The Joys of Entertainment Industry Accounting

‘Frasier’ back as legal drama [pdf]

How can a hit television series like “Frasier” gross $1.5 billion and yet be $200 million in the red?

That’s the issue at the center of a recent lawsuit filed against Paramount Pictures by two talent agencies seeking answers to how “Frasier” — the Emmy-winning NBC sitcom starring Kelsey Grammer that ran for 11 seasons — can claim that it never turned a net profit even though it was one of the most successful shows in television history.

[…] Such cases usually end in an out-of-court agreement, said attorney Pierce O’Donnell, who represented humorist Art Buchwald in the “Coming to America” case and went on to co-write a 1992 book titled “Fatal Subtraction: How Hollywood Really Does Business.”

“The studios typically do not want to air their dirty-accounting laundry,” he said. “Many a settlement of these kinds of suits occurs on the courthouse steps.”

But if the “Frasier” case goes forward, it’s sure to be followed by those who have long suspected that the industry’s odds are stacked in favor of the studio.