Why when a TV show or a movie becomes a tax write-off, it can never be shown again?
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In accounting terms, if a studio is writing something off, they’re essentially closing the book on it by saying it won’t make any more money. Showing a film generates revenue, so they need to ensure that doesn’t happen.
The tax rules for complicated corporate structures, especially Hollywood companies, is notoriously opaque.
If this is about the WarnerMedia / Discovery merger, and the various films and TV shows that are disappearing, I’m not sure if anyone outside the new Warner Bros. Discovery legal and accounting department could tell you exactly what is going on.
The fact that a network never intends to run a show again is what makes it a write off – not the other way around. There’s also nothing saying that a show can’t later be run after having been written off – any money that it makes just gets taxed normally.
There’s a pseudo-conspiracy theory going around about how HBO bought a bunch of cartoon network shows so that it could pull them and use them as a tax write off, which is what I assume prompted this. Its a total nonsense theory that ignores how taxes work and, in any event, would result in a huge financial loss for HBO for no gain.
The shows that HBO pulled were pulled because there are costs to hosting shows on a streaming service – even if no one is watching them. And the shows that were pulled all fall into that latter category – no one was watching them. Basically, HBO bought a gigantic library of cartoon network shows, included in which were a lot of shows that weren’t popular when run and which remain unpopular today.
HBO decided not to include those unpopular shows on HBO GO so there is nowhere you can see them, which is not uncommon among unpopular shows. The only difference is that the creators of some of those shows are very active on twitter and are up in arms about their shows not being streamed.
The other answers here are good, but let me take a step back and explain accounting a little.
On a balance sheet, you have three types of things – Assets, Liabilities and Equity. Assets are things the company owns, liabilities are money the company owes and equity is what is left that “belongs” to the shareholders. So if you own a car for $20,000 and owe $12,000 on the loan, you have a 20k asset, a 12k liability and 8k in equity.
Over time, most assets lose value. Without getting too complex, you are allowed to record this loss in value on your income statement as an expense for the period, which will make its way to a reduction in your equity. The loss on your income statement isn’t money that you actually spent, but rather just a representation of the loss of asset value. This can be deducted from your taxable income, so you pay less tax overall.
In this case, the claim is that by saying the show/movie will _never_ be shown again, they can claim that its value is much less than what it is listed for in the books – since it will never make them revenue again, its worth less than if it will potentially make revenue in the future. This allows them to reduce the value of that show asset, taking the loss for tax purposes.
This only really works if they agree to never show it again – if they do end up showing it and making revenue, then they wrote off too much and will have to reverse out the write-off on a future income statement.
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