Enron and Hollywood Accounting
We watched “The Smartest Guys In The Room” Enron movie tonight on the NetFlix on-demand service. First of all it was a bit ironic watching a movie that covered the BS Blockbuster movies-on-demand (via the Enron “bandwidth trading system”) on Netflix’s real version.
One thought occured to me- the type of schemes that Enron used to do fake accounting to pump up their profits remind me of the kind of schemes that the Hollywood studios use (in reverse) to make sure that films never have a profit and thus they don’t have to pay out percentages to various folks who have a stake in the film. For those that aren’t familiar with it, having a percentage of the profit in a typical film has become a real joke since even films that rake in $100s of millions of dollars world-wide somehow always end up not making a profit. Strange that the studios keep paying for them when they never make any money?
Anyway, post-Enron and in the Sarbanes Oxley accounting environment, I’m amazed that they still get away with this stuff? Most of the studios are big public companies. I thought with all the new rules you weren’t supposed to be able to pull anything like this off anymore? I wonder if the execs and directors of those media companies are personally liable to criminal charges if irregularities are found now and if so you would think they would start changing the system.
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