Warner's new business plan?

[Frank Cox]

Warner's new business plan: Lets make the movies but not actually release them.

This makes three: Batgirl, Scoob Holiday Haunt and now Coyote vs Acme.

That's gotta be damn discouraging and demoralizing for everyone involved in making those movies.

https://www.theguardian.com/film/202...ovie-john-cena

Warner Bros is reportedly shelving a completed $70m movie to take an estimated $30m tax write-down.

The “difficult” decision has been made not to release the live-action/animation hybrid movie Coyote vs Acme starring Will Forte, John Cena and Lana Condor, according to a statement.

“With the re-launch of Warner Bros Pictures Animation in June, the studio has shifted its global strategy to focus on theatrical releases,” the statement reads. “With this new direction, we have made the difficult decision not to move forward with Coyote vs Acme. We have tremendous respect for the filmmakers, casts and crew, and are grateful for their contributions to the film.”

Production on the film had completed last year and, according to Deadline, test screenings had already been underway with results 14 points above the norm for a family movie. It had originally been set for release this July but was pulled.

The writer-director Brian Duffield tweeted: “I have seen this movie and it is excellent. It also tested in the high 90s repeatedly. It also had interested buyers. The people working at Warner Bros are anti-art and I hope multiple anvils drop on their heads.”

The decision follows the studio’s decision to pull the plug on the $90m Batgirl last year despite the film being in post-production. The film starred Leslie Grace, Michael Keaton and Brendan Fraser and will now never reach an audience. The studio also cancelled the release of the $40m sequel Scoob! Holiday Haunt. All three films were given the green light by Jason Kilar before his successor, David Zaslav, took over.

Reportedly, Warners didn’t see it financially viable to try to sell Coyote vs Acme to another studio or release it on its platform Max. The news comes after quarterly earnings reported a net loss of $417m.

The film was directed by David Green, whose credits include 2016’s Teenage Mutant Ninja Turtles: Out of the Shadows, and written by Samy Burch, who has received acclaim for her screenplay for Todd Haynes’ upcoming drama May December.

The plot of Coyote vs Acme saw Looney Tunes character Wile E Coyote pursue legal action against Acme after the company’s products failed him in his pursuit of Road Runner. It was based on a New Yorker article by Ian Frazier from 1990.

[William Kucharski]

No matter what test screenings say, in the end WB knows how much they'd need to spend on marketing and such to get the movie into a theater and what it would return, and also what the sale after the fact to Amazon and other streamers would bring.

I'm sure it's all in a spreadsheet that either shows a figure in red or not, and what the tax write-off would be.

[Mark Ogden]

I'm sure this is part of the reason Taylor Swift bypassed studios with her picture. If she had gone through Warners, for instance, they would have charged their losses on this against her cut, and called it "studio overhead". Been going on forever.

[Rick Cohen]

Also the 'Salem's Lot' remake which was supposed to be released in September 2022, but is still on the shelf and rumored to be heading to Max for direct-to-streaming, with no theatrical release.

[Paul H. Rayton]

"Scoob Holiday Haunt" was NOT exactly on the top of my "must see" list, but that's just me ...

[Leo Enticknap]

I'm not sure that I understand the math on this, unless streaming revenues on this pic are expected to be bad.

If they totally shelve the movie, they stand to lose $40m ($70m negative cost, minus the $30m tax writeoff). It only makes sense to do that if they're not confident of the movie earning more than $40m, assuming little or no marketing. Would a trailer and a few posters really cost so much as to threaten the viability of the movie?

If so, the market for mid-budget (production costs of, say, $10-100m) is totally finished, because it costs so much to sell them that they can never earn back their production costs. That just leaves us with mega blockbusters and arthouse/indie stuff.

[Frank Cox]

If they can get a "guaranteed" tax write-off of $30m then assuming $5m in promotion and distribution costs the movie would have to make roughly $70m in box office gross to give them a greater profit than the $30m that they can already claim. If it grosses less than that they're behind on what they could have had just from the tax write-off.

So do they roll the dice and hope to see at least $70m of ticket sales walking in or take the $30m bird in the hand? (See what I did there )

[Mike Blakesley]

Don’t they calculate the income from all the ancillary channels into the overall equation anymore? If they did, and still expected to lose money, then those movies must be really REALLY crappy.

[Leo Enticknap]

The apparently don't try to calculate the income from individual shows on streaming services. This was a major issue in the actors' strike negotiations. The WGA and SAG-AFTRA wanted residuals payments based on streaming views, using a similar model to that of TV ratings. But the streaming giants responded that calculating these payments is impossible, because they don't track individual views that are bundled with a subscription package. So, apart from pay-per-views, ancillary channel income is like the conundrum over taxpayers funding the royal family: it's easy to figure out how much it costs, but a lot more difficult to figure out how much it makes (tourists coming to London, what they spend in hotels, indirect boosts to a regional economy when Wills and Kate come to reopen a refurbished hospital, etc.).

If this trend continues, I can see the creatives' unions start to demand "no shelving" clauses in contract agreements, i.e. the studios must release any movie they complete, even if low key and/or straight to home viewing. I would not want to spend, say 6 to 18 months of my life working on a project that then effectively became a gap in my resume, because no-one ever got to see it.

[Frank Cox]

But the streaming giants responded that calculating these payments is impossible, because they don't track individual views that are bundled with a subscription package.

If they actually say that then they are lying. Period.

Every server logs what it does, whether it's a webserver, a streaming audio server, a streaming video server.

All you need to do is run a log analyzer to count the views. You could probably customize logwatch to do hourly or daily reporting from whatever software they're using to provide the streams. If all they need is total views they could probably even do it with grep, wc and "a very small shell script".

If this trend continues, I can see the creatives' unions start to demand "no shelving"

I absolutely agree. Just imagine how the star of Batgirl feels after being more-or-less promised an ongoing role in a superhero series and then getting told to just forget the whole thing.

[Mark Gulbrandsen]

Don’t they calculate the income from all the ancillary channels into the overall equation anymore? If they did, and still expected to lose money, then those movies must be really REALLY crappy.

Theoretically, they do estimate ancillary sales. And sales of toy related items would have been a big deal for any Looney Toons movie. But everyone keep your eyes open, say in 5 to ten years, Warners, if they are still around, will claim they found a long lost Looney Toons feature and then release it that way, and generating more interest in it at the same time... I also just can't accept that it came out THAT crappy. Productions generally have watchful eyes looking at the results as they become available. The real problem I see here is that their "quarterly earnings reported a net loss of $417m". That's way more than the 70 million cost of the Toons movie, and leads me to believe Warners is having other problems. I worked on a lot of movies in the past, and only one movie was not released theatrically after test screenings were done. The producers decided the SFX in it were not believable on the big screen, or at least that's the excuse they gave, but that it looked ok on TV. So they released it to cable TV, and on DVD. Then presumably wrote off the loss as normal. It even had big name actors in it. That movie was called "Wilder Napalm", it's listed on IMDB with a low rating of 5.4.

[Harold Hallikainen]

"How David Zaslav Blew Up Hollywood", New York Times Magazine, November 19, 2023.
https://www.nytimes.com/2023/11/15/m...smid=url-share

[Randy Stankey]

I wonder whether they are sandbagging those movies, this year, to get the tax write-off. Then they can release them next year or the year after so that the write-off they took, before, essentially becomes a profit boost.

If it's not already illegal to do that, it should be.

[Mark Gulbrandsen]

Now just awaiting the announcement from Sony or Wanda that they now own Warner Brothers....

[Martin Brooks]

Now just awaiting the announcement from Sony or Wanda that they now own Warner Brothers....

There are rumors that Zaslav is going to try and sell it, but they'll never get the $43 billion they paid for it and that would likely cost Zaslav his job, which I think he's going to lose even if they don't sell it. I thought Warners was going to be a disaster under AT&T, but because they pretty much left it alone, they actually did a better job than Zaslav has, although the movie slate is so bad, it just might be that the Warner executives are also the problem.
And they DO calculate both streams and revenue from streaming. Netflix (and others) brag all the time about the number of people who watch a given show. And when a studio licenses a show for streaming, there's the licensing revenue that has to be accounted for. Even when licensed within the same corporation, there is STILL a licensing fee. If there were no such fees, Disney+ wouldn't be losing money, because aside from the cost of the servers and subscriber acquisition, they'd have few other costs. Disney has 146 million subscribers, which generates at least $12.3 billion annually and yet, they're not profitable (although of course, there's also the production costs of streaming only shows).

(I was responsible for the development of a Rights Management application that's used by the cable companies and streamers and a similar app is used by major sports leagues, so I'm very familiar with those aspects.)

If studios never released anything that wasn't going to make a profit based upon the theatrical run, almost nothing would get released, because few films are profitable on that basis today (once marketing is included). If they released those films and they lost money, they could have wound up with a bigger write-down, if they're going to use tax write-offs as a finance strategy.