Blind Item #8 - Details, Details - Mr. Hedge
I planned to be finished talking about a certain almost TV network, then noticed that some readers wanted to know details behind the almost-TV network’s shady accounting. So here you go.
The almost-TV network takes 4 years to depreciate 90% of the production cost of their original content. This is not a tightly-kept secret. Their top executives will answer the question, if an investor bothers to ask them - or digs through many long, boring financial filings.
Think about how a newly released box-office film gets depreciated, which is about that quickly - at the end of the box-office and peak on-demand runs. That always happens within a few months for a typical film, for a massive blockbuster – a year at most.
Sure, the almost-TV network does have their films available for streaming, so the loss of value doesn’t happen quite as quickly, as it would for a movie theater film. But it doesn’t take 4 years either. Not even close. Is watching a 3 year old film worth the same to a subscriber as a 3 month old film? Of course not.
Think about that big recently released sci-fi film which cost them $100 million. The one critics hate, and most people think is a lousy film. This applies to the almost-TV network’s entire film program, which represents the majority of their content spending.
That is how the almost-TV network can burn through mountains of cash, yet claim they are reporting a profit to their investors.
The almost-TV network told investors back in January that they could throttle back on the record $3-4 billion of cash they told everyone they would use in 2018. As predicted, they are already changing their tune. Just last week at an investor conference, the management admitted that 2018 might not be their “peak burn year” for cash. Not surprising, considering all the big multi-year commitments the almost-TV network has been making lately.
The good news is that this almost-TV network is basically burning through $30-40 per year of cash, per U.S. subscriber. This means they’re not charging subscribers anywhere what they need to charge, in order to cover all this spending.
So enjoy all the lousy, over-budget films, for as long as the almost-TV network can keep borrowing more money to finance them.
Their new film launching this week was set in a foreign country, with a completely improbable plot. The studio was glad to offload this heap of garbage to anyone who would finance production - after their first 2 choices for both lead actor & director all bailed.
Initially a recently married, foreign-born, full frontal loving actor was set to play the lead. Several years ago, a former girlfriend accused this actor of horrible physical abuse. When he bailed, a foreign born A- list mostly movie actor was tapped. Finally, they ended up with a disgusting B+ list actor who is an Academy Award winner/nominee, and is equally as famous for another entertainment profession. This is the same guy one with a long list of underage teen hookups.
The almost-TV network takes 4 years to depreciate 90% of the production cost of their original content. This is not a tightly-kept secret. Their top executives will answer the question, if an investor bothers to ask them - or digs through many long, boring financial filings.
Think about how a newly released box-office film gets depreciated, which is about that quickly - at the end of the box-office and peak on-demand runs. That always happens within a few months for a typical film, for a massive blockbuster – a year at most.
Sure, the almost-TV network does have their films available for streaming, so the loss of value doesn’t happen quite as quickly, as it would for a movie theater film. But it doesn’t take 4 years either. Not even close. Is watching a 3 year old film worth the same to a subscriber as a 3 month old film? Of course not.
Think about that big recently released sci-fi film which cost them $100 million. The one critics hate, and most people think is a lousy film. This applies to the almost-TV network’s entire film program, which represents the majority of their content spending.
That is how the almost-TV network can burn through mountains of cash, yet claim they are reporting a profit to their investors.
The almost-TV network told investors back in January that they could throttle back on the record $3-4 billion of cash they told everyone they would use in 2018. As predicted, they are already changing their tune. Just last week at an investor conference, the management admitted that 2018 might not be their “peak burn year” for cash. Not surprising, considering all the big multi-year commitments the almost-TV network has been making lately.
The good news is that this almost-TV network is basically burning through $30-40 per year of cash, per U.S. subscriber. This means they’re not charging subscribers anywhere what they need to charge, in order to cover all this spending.
So enjoy all the lousy, over-budget films, for as long as the almost-TV network can keep borrowing more money to finance them.
Their new film launching this week was set in a foreign country, with a completely improbable plot. The studio was glad to offload this heap of garbage to anyone who would finance production - after their first 2 choices for both lead actor & director all bailed.
Initially a recently married, foreign-born, full frontal loving actor was set to play the lead. Several years ago, a former girlfriend accused this actor of horrible physical abuse. When he bailed, a foreign born A- list mostly movie actor was tapped. Finally, they ended up with a disgusting B+ list actor who is an Academy Award winner/nominee, and is equally as famous for another entertainment profession. This is the same guy one with a long list of underage teen hookups.
