The "Bones" Ruling Exposes Corporate Greed in the Streaming Era

Discussion in 'HardForum Tech News' started by cageymaru, Feb 27, 2019.

  1. cageymaru

    cageymaru [H]ard|News

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    Fox has been hit with a $179 million ruling in a case involving its hit show "Bones" after an arbitrator concluded "Fox executives lied, cheated and committed fraud at the expense of the show's stars and executive producer Barry Josephson." The dispute was centered around the worth of the show and alleged "sweetheart" self-dealing between Fox's studio and Hulu as Fox refused to share profits with Josephson and others. Fox contended that Bones lost money and charged Hulu extremely low licensing fees for the streaming rights to the show. Fox has a 30% stake in Hulu, so it was in the best interest of Fox to charge its sister company lower licensing fees for the rights to stream the show. Meanwhile, Hulu collected subscription fees from its customers and advertising revenue that increased its value and positively affected Fox.

    At one point, Fox executives signed both sides of a contract that determined how much money they made off the streaming rights for Bones on Hulu. Instead of requesting fixed episodic license fees or a minimum guarantee, the studio chose to license the digital rights to Hulu based on a "share of speculative advertising revenue." This was the first time that such an agreement had been reached by a studio. The arbitrator determined that "The obvious inferences of self-dealing, conflict of interest and the lack of any arm's length negotiations leap off the page." Similar hit shows such as Blue Bloods and CSI charged a current episodic fee of $685,000 on Hulu. Thus the arbitrator determined that Fox owed $178,695,778.90. The ruling may open Pandora's box for attorneys in the entertainment industry.

    It's possible that the studio just isn't charging enough for rights to exhibit the show, whether it's streamed online or broadcast on a television. Streaming platforms hawk subscriptions. Television networks sell advertisements and take in additional revenue from cable and satellite companies. Such money doesn't directly go to profit participants. So if a studio is within the same corporate structure as a streamer or broadcaster, an underhanded way for the parent company to derive the spoils from a show (to the detriment of executive producers and stars) may be to undercharge licensing fees to its sister companies. That's exactly what the Bones profit participants alleged was happening.
     
  2. Lakados

    Lakados [H]ard|Gawd

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    Movie Studio Accounting is funny at best.....
     
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  3. DejaWiz

    DejaWiz Oracle of Unfortunate Truths

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    That's 9% of their annual revenue last year...ouch.
     
  4. Lakados

    Lakados [H]ard|Gawd

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    I am sure they will challenge it in another court in an attempt to over turn that ruling, the Fox lawyers will find ways to tie up the process and some time in 2050 when all the involved party members are dead or senile it will get dropped.
     
  5. U-238

    U-238 Limp Gawd

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    Can we stop for a minute and reflect on the fact that the price of a single episode of a single TV show is $685,000? That is absolutely insane. I mean you want to talk about corporate greed, lets start with that.
     
  6. viscountalpha

    viscountalpha 2[H]4U

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    Fox, unethical??!? I am shocked. Shocked!!!
    Seriously though what goes around comes around and I hope plenty of others take notice of this.

    Hollywood, creatively and morally bakrupt now.
     
  7. Lakados

    Lakados [H]ard|Gawd

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    David and Emily were both paid upwards of 200,000 per episode and the other actors were in the 5 figures so 685,000 per episode towards the end seasons just covers the actors salaries alone let alone anything else. That number is a complete low-ball at best.
     
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  8. BlueFireIce

    BlueFireIce [H]ardness Supreme

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    You have any idea what goes into a show? The actors have to be paid (and some are paid VERY well) the two leads are paid $200,000 per episode. Crews that set everything up, lighting, audio, video gear, props, locations etc etc etc, not even getting into back end editing, CGI etc etc
     
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  9. PhaseNoise

    PhaseNoise [H]ard|Gawd

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    It is remarkably expensive to make a show which doesn't look like it was remarkably inexpensive to make.
     
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  10. purple_monster

    purple_monster Limp Gawd

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    imagine turning on your tv and being like "im gonna watch some bones."
     
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  11. Lakados

    Lakados [H]ard|Gawd

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    Wife binge watches it on Netflix, or did I think she is currently on a Gilmore Girls binge atm....
     
  12. clockdogg

    clockdogg Gawd

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    Or Black Mirror binge. Notice any unusual 80s game or 60s ashtray purchases recently? ;-)
     
  13. Derangel

    Derangel [H]ard as it Gets

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    Eh. Bones wasn’t that bad. It ended up falling apart in the last couple seasons but I enjoyed watching it and binging it on Netflix after they added the final season.
     
  14. Fading Phoenix

    Fading Phoenix Gawd

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  15. illli

    illli [H]ard|Gawd

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    This is only going to get worse as more companies are allowed to consolidate. on a side note, I just read disney is negotiating with at&t to but their 10% stake in hulu
     
  16. Brian_B

    Brian_B 2[H]4U

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    Which is interesting, because Disney already owned 30%, then bought Fox who owns 30%. That just leaves Comcast with 30%.

    Throw in the fact that Disney already has one streaming service (ESPN+) and is also trying to start up another (Disney+). Not sure what they are after here...
     
  17. Burticus

    Burticus 2[H]4U

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    I tried to read that article and fell asleep. Much like watching most episodes of Bones.
     
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  18. Dead Parrot

    Dead Parrot 2[H]4U

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    "Hollywood Accounting" has been a joke for decades. A movie can set box office records and after the Hollywood Accounting dept. gets through, the movie has officially lost money. Pretty sure if any other industry used the same techniques, they would be in jail for tax evasion and SEC violations.
     
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  19. seanreisk

    seanreisk Gawd

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    I wanted to like Bones, but anyone who has been to a lab where they store and study osseous tissue knows that it doesn't look like a cross between an emo night club and a Rodeo Drive shoe store. It was one of those shows that felt like the producers and writers researched their source material by watching other Hollywood productions.
     
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  20. Darth Kyrie

    Darth Kyrie n00b

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    Hulu is where the more adult-oriented programming will be. Do you think Disney is going to show Deadpool on Disney+?
     
  21. the-one1

    the-one1 2[H]4U

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    And all this time I thought it was going to end up being one huge media company called CNNBCBS. Instead it'll be Disney and Comcast
     
  22. Burticus

    Burticus 2[H]4U

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    DisneyCastUniversal
     
  23. sfsuphysics

    sfsuphysics I don't get it

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    Ok this 685k number is the amount that the networks charged to Netflix to allow them to stream it NOT the cost to make an episode. The actors were paid for doing the work, this was simple "syndication" money.

    As for the 685k number, if you have a show running 24 episodes a season thats over 16 million per season which is absolutely bonkers, now true a show like CSI may bring in viewers but 15 seasons of CSI and that doesnt include all the spin offs like Miami, New York, and the strangely amusing Cyber which died after I think one season and those VCs backing Netflix need to write out a heafty check to CBS to the tune of a quarter BILLION and that's just for a single show!
     
  24. Derangel

    Derangel [H]ard as it Gets

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    The more popular a show the more the rights cost. Imagine what Hulu pays per episode for something like Big Bang Theory.
     
  25. aaronspink

    aaronspink [H]ard|Gawd

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    The actual books that the show is based on are somewhat decent and have good science. IIRC, the author Kathy Reichs gave a talk at my HS in the 90s which was pretty interesting.
     
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  26. aaronspink

    aaronspink [H]ard|Gawd

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    For a top tier show, that actually pretty reasonable. Netflix paid over $100 for Friends licensing rights and Hulu reportedly paid $160 mil for Seinfeld.
     
  27. Qthulu

    Qthulu [H]Lite

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    Never watched bones..........thought it was crap
     
  28. zehoo

    zehoo Limp Gawd

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    Yep, pretty much been the norm for the entertainment industry for the last century, probably longer. And because everything is pretty consolidated most people can't challenge it for fear of being blacklisted from the industry.
     
  29. Uvaman2

    Uvaman2 2[H]4U

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    Hulu is starving for contents, badly.
    I pay 1$ a month with ads , and I am not sure that is a great deal .
    Question is also, did fox did the same move with all of their shows, or did they do it only with Bones, as to screw those people that would have gotten more of a cut?
     
    Last edited: Feb 28, 2019
  30. M76

    M76 [H]ardForum Junkie

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    That's a very cheap episode as far as tv series goes. GOT costs upwards of $10 milllion / episode.
     
  31. ChadD

    ChadD 2[H]4U

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    That isn't at all that crazy. Sure it sounds crazy to most of us not used to thinking about multi million dollar deals.

    Think of it this way... there are a handful of corner stone type shows that sell subscriptions. I mean I would never sit through 15 seasons of CSI or whatever it is... nor would most people, but the fact that a streaming service like Netflix has a handful of content like that on offer means they retain subs.

    Netflix has 148 million subs in the US... over the course of a year a small percentage people watch even a handful of those episodes it has to be looked as content that is retaining subs.

    For sake of argument imagine 2% of their US subs watch 3 or more episodes of which ever high dollar marquis level Network content we are talking about... that is 2.96 million eyeballs now if your a streaming exec you say ok a handful of those shows all overlap and lead to the average user retaining say 3 months of subscription they may not otherwise have maintained. (Netflix knows exactly what the real numbers are) Then they can say that content retained perhaps 70-100 million in revenue, depending what the actual profit on a sub is after deducting costs. At that point 10-15 million per season of a show with big name recognition... is likely a very good buy.

    Of course it also goes to show exactly why Netflix and Amazon are spending as much money as they can producing their own content. Still if they can get a show like Bones for 10-15 million a season, that isn't bad when Netflix is paying Comedians 10s of millions for small bits of stand up content... and it may seem insane but Netflix is producing multiple shows with production budgets of 7-10 million an episode. The crown cost 10 million an episode... Altered carbon was also north of 5. (and season 2 bringing in Anthony Mackie AC may top the crown as Netflixs most expensive ever production.)
    So anyway ya if you just spent 100 million making a 10 episode season of content about the queen of England.... 15 million for 20 episodes of bones is a steal. lol Heck the Netflix guys don't even seem that crazy anymore when you got HBO spending 10-15 million per episode for GOT... the main reason the final season is short 10+ mil per hour of content.
     
  32. NKD

    NKD [H]ardness Supreme

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    I actually used to watch this show alot lol. I fucking forgot where I left off, I moved at the end of season and never got around to it lol. Talk about feeling lost and not knowing where to start this shit. I am sure I could find out by wasting a few hours messing around with episodes and have it trigger my memory. Well that is for another day though haha.
     
  33. deton8

    deton8 Limp Gawd

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    I tried to watch a few episodes due to my man-crush on David Boreanaz from Angel. It was definitely crap.
     
  34. aliaskary77

    aliaskary77 Limp Gawd

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    they charge $685k to services like netflix and hulu, but thats not all the money they make per episode I assume. they charge other service the same or similar, cable companies, and tv stations. so income per episode could likely be 5 or 10 times that.
     
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  35. vegeta535

    vegeta535 2[H]4U

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    You will be floor to know shows like Game of Thornes cost upwards of 15 mil a episode to make.
     
  36. Jagger100

    Jagger100 [H]ardness Supreme

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    Corporations are naturally greedy. The real title should be.
    The "Bones" Ruling Exposes Judicial and Congressional failure to protect individuals and small entities from large corporations in the Streaming Era
     
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  37. BlueFireIce

    BlueFireIce [H]ardness Supreme

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    I never said that was the production cost. He was labeling it as greed, which one, these are companies, the whole point is to make money, and that fee is actually not greedy, the low one was the greedy one, as they had stake in both sides and setting it below cost meant they had an excuse to not pay anyone else.

    It's also not bonkers when you consider it's value, they are not going to license the show at that cost if they don't think they can't make money off of it from both parties.
     
  38. Todd Walter

    Todd Walter Gawd

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    Now that the arbitrator introduced a more realistic way to calculate FMV Hollywood could be in for a world of hurt if the IRS decides to use it.
     
  39. timberwolf

    timberwolf Limp Gawd

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    "Fox executives lied, cheated and committed fraud at the expense of the show's stars and executive producer Barry Josephson."

    People who have already been paid far too much already IMHO. A fucking actor shouldn't make more than a doctor. Don't even get me started on professional athletes.
     
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  40. daglesj

    daglesj [H]ardness Supreme

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    Got up to Season 5 or 6 with the DVD sets for the GF. Even she got tired of it by then.

    Thankfully.