WB’s Tax Write-Off Means Batgirl Can Never Get A Snyder Cut-Type Release

After Batgirl‘s shocking and unprecedented cancellation, Warner Bros. Discovery reportedly plans to use the movie as a tax write-off, which would prevent it from receiving an eventual release in the same fashion as the Snyder Cut of Justice League. Since Batgirl was a product of the pre-Discovery merger WB, the new company has more options at its disposal to recoup some of the production costs, which some have said would put an end to the nascent campaign to release Batgirl.

Thanks to a decade of mismanagement of WB and the DC movies, WBD CEO David Zaslav is taking drastic measures to turn the company around. After WB was acquired by AT&T in 2018, the plan was to turn WarnerMedia into a new streaming giant under CEO Jason Kilar, as a huge focus was placed on the recently launched HBO Max, and a number of big streaming movies were announced, including the $90 million Batgirl. The AT&T era only lasted a few years, and while HBO Max saw significant growth, a number of historical issues still plagued the company, particularly in the DC Films department. This led AT&T to sell the company to Discovery and the cancellation of numerous movies and shows, including Batgirl, as the new iteration of the company abandons the old streaming-focused strategy to prioritize big theatrical releases once again.

Related: Batgirl’s Cancellation Is A Consequence Of WB’s Bad DCEU Planning

There’s been a number of reports about the reasons behind the decision to totally scrap Batgirl, despite the movie already being deep into post-production, from poor test screening scores (despite testing similarly to other big upcoming DC movies) to perceptions that the movie is both too expensive to be monetized for streaming and too cheap to serve as a theatrical draw. One of the biggest factors, though, could be the fact that Warner Bros. Discovery’s post-merger tax options provide a unique option to totally scrap the movie as a tax write-off. Hollywood accounting and using movies as tax write-offs is nothing new, but most of those scenarios still see the movie released, which makes Batgirl particularly unique, especially when compared to Zack Snyder’s Justice League, which just saw a big release following a three-year campaign, despite WB’s insistence Snyder’s version of Justice League didn’t even exist.

How Hollywood Accounting Works

The term “Hollywood accounting” is thrown around a lot when referring to some of the wonky budget and tax strategies employed by movie studios. On the surface, Hollywood accounting is the same as accounting in any other industry, some unique factors related to the way movies are made, monetized, and taxed also open the doors to a lot of tricks and loopholes for studios to minimize costs as much as possible.

On a high level, accounting is simply the practice of recording assets and liabilities for financial, legal, and tax purposes. While every company has a natural incentive to maximize revenue and minimize expenses, when it comes to the accounting side, it’s generally the best strategy to itemize assets and liabilities in a way that minimizes revenue and maximizes expenses so the company can reduce how much profit it shares with stakeholders and pay the least amount of tax possible. Of course, a fraudulent record of assets and liabilities is illegal, but thanks to the complexities and nuances of finance laws and the tax code, there’s a lot of flexibility in the way accounting logs are put together, particularly in Hollywood.

A lot of fuss is made over big blockbuster budgets, with modern movies seeing costs reported as high as $250 million or even more, but those numbers rarely represent the true cost of a movie. Some movies see drastically inflated budgets compared to actual production costs thanks to arbitrary factors such as when a movie’s budget also includes expenses related to previous attempts to develop the same property, while others are under-reported if expenses can be assigned to other areas of the studio balance sheet. This leads to odd phenomena such as claims that Return of the Jedi wasn’t profitable, leading to actors like the man behind the Darth Vader mask, David Prowse, being denied residual payments. It’s not exactly clear how Lucasfilm’s accounting made that possible, but considering George Lucas’ constant tinkering and VFX work related to the original trilogy, it’s easy to see how expenses can continue to accumulate long after the movie’s release, offsetting any revenue that could have been considered profit.

There’s also a common studio practice of spending lots of money on movies that are expected to bomb so they can report a massive loss and use it to offset their tax burden. Historically this comes in the form of under-the-radar movies that get dumped in theaters or the home market, but there have been a number of cases where movies are shelved or outright destroyed so they can be used as a tax write-off. The practice all the way back to early Hollywood history when Charlie Chaplan destroyed the reels for his unreleased movies, Her Friend the Bandit and A Woman of the Sea as a tax write-off in the 1930s during one of his many encounters with the IRS. While Chaplin’s lost films never resurfaced, some movies that get declared a total loss eventually see the light of day thanks to a leak, but it would be tax fraud to claim a movie as a total loss and then release it for profit anyway years later.

Batgirl Represents a Rare Tax Opportunity For Warner Bros. Discovery

Normally, a movie like Batgirl might just see post-production expedited for cost savings and released without any fanfare so the studio can claim the lack of profit as a write-off. Unfortunately, since Batgirl was acquired as part of the Warner Bros. Discovery merger, there are far broader options in place to write off acquisition-related expenses, allowing them to claim the full cost of Batgirl‘s production expenses as a part of what Deadline reports is a total of $825 million attributed to “Content impairments and development write-offs.”

A confluence of factors attributed to Warner Bros. Discovery’s decision to shelve Batgirl and use it as a tax write-off. Since the studio is no longer prioritizing HBO Max growth in the way it was before, a $90 million Batgirl movie doesn’t look nearly as valuable for a streaming release, but since it was designed for the small screen, it reportedly wouldn’t suffice on the big screen alongside recent theatrical releases like The Batman or upcoming releases like Aquaman and The Lost Kingdom, Black Adam, or Shazam! Fury of the Gods. While Joker notoriously made over $1 billion from an even smaller budget than Batgirl, it was also designed as a potential awards contender, meaning Batgirl just didn’t make a clear fit for the release strategy.

Additionally, since Batgirl featured blended elements from the multiverse such as Michael Keaton’s Batman and J.K. Simmons’ Commissioner Gordon, previously seen opposite Ben Affleck’s Batman, its place in DCEU continuity isn’t clear, with the directors referring to it as a “spaghetti of Multiverses.” Of course, that doesn’t seem like a sufficient justification to cancel a whole project so many people had spent years of their lives developing, but WB already shifted away from the filmmaker-friendly approach appreciated by Christopher Nolan during The Dark Knight trilogy, notoriously taking projects away from directors like Zack Snyder, David Ayer, and Cathy Yan to produce more studio friendly “content,” leading Nolan, Snyder, and others to leave Warner Bros. to work with other studios.

How Batgirl’s Tax Write-Off Makes it Different From the Snyder Cut

Following the highly publicized release of Zack Snyder’s Justice League, the idea of a fan campaign to release Batgirl has gained some traction, although the scenario is significantly different thanks to the tax situation. Since the Snyder Cut was initially just an alternate cut of the version of Justice League released in theaters in 2017, the movie couldn’t be written off as a total loss. Additionally, it was reported Geoff Johns and John Berg refused to delay the movie so WB executives could keep their bonuses, but that also meant it was released prior to the completion of the AT&T acquisition, meaning the post-merger options being utilized by Warner Bros. Discovery were never available to the Snyder Cut.

Additionally, if the circumstances had been right to write off all of Justice League, it would have been a massive PR blunder given the popularity of the IP and size of the budget. Not only is Batgirl about a much smaller character with a much smaller budget, but it’s also the product of the previous Warner Bros. administration’s streaming strategy, and since most of those executives are no longer with the company (with only DC Films president Walter Hamada still lingering for now), the decision is reflective more of pre-merger failures instead of a sign of no-faith in the current Warner Bros. Discovery strategy.

While the movie can’t get a proper release now that it’s being used as a tax write-off, that doesn’t mean there’s no chance it’ll ever see the light of day. The chances are certainly slim, but unreleased films leak all the time. Also, as demonstrated by the very nature of Hollywood accounting, laws can be more like “guidelines” than absolute restrictions, and when Hollywood studios and high-priced lawyers get involved, it’s hard to say anything is “impossible,” although the notion of David Zaslav and Warner Bros. Discovery going to bat in such a big and costly way for Batgirl after shelving the $90 million project is far less likely than the movie simply being leaked. Unfortunately, since the movie didn’t finish post-production, any leaks won’t be a final edit with completed visual effects or any of the other post-production polish afforded Zack Snyder’s Justice League prior to its HBO Max release.

In the chaotic and ever-changing environment of Warner Bros. Discovery, and especially DC Films, the phrase “never say never” seems very appropriate; however, the barriers existing to Batgirl‘s release are far harder to overcome than the Snyder Cut was, and the Snyder Cut was called a “pipe dream” in the years before it eventually released. Hopefully, some miracle will eventually let the movie see the light of day. Still, if it does happen, the road to releasing Batgirl will look drastically different than it did for the Snyder Cut.