When Capitalism Kills Art - Disney, WB , And More.

In the midst of ongoing strikes, one strategy megacorporate movie and TV producers have embraced is abandoning properties in exchange for tax write-offs. Here's how to stop that.

Hello, friends,

Last week, I was on vacation, but we talked briefly about my thoughts on the Republican debate and the various candidates vying to supplant Trump as Fascist-In-Chief.

This week, we’re going to focus on something near and dear to me:  The world of the arts.  In particular, we’re going to talk about the newly-emergent, but perhaps older than I know of practice of big companies spending a lot of money to make a film or TV show and then destroying it in order to recuperate money in the form of tax breaks for losses.

This is a practice taking place, at least these days, under the backdrop of massive actor and writer strikes. In fact, this strike might grow to include video game acting, as well.

By the way:  Union representation is important, since it provides an umbrella for advocacy - among other things.  I’m a writer, though not a screen-writer, and even I didn’t realize (until researching for this article) that we have a nationwide union I now need to join.  Apparently songwriters can’t have a strike at all because they are considered independent contractors, and I’ve heard similar stories about us novelists, so suffice it to say that unionization can be quite confusing, too - and some people probably prefer it that way.

Anyway!  On to this week’s article.  BUT FIRST!  If you enjoy the cut of my jib, consider hitting the subscribe button:

Killing Projects For Profit.

The first time I heard of this practice, it involved the Batgirl film by Warner Bros.  I’m not the biggest DC head (though I love the Harley Quinn cartoon), but I was curious to see what they did with the property.  It was supposed to be Branden Fraiser’s big comeback besides The Whale, so I was eager.  It was just about done, maybe in need of some reshoots or something.

It wound up in the scrap heap at enormous profit to WB.

Now, there are mega-corporate politics at play with this one. According to the previously linked Film Stories article, this was all related to debts created by the Discovery/Warner Bros merger.  Don’t ask me how companies that merge and/or are acquired manage to pick up debt in the process.  I could try to explain it, but it’s fairly far outside of my professional expertise and I’m sure there are better explanations out there.  Something similar happened with Elon Musk’s buyout of Twitter, where he ended up saddling the company with a massive amount of debt.

Anyway, WB took this movie and declared it a loss, and it wasn’t alone.  By declaring these projects losses, they are able to basically go to the government and say, “W-w-we had this investment and it - it didn’t w-work out, and n-now we can’t p-profit so we should get a t-t-...A tax break.”

Something similar exists with stock losses:  If you buy a share of a stock at $100 and sell it for a loss at $80, you can write off the additional $20 as a loss and use that to defer taxes you might be liable for from other sources of profit.  This is sort of the “back-half” of a system where you can buy something for $100 and sell it for $120, essentially scoring an extra $20, but paying taxes on what you’ve gained.  It’s partially the explanation why the ultra-wealthy aren’t taxed at a commensurately high rate:  If I own billions of dollars in stocks, until I’ve sold them, I haven’t necessarily made a profit yet, so there’s no point-of-taxation.  That’s what a wealth tax is supposed to fix.

This is kind of the same thing as that.

Only instead of buying an asset whose value (in theory, at least) depends on the performance of an underlying business (Say, buying an industrial stock in hopes that it makes good products), the loss-harvesting WB is engaging in is more, “Hey, we made this thing we suddenly don’t think will do so hot, so rather than follow through we’d like to un-do it, please.”  It’s, “We got into a risky enterprise and we don’t want to take the risk anymore, so cover our asses.”

It reminds me of how drug companies like Johnson and Johnson will talk about how researching and developing drugs is risky because not all of them work, and that they need exclusive production periods to justify the cost, but then balk at actually doing research and development.

WB Is Not Alone.  Enter:  Disney.

Disney just pulled a whole bunch of content off of the streaming platforms it owns (Hulu and Disney Plus), as well.  This even includes recent projects such as the widely well-regarded Willow reboot.  It’s written off over $1.5 billion in ‘losses’ that aren’t really lost.  This has an impact not just for Disney, in terms of Disney being able to get a tax cut:

It impacts the staff who featured in these shows, who won’t be getting residuals.

That’s right!  This isn’t just a “Wahh I want a tax break!” move, it’s also a cost-cutting move.  After all, the price of a Disney Plus subscription didn’t change as a result of these moves.  You’re still paying…Oh, wait, prices went up.

That’s right!  At a time when content is being stripped off of platforms to make for tax write offs, and at a time when no new productions are being made because of the strikes, these streaming companies occasionally have the gall to ask for more money!  For what?  Less of a product?  Are they gonna say they got hit with inflation?  Not if they aren’t paying staff to make new products!

It’s batshit crazy.  It honestly pisses me off just to hear this.  And remember how I said I wasn’t that big into DC?  Well I am that big into the MCU.  Hulu carries the Bleach anime, and I fuckin’ love me some Bleach.  Hulu also carries The Handmaid’s Tale, another series I watch.  So while the Disney +/Hulu bundle is nice and all that, it also means that if I was predisposed towards any one service, it’d be the one cutting content, not producing new content, and raising prices.

Kinda annoying, huh?

So How Do We Fix This?

I have a very simple solution that will fix this entire issue:  When a project is written off for tax purposes, do you know who becomes the custodian of that project?  The taxpayer who is giving you a break.

In other words:  Batgirl, Willow, and all the other projects that are canceled should be immediately landed in the public domain.  At the very least, the resources created for the project should be made available to other creators to complete their own versions of the project.  Remember how there’s a Snyder Cut of Justice League?  It was okay, even if it wasn’t all it was hyped up to be.

Can you imagine film schools having all sorts of Batgirl materials to teach from?

Can you imagine a Library Of Abandoned Shows whereby projects deemed “no longer of value, but rather of harm” to a streamer are suddenly free to view from anywhere in the world?

Or maybe we’ll have a sort of IP Auction, where an abandoned project - including all resources that exist for it - are available at auction for bargain prices?  Want to finish Batgirl?  Got yourself a small or medium studio?  Maybe one that can sign an interim agreement with the actors’ and writers’ guilds?  Pick it up, hire whoever you need to do whatever reshoots need to be done, and you’ve got a movie that WB did 98% of the work on but didn’t want to finish.

Whatever the case, studios have to get their acts together.  Literally.  They have to pay them and get their acts together to make movies and TV.

In Other News

• Did you know our former President, Donald Trump, is accused of crimes?  Shocking!  I know.

• The Biden Administration has begun a push to reschedule Cannabis from Schedule I (I.E. no medical purpose) to Schedule III.  I recently wrote about why it’s a good idea to fully legalize Cannabis.  For starters, it would get a lot of otherwise-innocent people out of the prison system, which we’ve asserted here is a bad system.

• In all honesty, the Biden administration has been doing really well vis-a-vis labor, lately.  To start with, they’re making some changes to overtime rules to expand who gets time-and-a-half for going past 40 hours a week.  To be fair, that number should be “everyone,” but it’s a start.

• Following up on Biden doing a good job with labor is more labor!  In particular, this is about the National Labor Relations Board changing rules regarding union ratification.  Any time we make it easier for workers to unionize is a good time.

• Global climate change-caused disruption continues as Asia experiences ongoing record-breaking heat.  So did New Orleans.  Sorry to be depressing, but, yeah.  If you’d like one promising remedy to the climate crisis, here’s a long-abandoned technology that would (probably) work that we might be able to use to cut greenhouse gas emissions.

• Speaking of Louisiana, a prominent pediatric cardiologist left Louisiana over it’s Queerphobic laws.  We’ve talked before about the intentionality behind “unintended consequences” of regressive laws.  It brings me no joy to say this:  They would rather innocent children who could be saved die than share this world with us.

Thank you for reading The Progressive Cafe.  If this article has helped you, please consider signing up for our mailing list.  This article is by Jesse Pohlman, a sci-fi/fantasy author from Long Island, New York, whose website you can check out here.