Chapter 804: Massive Losses

In Hollywood, studios were rarely eager to pay out profit shares. Delaying for six months to a year was standard practice, and dragging things out indefinitely until they ended up in court was not uncommon either. Because of this, the moment Harry Potter and the Deathly Hallows Part 2 left theaters, the agent representing the young Harry Potter actors and director David Yates—who belonged to a British talent agency—flew to Los Angeles, relentlessly hounding Robin Grande and the executives at the Harry Potter Studio for their money.

Since a box office profit-sharing agreement had been signed, it naturally had to be executed. The relevant laws were not just for show.

However, calculating the box office profits for both parts of Harry Potter and the Deathly Hallows took time.

Currently, as the distributor, Warner Brothers had collected an $800 million cut from the total box office revenue of the two films.

Based on this figure, the Harry Potter Studio began the relevant financial accounting.

The Harry Potter Studio was merely the production company. They had signed a distribution contract with Warner Brothers, and according to its terms, ten percent of the total box office for both parts of Harry Potter and the Deathly Hallows belonged to Warner Brothers as a distribution fee. That meant ten percent of the $2.4 billion, or roughly $240 million.

This amount would be deducted by Warner Brothers. Even if they were essentially paying themselves a service fee, no one could find fault with it.

Then came the films' marketing and promotional expenses. In the financial reports submitted by Warner Brothers, Harry Potter and the Deathly Hallows Part 1 incurred $120 million in these costs, while the related expenditure for Harry Potter and the Deathly Hallows Part 2 was $130 million.

These funds were also basically Warner Brothers paying themselves, as most of the channels used for the films' marketing campaigns belonged to Time Warner.

After deducting this sum totaling a massive $490 million, the remaining $310 million was transferred into the Harry Potter Studio's accounts.

But the individuals who had signed box office profit-sharing agreements still could not share in these funds, because the Harry Potter Studio also had to deduct the production costs.

In this regard, the Harry Potter Studio did not pull any tricks. Because the two films had been shot together, they had saved quite a bit on expenses. The total production cost for both parts of Harry Potter and the Deathly Hallows was $300 million...

However, it did not end there.

The Harry Potter Studio had not had sufficient funds to invest in the films. The $300 million investment came from a loan—a loan the Harry Potter Studio took from one of Duke's film foundations.

Over three years had passed since the initial loan, and the Harry Potter Studio needed to pay Duke's foundation $47 million in interest.

This was, of course, an expense generated by the left hand borrowing from the right. But the Harry Potter Studio was a financially independent company. Borrowing money and paying interest was not just a matter of course; it entirely complied with the relevant legal standards.

Therefore, from an accounting perspective, both parts of Harry Potter and the Deathly Hallows operated at a total loss at the box office.

Because of this, the core cast and crew members who had signed net profit-sharing agreements with the studio would not see any money at all.

"Losses?"

Inside the Harry Potter Studio, the British agent was absolutely furious after hearing Robin Grande's reply.

"How is that possible? How could this film possibly suffer a box office loss?"

He planted his hands on the desk and glared fiercely at Robin Grande, looking like a beast ready to devour someone alive.

Robin Grande ignored his attitude completely, pushing a thick financial audit report across the desk to the agent.

"This is the relevant financial audit data," Robin Grande said. "It contains a detailed breakdown of the box office revenues and all expenditures across all regions. If you do not believe me, you can hire professional lawyers and accountants to audit it."

From a legal and financial perspective, the Harry Potter Studio's actions were perfectly legal and sound.

Precisely because he knew this, Robin Grande did not care in the slightest what this agent thought.

"My apologies, but I have other work to attend to."

Hearing the obvious dismissal, the agent's fury only grew.

"You're taking this too far! Do not forget, they are Daniel Radcliffe and Emma Watson. They are insanely popular superstars right now."

Looking up, Robin Grande simply stared at him, saying absolutely nothing.

The agent's bluster, however, began to deflate bit by bit. Looking at the thoroughly unbothered Robin Grande, he seemed to gradually realize something.

Daniel Radcliffe, Emma Watson, and the other young actors under his agency had indeed become massive stars thanks to the Harry Potter Series. Saying the former two were insanely popular was not an exaggeration.

But the Harry Potter Series was already over. As for their value to the Harry Potter Studio...

Taking a deep breath, the agent suppressed his burning anger and said,

"This will not end here, Mr. Grande. Do you really want to see a lawsuit?"

Robin Grande gave a faint smile.

"This financial accounting fully complies with legal regulations. If you wish to sue the Harry Potter Studio, be my guest."

With that, he pressed the intercom, called his secretary into the office, and had the British agent shown out.

Neither Robin Grande nor Duke and Warner Brothers standing behind him cared in the slightest if this escalated into a lawsuit. From a legal standpoint, the Harry Potter Studio's accounting of the losses had absolutely no issues.

Hundreds of millions of dollars were at stake. Duke and Warner Brothers were not going to give that up easily, and naturally, the actors and their agents were not going to give up either.

They lobbied all around Hollywood to put pressure on the Harry Potter Studio, and even sought out relevant lawyers to prepare a lawsuit against the studio in the Delaware Court of Chancery.

Like the majority of Hollywood companies, the Harry Potter Studio was incorporated in Delaware.

"Did the box office really not generate a profit?"

In an office at Warner Studios, Joanne Rowling—who had flown over specifically from London—sat across from Duke with a coffee cup in hand and asked,

"Duke, doing this to Emma and the others is unfair."

"Jo..."

Looking at Joanne Rowling, Duke spoke slowly,

"I am sure you can get the statistical data from the Harry Potter Studio. You can have your own accountants and lawyers audit it."

Joanne Rowling did not reply.

"Our collaboration has always gone smoothly, and your share has never been short a single penny," Duke continued. "And I believe our partnership will continue."

Unlike the actors, Joanne Rowling held the right to a percentage of all related revenue. Box office profits and losses had absolutely no impact on her income.

"Partnership?"

Joanne Rowling looked at Duke.

"Of course." Duke raised an eyebrow. "Both Warner Brothers and I hope to keep working with you. Our collaboration has always been pleasant. Jo, you probably would not want to work with unfamiliar companies, would you?"

Regardless, Duke and Warner Brothers had never pulled any tricks with the income Joanne Rowling deserved.

After thinking for a few seconds, Joanne Rowling smiled.

"Of course I want to keep working with you."

If there had not been a platform like Time Warner, there would be no Harry Potter Series craze, and she would certainly not have such fame and net worth.

Joanne Rowling was no fool; she knew the importance of a media conglomerate to herself.

Between a media conglomerate and actors who basically held no value, choosing who to side with was not hard at all.

After that, Joanne Rowling brought up the actors' box office profit shares no more, and instead discussed with Duke some thoughts on her new work, Fantastic Beasts and Where to Find Them.

However, since the Harry Potter film series had only just ended, Fantastic Beasts and Where to Find Them was still in the conceptual stage. Adapting it into a movie was a matter for the future.

After seeing Joanne Rowling out, Duke directed his energy back to the prep work for The Avengers. He had only been reviewing storyboards for half an hour when Tina Fey knocked and walked in.

"Emma Watson is here. She wants to see you."

Hearing Tina Fey's words, Duke thought it over and said,

"Let her in."

A few minutes later, Tina Fey led Emma Watson into the office.

"Hello, Director Rosenberg."

She took off her sunglasses and proactively greeted Duke.

Duke gave her a nod and pointed to the chair across the desk,

"Have a seat, Miss Watson."

Once Emma Watson sat down, Tina Fey brought over a cup of coffee. She did not leave, taking a seat behind another desk in the office.

Duke was busy with work, so he directly asked,

"What is the matter?"

The two were merely acquaintances. Let alone having any sort of friendship, they barely even knew each other.

Clearly, Emma Watson held certain illusions about Duke,

"Director Rosenberg, I do not know if you have heard, but there are some problems with the contract I signed with the Harry Potter Studio."

Hearing this, Duke frowned slightly,

"My apologies, Miss Watson, but while I am a producer for the Harry Potter Series, it is in name only. Robin Grande and the Harry Potter Studio are responsible for the concrete operational affairs. You have the wrong person."

Emma Watson still wanted to say something, but Duke raised a hand and stopped her.

"I am currently preparing for The Avengers. What you are talking about has nothing to do with my work."

Without waiting for her to continue, he gave Tina Fey a look. The female assistant walked over and made a gesture of invitation.

Her brows knitting tightly together, Emma Watson looked at Duke in bewilderment, seemingly not having anticipated this outcome.

Perhaps the actress had previously been indulged too much by the Harry Potter crew and her talent agency; she was clearly still a bit naive.

It was just that this naivety was brought to the wrong place, and Duke would not be moved by her few words. After Tina Fey showed her out, he tossed the matter to the back of his mind and focused on the work for The Avengers.