Hollywood accounting strips profits from films while enriching distributors at financiers’ expense.

Evidence

Mnuchin fared better in Hollywood than most; despite their sophisticated risk-management strategies, many financiers suffer when they encounter ­“Hollywood accounting,” the dubious, byzantine math by which film financing is engineered asymmetrically so that individual films rarely achieve profit on paper yet the distributors still earn massive fees. Furthermore, the films offered up to slate-financing deals are often the riskiest ones studios have; they prefer to finance the reliable films themselves, particularly their franchises, and retain the bulk of that revenue. Compounding this difficulty, the credit crunch forced many financiers to pull out of these slate-financing deals in 2007 and 2008 and sell their Hollywood assets at a discount of up to 70 percent. — Andrew deWaard, Derivative Media, 299

Categorization

• DEFINE: Defines Hollywood accounting — the asymmetric profit engineering central to traceable finance-to-form causation.
• XREF: Connects to the slate-financing and PE rollup mechanics central to the reader’s tracing project across Part One.