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HomeColumnsAccidental TuritzThe Accidental Turitz: Introduction to Creative Accounting 101

The Accidental Turitz: Introduction to Creative Accounting 101


Bohemian Rhapsody
Rami Malek in Bohemian Rhapsody (20th Century)

Anthony McCarten filed suit last week against Graham King, the producer of Bohemian Rhapsody, which won four Oscars and grossed close to a billion dollars at the global box office. It’s a movie that McCarten wrote, earning sole screenplay credit while sharing screen story credit with Peter Morgan. As part of McCarten’s deal with King’s GK Films, the production entity behind the movie, McCarten was to receive five percent of King’s take from the movie. 

For a movie that cost a reported $52 million to make, which earned more than $216 million domestically and over $911 million worldwide, one would think that McCarten’s pay day might be fairly impressive.

Well, according to the lawsuit, one would be wrong. Dead wrong. Hence, the whole point of the suit, as it seems GK Films informed McCarten that the movie is actually $51 million in the red. 

Are you shocked? Shocked and appalled? Stunned and disconcerted that such a thing could occur? Of course, you are! This is Hollywood! Nothing underhanded like that happens here!

Coming to America
Eddie Murphy (L) and Arsenio Hall in Coming to America (Paramount)

This is far from the first time such a thing has happened. Two famous cases that ring similar happened in recent memory. First there was Art Buchwald, who sued Paramount Pictures for a credit on Eddie Murphy’s 1988 smash, Coming to America, claiming it was based on his idea. He won the case, and sought a piece of the net profits. The movie cost $36 million to make, grossed nearly $300 million worldwide (roughly $700 million today), and according to Paramount … lost money. Which meant that Buchwald was owed nothing. In the end, he took a settlement of about $150,000. 

A couple years later, author Winston Groom filed suit against … (checks notes) … Paramount Pictures. As part of his deal, he was supposed to get three percent of net proceeds from a film that cost $55 million to make and earned over $678 million globally (over $1.26 billion today). 

Any guesses as to how much money Paramount claimed the film netted?

If your guess was that it actually lost over $62 million, give yourself a gold star. Or at least pat yourself on the back for paying attention.

Groom’s suit was settled by Paramount giving him a seven figure check for the rights to the book’s sequel, Gump & Co., to turn it into a movie that, of course, has never been made. 

So, it’s not like this McCarten thing is new, even if it’s not something that has come up any time this century. The creative bookkeeping has been around since the start of the industry, obviously, but the squabbles over cash and who is owed what don’t tend to be made public. More often than not, a company quietly comes up with another way to take care of the issue at hand in the manner that Paramount took care of Winston Groom. Option a script, pay for a rewrite gig that doesn’t actually involve any genuine work, do something that will grease the squeaky wheel. I have at least a half dozen friends who have experienced this exact thing. It happens all the time.

Thus, the fact that McCarten felt the need to actually file suit against GK Films — but, interestingly, not against 20th Century Studios or its now parent company, Disney — means that the A-list writer and producer can’t find another way to settle a deal where he very clearly believes he is getting screwed. It’s perfectly evident, just peeking at it from the outside, that the numbers he’s discussing are higher than any standard buy-off might cover. In McCarten’s mind, that’s going to be millions of dollars, and it’s tough to imagine any production company coming up with that for any writing gig.

Now, just to look at the bigger picture here, let’s do some math. The movie cost a reported $52 million, which means that it has to do roughly double that to start returning money. This doesn’t factor in marketing, though, which we can very conservatively put at another $50 million, and since there’s an Oscar campaign involved for both the movie itself and its star, Rami Malek, let’s add $20 million more. Now we’re up to $112 million to make the movie, and for the sake of argument and other hidden costs, let’s round it up to $120 million.

Bohemian Rhapsody
A scene from Bohemian Rhapsody (20th Century)

Which means that $216 million at the domestic box office is, essentially, a money loser so far for the studio, and that still doesn’t take into account any first dollar gross deals any of the filmmakers might have had. Bryan Singer might have been fired as the film’s director to be replaced by Dexter Fletcher, but he was still an A-list guy at the time, and I’d be willing to bet a sheckel or two that his deal included something along those lines. Not sure about Malek, but the surviving members of Queen? Either way, it’s fair to say that, at this point, the film is still in the red, even if some of those grosses might have gone to GK. Though we can’t be sure about that. 

So, using only domestic grosses, there is a legitimate argument to be made that the movie is still in the red.

But then we turn to the $650 million of international grosses. Cut that in half, for international box office, and then lop off another third for various fees and such, as well as any spillover from the red numbers already present. That gets us to around $250 million. Even if we’re being generous and say that another 20 percent goes to other payouts, that’s still $200 million, and even if it’s less, it’s equally hard to imagine that some of that payout wouldn’t go to the production entity behind the movie. 

And yet, said company is claiming that the movie has actually lost something in the mid-eight figures, which is hard to fathom. Even being as generous as I’ve been in the whole accounting of it all. 

McCarten has earned four Oscar nominations, two each for writing, The Theory of Everything and The Two Popes, and producing, The Theory of Everything and Darkest Hour. He’s no schmuck off the street, as the saying goes. And yet, he’s being treated like one. I can’t claim to have any inside knowledge about GK Films’ financial situation, but I can hazard a guess that the pandemic has not been kind to the company. There’s nothing good about this, either, because at the very least it’s going to require GK to open its books and show how it came to this specific dollar number. If that affected only GK, it’d be bad enough, but of course, there’s more to it than that.

This could, in theory, end up being the first domino to fall in how Hollywood studios and production companies handle their accounting. I mean, I’m sure the same thing was said a quarter-century ago when the other suits went through, but we’re living in a different world now. The industry has changed enormously in that time, and there’s more accountability in just about every sense. 

The question is, will it translate to the financial side? CAA, McCarten’s agents, are probably licking their chops to get an inside look at the numbers. I imagine just about everyone else in Hollywood is, too.

Neil TuritzNeil Turitz is a journalist, essayist, author, and filmmaker who has worked in and written about Hollywood for nearly 25 years, though he has never lived there. These days, he splits his time between New York City and the Berkshires. He’s not on Twitter, but you can find him on Instagram @6wordreviews.

You can read a new installation of The Accidental Turitz every Wednesday, and all previous columns can be found here

All pictures courtesy of the respective copyright owners.

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