Brian Myers | Posted
The company’s total spending on the latest Ant-Man movie exceeded box office revenue despite its massive budget, according to recently released financial information from Disney. On the surface, this turn of events may seem like a setback for studio brass, but there’s more to the loss than meets the eye. The company was able to make a net profit of less than $90,000 by taking advantage of financial incentives provided to studios by the British government.
didn’t lose money
Ant-Man and the Wasp: Quantum Mania Debuting last February, the film was a far cry from other previously proven box office smashes in the Marvel Cinematic Universe due to its huge budget, disappointing villain, and VFX scandal. The film grossed just over $476 million in ticket sales, with production studio Disney accounting for half of that. However, taking into account the cost of making the film, these cuts meant that Mickey Mouse and company had to take a loss of $92.05 million.
Typically, movie studios hide their profits and losses in their overall budget, including other films. Being able to avoid itemizing specific movie budgets makes each effort seem a little better, even when studios are sitting on box office bombs. The studio’s decision to film in England had two distinct implications for the company. This was full legal disclosure and cash refund of the entire budget under UK law.
Save with UK tax deductions
When the decision was made to film the latest Ant-Man movie in the country, Disney had to file financial statements with disclosures covering everything in the budget, from material costs to each employee’s salary contribution. According to these financial filings, Disney earned $327 million in revenue and $2.8 million in other income. Total costs were reflected at $388 million, with a pre-tax loss of more than $58 million.
However, Ant-Man’s studio was able to make a small profit thanks to tax credits provided to studios by the UK. The government reimbursed Disney up to 25.5% of what it actually spent nationwide, resulting in a credit of $58,281,661. When analysts reached their final results, the budgeted figure reflected Disney’s net income of $88,236.
Government demands transparency
To qualify for a refund, at least 10% of total production costs had to be spent within the UK. Film companies are planning to set up additional film productions in the country to demonstrate their financial standing. This separate company would be “responsible for pre-production, principal photography, post-production” and the final edited version delivered.
These rebates can be quite high, forcing the UK government to force all studios looking to take advantage of the tax credit to show all their cards. A large company like Disney filming set? Ant Man For sequels or smaller studios shooting independent feature films, budget rules apply across the board. Films that make a profit get a refund with a credit against taxes owed, while films that fail get a cash refund for the money spent on making the film.
