Last November, we learned that Warner Bros. Discovery, under the leadership of David Zaslav, the human equivalent of a lumpy motel pillow, was going to shelve yet another film for a tax write-off, this time tanking Coyote vs. Acme—a completed film about Wile E. Coyote suing the Acme Corporation for all their faulty products in which Will Forte stars as Coyote’s lawyer and if that sounds awesome, you’re not alone—despite that film already rating highly with test audiences. As I said before, WBD’s initial bout of sh-tcanning films for tax write-offs appeared to be a one-off “everyone loses here” situation due to WBD’s mountainous post-merger debt. However, it is clearly now part of WBD’s financial strategy, as their Q4 earnings call is on February 23, and it appears they are determined to wipe Coyote vs. Acme from the ledger in time for that deadline.
After the backlash to the news last year, WBD agreed to screenCoyote vs. Acme for other distributors, in what appeared to be an attempt to deescalate the situation—they had talent cancelling meetings—by allowing the film to be sold to someone else, rather than wipe it from existence (and yes, it would be literally deleted, as they cannot risk the film leaking, if it is shelved, it is actually going to be destroyed). But here's what we learned Friday, courtesy Drew Taylor at The Wrap: that whole “sell it to someone else” ploy appears to have been entirely in bad faith.
Warner Bros. Discovery demanded $70-80 million for the film, but crucially, they would not entertain any counter offers. Let me repeat: they would not entertain any counter offers. Paramount is reportedly interested in the film and has a plan including a theatrical release which would keep WBD involved to some extent, so they look less like anti-art losers, yet they would not hear the offer (presumably, a share of box office would also be kicked their way). Another key component—the studios interested in acquiring the film did not know this was the circumstance of their buying it. They sprung this on distributors after the fact, a “take it or leave it” cold offer no one can argue with.
So even if a studio like, say, Amazon or Paramount, came at WBD with an offer to pay less up front for the film, but share box office revenue in some way, WBD would not hear the offer, which is especially hostile in the current tough economic environment. Speaking to an industry accountant who has worked on other WBD productions, there are several ways a sale of the film could be profitable for WBD, all involving sharing some combination of box office and streaming revenue, but they have expressed no interest in exploring those options. Again, the whole thing looks like it was conducted in extreme bad faith—they never had an intention to sell the film, they just wanted to stop the bad headlines last November.
Welcome to February, when the headlines are worse.
There are a lot of angles to this, such as the legality of dumping what is essentially a business asset for a loss, to the cultural loss argument, to the simple economics of family friendly films. Let’s start with the last one—would Coyote vs. Acme even be profitable for WBD? History says yes. Family friendly films do not have to be good to make money. Case in point: Space Jam: A New Legacy. That film was released in 2021, during the previous WarnerMedia era under Jason Kilar and his “all films released day-and-date with streaming” plan that lost the studio the loyalty of Christopher Nolan. Like Coyote vs. Acme, Space Jam: A New Legacy is a family friendly live action/animation hybrid starring the Looney Tunes. That film, despite widespread awful reviews and a concurrent streaming release, made over $163 million at the pandemic box office. With a $70 million price tag, Coyote vs. Acme would need to make about $175 million to become profitable. There is every reason to believe Coyote vs. Acme—which again, was testing very well with audiences—would make at least that much in 2024. Yet we now live in a world in which Space Jam: A New Legacy is prophetic.
As for the legality of dumping an otherwise functional business asset, while you or I would not get away with deliberately burning down our business to claim the insurance money, movie studios can shelve films and TV shows and claim them as a business loss. As the industry accountant put it, “It is legal but pretty bankrupt, morally.” Essentially, the studio can tank the film as a capital asset by claiming that the cost of releasing it would never be recoupable. This was the case with Batgirl, which studio sources claimed was “unwatchable” and the studio would be more fiscally responsible to shelve it than spend even more releasing it only to see it bomb (they later released the much more expensive The Flash to historic losses).
Notably, the tax write-off is not a break-even move for the studio. They’ll only get about $35-40 million back as a write-off, so about half the film’s production cost. Meanwhile, they could sell it to someone else for $80 million and break even or engage in a co-release scheme and recover a percentage of their expenses up front and see more money roll in over time through theatrical and streaming revenue sharing. They COULD make money on Coyote vs. Acme, but going back to their February 23 earnings call, by claiming it as a total loss they can say they’re “saving” up to $40 million right now. Given how upsetting this is to the creatives a movie studio relies on to make their product, this is extremely short-term thinking, to put it mildly.
And then there is the cultural loss element. Essentially, David Zaslav and WBD are committing cultural theft and then charging the US taxpayer for it.
Projects get cancelled, even mid-production in the most unfortunate circumstances like Tim Minchin’s Larrikins animated musical, and it’s never fun for anyone. But what WBD is doing here is destroying a fully completed film ready to go to market. This is why people within the industry reacted extra negatively to Coyote vs. Acme as compared to the cancellation of Batgirl (incomplete and in need of additional photography) and Scoob 2 (almost but not quite done). This film is READY. It was supposed to be released on July 21, 2023, a date that ultimately went to Barbie. WBD is not killing off a film with mounting costs or an uncertain release timeline, they could put out Coyote vs. Acme tomorrow, if they wanted.
Which brings us to the crux of the issue—they don’t want to release this film. Maybe it’s what Tim Minchin called “schmuck insurance”—they can’t risk someone else releasing the film to acclaim and looking like schmucks. Or maybe it’s that they’re morally bankrupt ghouls feasting on the carcass of American cinema, or maybe it’s that people don’t like Zaslav and don’t want him at their after parties and that’s making him vindictive (allegedly). It doesn’t matter, at the end of the day, they seem determined to delete Coyote vs. Acme from existence rather than just let someone else handle the theatrical release.
And while it might be technically legal to tank a film for a tax write off, it IS theft, from us, the public, and worse, they’re making US taxpayers pay for the privilege of being robbed. It’d be like if the Galleria dell’Accademia di Firenze destroyed the David but continued to charge the Italian public for the privilege of not seeing the sculpture ever again. And if that comparison sounds hyperbolic, remember that the Looney Tunes are multi-generational cultural icons. People LOVE them, so much so that even a legitimately bad movie like Space Jam: A New Legacy can make nine figures at the box office. Are they important like the David? Arguably, no, but they are beloved, nonetheless. And we’re paying for the experience of not watching them.
So where does this leave us? Well, as individual consumers, we can decide if we want to keep supporting Warner Bros. Discovery and giving them our dollars to literally delete films from existence. But this is a bigger problem than individuals can truly affect, it’s going to take a combination of government action—more scrutiny on mergers and acquisitions by the US Department of Justice, for one, and Congress changing the tax code so that creative industries can’t be exploited like this any longer—and action from the most powerful creatives in the industry to hold WBD accountable for their sh-tty business practices.
Ryan Coogler and Michael B. Jordan closed a deal with WBD just days ago, and Paul Thomas Anderson set up his latest film there, not to mention Tom “Go To The Movies” Cruise signed a production deal with them, too. I’m not saying they HAVE to do anything, but Christopher Nolan taking his business elsewhere sent a HUGE message to studios about how to keep him happy, and it’s by guaranteeing him long, exclusive theatrical release windows. If the top-tier talent simply stopped working with Warner Bros. Discovery, it would send a similar message. They’re the ones who have the power to immediately and concisely tell WBD that these business practices are not welcome in their industry.
The pattern is now clear—David Zaslav and Warner Bros. Discovery will do something unpopular, like slash the operating budget of Turner Classic Movies or delete a film from existence, then say whatever the f-ck they have to in order to calm everyone down, then they’ll sign some high-profile talent deals, then they’ll shelve another film for tax credits, rinse and repeat. This is established now, and it’s on the filmmakers to stop f-cking falling for it. David Zaslav can renovate Robert Evans’ estate all he wants, he can shove his mug into as many red carpet photos as will have him; this man does not love cinema. Stop expecting him to treat you differently, filmmakers, because if it’s between your artistic expression and his bottom line, we know which one he’ll choose. David Zaslav told us who he is. It’s time to believe him.