Why does Batgirl’s cancellation generate zero cents?

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To be perfectly clear, Batgirl being canceled by Warner Bros. Discovery is a bad thing. It doesn’t bode well for anyone who enjoys movies, streaming or otherwise, and it’s a blow to the talented artists who worked so hard at every phase of the film’s production and the diversity this character represents in particular.

As far as we’re concerned, Kevin Smith put his finger on it highlighting the fact that “canceling the Latina Batgirl movie is an incredibly bad picture” even “if the movie was absolutely fucking shit” which he doubts was the case anyway.

Since its cancellation, there has been a handful of reasons offered and excuses made for what is, creatively speaking, a very disappointing move on the part of the Newly merged Warner Bros. Discovery. Get ready for a little accounting, because we’re going to take a look at the financial implications of dropping Batgirl and how they compare to a hypothetical release of the movie.

All DC Movies and Series Affected by the Warner Bros. Discovery Merger

Batgirl and the ‘tax stuff’

One reason that has been dismissed as a footnote in all accounts of Batgirl’s cancellation is the tax incentive of reporting a loss. We’ve done our own taxes before, so if the IRS asks, we have a basic understanding of how this works. But just in case, we talked to a handful of people in the entertainment industry to help us with our napkin math, from high-level executives to production accountants at different studios. There’s been quite a bit of information about this, and we should say that estimates of what Warner Bros. Discovery is actually saving have been a bit all over the place. It’s hard to say for sure, but here’s what we came up with.

In simple terms, a loss can be deducted from a business’s taxable income, so by claiming the money they already spent on Batgirl as a loss, some $90 million according to most reports, Warner Bros. Discovery’s revenue for the year is down that same amount. They are 90 million dollars for which they will not pay taxes.

Now, that doesn’t mean $90 million will ever show up in WBD’s pocket again. The federal corporate tax rate is 21%, which means your tax bill will be reduced by $18.9 million. On top of that, the state of New York, where Warner Bros. Discovery is headquartered, also gets a cut of a company’s profits and its corporate tax rate is 7.25%, or another $6.5 million. Basically, that means Warner Bros. Discovery will pay Uncle Sam $25 million. less simply by unplugging Batgirl.

Essentially, this means that WBD is losing $65 million instead of the full production budget of 90 million. But throwing away a nearly finished movie so they could lose $65 million raises another question… How else could WBD make the same $90 million loss on their Batgirl taxes if they had decided to finish and release the movie?

How to find an ‘L’ of $90 million

Well, he says, pushing his glasses up his nose, let’s talk about what might have happened if the movie was released in theaters instead of just on HBO Max.

The first thing is that they would have to finish it. There are several reports that test projections it didn’t go well and the visual effects weren’t complete. This could mean reshoots, more editing, more effects work, and more delivery costs to get the movie into theaters. So after speaking with the same studio sources, we feel safe in assuming that it could cost another $10 million to complete the film.

But once you have a finished film, you have to tell people about it; Slapping Batgirl across buses, billboards, TV commercials, and YouTube pre-rolls doesn’t come cheap. So, below, we add another number gleaned from our conversations with our friends at the studio: around $20 million to market the film.

Adding those numbers to the $90 million already spent brings the total cost of Batgirl to $120 million. So really, all Batgirl needs to bring home from theaters is $30 million to offset the costs of finishing and marking her up.

Even if Batgirl really was bad, she can’t be worse than Morbius, and that stack managed to steal $160 million from the people of Earth.

Now you might be thinking, $30 million is nothing in box office numbers, and you’d be right. But it’s not that simple. Movie theaters don’t show free movies. They take a part of the ticket sales, which is usually around 50%. This means that Batgirl actually needs to earn $60 million at the box office to earn $30 million for the studio.

In short, WBD would have to spend $30 million and split $60 million made at the box office just to be able to lose $90 million on Batgirl to be in the same position as now just killing the movie.

For context, this August bullet train made $65 million worldwide in its first four days. Meanwhile, 2022 also saw The Northman, a dense Viking epic from independent author Robert Eggers, which drew 68 million worldwide, and that film largely failed to feature the The Return of Michael Keaton’s Bruce Wayne.

But even if Batgirl really I was bad, he can’t be worse than Morbius, and that stack managed to steal $160 million from the people of Earth when he finished his relaunch fueled by memes. Surely Batgirl could have kept pace with Morbin’ Time in a race to be the biggest tax deduction.

Now, if they had released the movie exclusively on HBO Max, as they intended, at $15 a month (which they don’t have to split with the theater chains), it would have taken 2 million new subscribers to hit that $30 million mark. . Or maybe only a million people sign up and forget to cancel before the second billing cycle arrives. But, you know, good luck proving that it was for Batgirl. In truth, it’s more likely that even if someone signs up for Batgirl, they’ll keep the other programming he’s paying for…so streaming revenue gets intensely fuzzy very quickly.

And remember, this whole exercise is just to see what it would take for a movie to lose $90 million. Maybe the movie would overcome the estimates we’ve made here if given the chance in theaters. Maybe it’ll make 100 million instead of 60 at the box office, and you’ll be left with 70 million instead of 90. That’s not out of the realm of possibility, and in theory you’re $20 million better off then. Then why No just drop it?

this industry sucks

The industry has always been notorious for hiding profits. Wildly successful movies may never earn a dime according to their balance sheets thanks to infamous “Hollywood accounting.” So if a loss is what WBD needed, there are traditional ways to do it.

To pick an example, Warner’s own balance sheet Harry Potter and the Order of the Phoenix Shows that the film lost about 160 million dollars in 2007. By Mojo box officeBudgeted at $150 million, the film grossed close to $1 billion worldwide. So I do not know.

What this exercise seems to show, though, is that canceling Batgirl couldn’t have been about the money. Frankly, based on these numbers, it sounds like Batgirl might have accidentally gotten her budget back and then some. The financial benefit of ending the film is now secondary to the decision, a silver lining for a CFO somewhere.

More than anything, what appears to be Batgirl’s cancellation is a new regime cleaning house and doing a complete reboot of the DCEU.

More than anything, though, what appears to be Batgirl’s cancellation is a new regime cleaning house and doing a complete reboot of the DCEU. CEO of Warner Bros Discovery David Zaslav was recently quoted as if to say, “This idea of ​​expensive movies going straight to broadcast: We can’t find an economic case for it, we can’t find an economic value, so we’re making a strategic shift.” In addition to this emphasis on theatrical release rather than streaming for his DC properties, had Zaslav felt the film was closer to an expensive TV episode than a big-screen movie, it seems there would be more will. to finish her off.

Which are two different answers, but probably only part of it. The other part lies in the dismal macroeconomics of 2022. If you haven’t been reading the news lately, it sounds like a economic recession is on the horizon, and Zaslav and company may be betting on tightening their belts in homes around the world where the first casualty may be streaming subscriptions. Meanwhile, the movie industry and movie theater chains have historically proven to be recession-resistant at a minimum, and recession-proof if you’re willing to be generous.

DC Extended Universe: All Upcoming Movies

The decision to cancel an entire movie so close to completion took everyone by surprise. It’s a drag to say the least. But while we search for some kind of logic behind this, we can all look away from finances. The “savings” they’re seeing in walking away from a $90 million investment is a drop in the bucket for a company that’s traded in the billions, and more than that, there are very realistic scenarios where the movie could have made more. of those savings. Regardless of the reasoning, be it a strategic shift or a lack of faith in the product, it’s pretty safe to say that money wasn’t a consideration. And respect for the artists who worked on Batgirl was also not a consideration.

Anyway, Leslie Grace and the directors Adil El Arbi and Bilall Fallah and the craft service people and the stuntmen and the composer and any number of people who would eventually be found in the credits; by the way, the main end credits you normally see. in a superhero movie? Those fancy animated sequences can cost upwards of $300k, so add that to the calculus – everyone deserved better.

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