, the claim to have been there fighting the battles all along belies the truth that they were silent and complicit.

Dietrich Bonhoeffer, German Lutheran Pastor who sought to bring down Hitler, said “Not to speak is to speak. Not to stand is to stand.” Hello? Meryl?