

What “Hollywood Accounting” teaches us about management risk - vnchr
http://revenuetrades.tumblr.com/post/10119543092/hollywood-royalty

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bsiemon
What is there to predict when the whole game is fixed? The article seems to
acknowledge that the game is fixed but then continues on like it is not.

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vnchr
You can fix the game of declaring profit, but you can't fix the game of
revenue. And therein lies the problem: management risk represents the ability
of a business to draw a profit from revenue. Tax-flight and profit-sharing
shenanigans represent the management risk of dishonesty, though more often
management risk is the aptitude of a manager to run the business well.

The businesses we are working with (I'm with RT, wrote the post) aren't films.
They're startups and operating businesses. And we believe royalty financing
has more scaling potential in a massive crowdfunding marketplace than equity
financing. Removing management risk makes crowdfunding more viable.

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findm
I think this is a misleading article in the sense that all movies lose money,
due to the way they are structured.

I'm no expert on the financing of the entertainment business but I do remember
a podcast on npr talking about this:

[http://www.npr.org/blogs/money/2010/05/the_friday_podcast_an...](http://www.npr.org/blogs/money/2010/05/the_friday_podcast_angelina_sh.html)

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vnchr
I'm not making a point that film investing is good or bad. I submitted this to
HN because the audience is tuned to startup and business perspectives.

From an outsider's PoV, it is counter intuitive that these major films are
technically not profitable. We aren't as surprised by their revenue, and that
is the point: in the example of those films, revenue would have been easier to
predict than profit.

