Think of it like Russian nesting dolls.
You got the production company that pays $100 million to make a movie. The production company is owned by a studio. Production company licenses the movie to the studio that owns it for $200 million. But it’s all the same ownership and no money changed hands. It’s just on paper. So now the $100 million movie cost $200 million. Then the studio licenses out the movie to the marketing company, which the studio also owns, for $300 million. Again no money changed hands and the value is all on paper.
Do that a couple more times and that’s how a movie that literally cost $100 million and made $500 million at the box office “barely broke even”.
Might be off on the layers, but I heard that description of movie accounting years ago.
Exactly. I left that part off since I thought it was already a long description. But completely true. Can’t pay out an actor that takes a percentage if it never made any money on the “official” paper.