Quote from: Lurkndog on June 01, 2023, 09:30:29 AM
It seems to me that the last stage of a property after you pull it off of streaming should be to release it on disc.

Why leave money on the table?

You have it ass backwards, it should be:

Theaters > Disc > Streaming > Open TV

With enough time between each stage as to have an incentive to go to the theater or buy the disc.

Plus streaming is only profitable for the studios IF it's a third party buying the rights from them, which is why Netflix was a good idea up until all the studios decided to commit sepuku by launching their own streaming service thus loosing the money Netflix was paying them and still cutting into Netflix's bottom line without a real monetary profit for the studios.

I know that not many care about this topic anymore but I found out information which may shed some light on what Disney is doing.

Firstly, according to the IRS*, if a TV show or movie costs more than $15 million, it must be treated as an asset and depreciated over 10 years. So, if the TV show costs $100 million, the will get a $10 million depreciation expense for each year for the next ten years**. What Disney is doing this year is taking something called an Impairment which applies if the current asset value (original value-depreciation taken) is significantly higher than the asset's current fair market value. This allows them to write down that asset to its market value and take all that future depreciation expense in 2023. Thus paying less taxes this year at the cost of paying more taxes for the upcoming years. In effect, this all should result in the same taxes being paid and in my own business of commercial real estate we often do this (through another method) if we plan on owning a property for a short period of time.

This also explains why they are cancelling recent shows, as those shows have the most depreciation left in them to move around with this method.

However, this doesn't explains why they had to take the shows off of Disney+ unless they were doing some creative accounting. There is a current law suit where stockholders are claiming that Bob Chepek was being deceptive by having the various studios spend money to make shows for Disney+ but not having those expenses allocated to Disney+ in order to make Disney+ look like it is performing better than it actually is. This looks to me like Disney+ had agreed to pay the various studios money per year for the right to put the show on Disney+ and in order to make it look like those shows have no future income potential, Disney had to cancel the current contract and pull the show. Thus I don't see why they couldn't add these shows back a few years from now.

You might be wondering why they are going through all this effort just to move expenses around, but the consensus I'm seeing is that Disney needs at least $8 billion to pay for the last third of Hulu which is due in January of next year and they are a bit short on liquid assets.


*https://www.irs.gov/publications/p946#en_US_2022_publink1000107351
**There is a another way to calculate depreciation rather than a straight line, but that won't really affect the core issue here.

Quote from: hedgehobbit on June 07, 2023, 08:25:49 PM
I know that not many care about this topic anymore but I found out information which may shed some light on what Disney is doing.

Firstly, according to the IRS*, if a TV show or movie costs more than $15 million, it must be treated as an asset and depreciated over 10 years. So, if the TV show costs $100 million, the will get a $10 million depreciation expense for each year for the next ten years**. What Disney is doing this year is taking something called an Impairment which applies if the current asset value (original value-depreciation taken) is significantly higher than the asset's current fair market value. This allows them to write down that asset to its market value and take all that future depreciation expense in 2023. Thus paying less taxes this year at the cost of paying more taxes for the upcoming years. In effect, this all should result in the same taxes being paid and in my own business of commercial real estate we often do this (through another method) if we plan on owning a property for a short period of time.

This also explains why they are cancelling recent shows, as those shows have the most depreciation left in them to move around with this method.

However, this doesn't explains why they had to take the shows off of Disney+ unless they were doing some creative accounting. There is a current law suit where stockholders are claiming that Bob Chepek was being deceptive by having the various studios spend money to make shows for Disney+ but not having those expenses allocated to Disney+ in order to make Disney+ look like it is performing better than it actually is. This looks to me like Disney+ had agreed to pay the various studios money per year for the right to put the show on Disney+ and in order to make it look like those shows have no future income potential, Disney had to cancel the current contract and pull the show. Thus I don't see why they couldn't add these shows back a few years from now.

You might be wondering why they are going through all this effort just to move expenses around, but the consensus I'm seeing is that Disney needs at least $8 billion to pay for the last third of Hulu which is due in January of next year and they are a bit short on liquid assets.


*https://www.irs.gov/publications/p946#en_US_2022_publink1000107351
**There is a another way to calculate depreciation rather than a straight line, but that won't really affect the core issue here.

I've heard that speculation about Disney playing shell games with their money before. It really doesn't bode well, as at the end of the day it's not really actual income.

The Hulu thing is hilarious because it was a terrible deal. Disney is on the hook and it does not surprise me they have liquidity problems considering their spending sprees over the last several years.

Quote from: GeekyBugle on June 01, 2023, 02:00:21 PM

You have it ass backwards, it should be:

Theaters > Disc > Streaming > Open TV

With enough time between each stage as to have an incentive to go to the theater or buy the disc.

Plus streaming is only profitable for the studios IF it's a third party buying the rights from them, which is why Netflix was a good idea up until all the studios decided to commit sepuku by launching their own streaming service thus loosing the money Netflix was paying them and still cutting into Netflix's bottom line without a real monetary profit for the studios.

I mention disc last because some companies, Disney mainly, seem to not release on disc at all if they can help it. For instance, I want Mandalorian blu-rays, and there are none to be had, apart from possibly sailing the high seas. I'm amazed I got Star Wars Rebels on blu-ray.

It used to be that the strategy was to release on disc immediately before the next season dropped. That way the discs on shelves acted as free advertisement to remind people of the show, and if fans bought the discs and rewatched the show, and got stoked to see the new season, so much the better.