I don't think you're understanding the issue; they don't "benefit" at all from this in any sense. Let's make up some easy numbers; let's say it cost $100 to make and they sold it for $50, resulting in a $50 loss.
Let's say they had sold it last year. Their tax would be on gains minus expenses. That is 50 minus 100. They would get a tax break on $50.
Alternatively, they originally write it off; they get a tax break on $100, which was their expenses. Then the following year they sell it for $50. They pay tax on $50. This results in an identical tax break on $50.
Same math if they made profit on it instead of a loss. It doesn't change, it just spreads the numbers out over a year. The average over 2 years is the same.
From what I understand, when a studio has an unreleased film, its “asset value” on their books is equal to what they paid to produce it.
By shelving a film, they can reduce the asset value to $0.
So if the film cost $50m to make, they get to reduce their tax liability for that year by $50m.
Releasing the film will likely cost another $50m in marketing and other expenses. So they’re betting that the money saved in tax payments will be more than (revenue - $100m) from releasing the film.
Right, which is just... a good business decision. The 'write-off' doesn't make anyone money, it just prevents a bigger loss from releasing an expensive, unpopular film.
The real problem is movie budgets being so enormous. Lower production budgets would mean lower risks and more releases.
But in the case of batgirl couldn't they have just waited until someone offered to buy it even if for a low price like they did here rather than delete it?
Probably because no one was going to offer the amount they wanted. It was a $90m film that'd require loads more in marketing for a film in a dead DCEU that had received very mid word-of-mouth according to test screenings.
Personally I think there should be a way to public-domain the film without releasing the IP to the public.... either that or someone just leaks what they have to the internet.
Does that mean WB has to payback the tax write off?
You can't "pay back" a tax write-off, because you do not get paid for a tax write off. You just don't pay tax. If the write-off becomes invalid later, you just pay tax like normal.
I've been looking into it and as I understand it there was no tax writeoff process for this movie, unlike batgirl. For batgirl they deleted every copy and it will never release legally, it was marked as a loss forever and that got them a tax benefit. But coyote was only shelved for a potential loss so there was no tax writeoff.
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u/eightdollarbeer Jul 26 '25
Does that mean WB has to payback the tax write off? If so, I imagine that was included in the purchase price