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Answerman - Why Do Japanese-Owned Publishers Still Have To Pay For Licenses?




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John Thacker
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PostPosted: Mon Oct 23, 2017 11:29 am Reply with quote
It's also pretty important for how corporate income taxes are assessed. Japan's corporate income tax statutory rate is just about 30% versus the US rate of 40%, so it makes sense for the US subsidiary to pay the Japanese conglomerate so that the Japanese conglomerate makes more profit (taxed at 30%) and the US subsidiary makes less (taxed at 40%), so fewer taxes in general are paid. You don't want to pay so much that the US subsidiary always runs at a loss (an occasional loss is fine, so long as it is canceled out by profits in other years that it can be deducted from). (You hear a lot about how multinational US companies don't pay the high statutory rate on corporate income taxes, and that's true, but one big way that they do it is by having subsidiaries in foreign countries be the ones that are making the profit rather than the US subsidiaries. That's a reason why the companies that do pay high US corporate income tax rates are the ones without extensive foreign operations, such retailers like Walmart or insurance companies (which are all state regulated and can't move money around.)

Even aside from making people unhappy, it's important for internal accounting, such as when a company tries to determine whether it could make sense to outsource or partner with another company rather than handle it with a subsidiary.
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maximilianjenus



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PostPosted: Mon Oct 23, 2017 1:37 pm Reply with quote
I did consulting for a company that had subsidiaries; they would move their product around between them without paying any fees and it was horrible and caused a lot of problems, so yeah, it's a bad idea to skip the due process.
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configspace



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PostPosted: Mon Oct 23, 2017 5:52 pm Reply with quote
Quote:
Things are different in the case of Aniplex USA or PONYCAN. Discs released by those companies are thought of as extensions of the Japanese publishing, and so an arrangement for distribution in North America is considered ahead of time. The production committee isn't expecting to get a big license fee for North America; it's expecting that Aniplex or Pony Canyon will distribute the title there, themselves, and that they'll get paid based on how well the title does.

I guess these situations explain the much higher than standard pricing--somewhere between premium US and Japanese--if not outright import editions prior to any english dubs from them? In contrast, Viz (owned by Shogakukan-Shueisha) and Kodansha US still uses standard US retail practices.
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Aphasial
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PostPosted: Mon Oct 23, 2017 6:19 pm Reply with quote
maximilianjenus wrote:
I did consulting for a company that had subsidiaries; they would move their product around between them without paying any fees and it was horrible and caused a lot of problems, so yeah, it's a bad idea to skip the due process.


Yep. Ultimately, the leadership of the subsidiary can only complain in their reports so much that they've been tasked with running things at an operational loss for so long before they start to feel heat. And if the subsidiary isn't wholly owned but has multiple investors (even if the owners are other sister companies, or multiple parents), it's a lot more important for the subsidiary and parent president(s) to do their fiduciary duty.

This extends to all media industries to some extent though. Plenty of Hollywood films have ended up in litigation because licensing shuffling ends up booking little or no profit for a film on the books and the directors, actors, and others who might have negotiated residuals from that end up stiffed. If I recall, that was exactly the case with the Lord of the Rings trilogy -- New Line Cinema recorded it as a loss even though it was a gangbusters success that more or less saved the company.
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Polycell



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PostPosted: Mon Oct 23, 2017 6:43 pm Reply with quote
configspace wrote:
I guess these situations explain the much higher than standard pricing--somewhere between premium US and Japanese--if not outright import editions prior to any english dubs from them? In contrast, Viz (owned by Shogakukan-Shueisha) and Kodansha US still uses standard US retail practices.
Manga prices are basically the same on both sides of the Pacific, so there's no oddities there. When it comes to anime, though, let's remember Bandai also had a somewhat similar situation: it was basically a US company owned by Japanese company with few special benefits(not that Viz has all that many in its stable to begin with).
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CR85747



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PostPosted: Tue Oct 24, 2017 5:35 am Reply with quote
A similar arrangement exists at the BBC, where BBC Worldwide has to pay the parent broadcaster full price for shows in order to preserve value for the license-fee payer.
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Kadmos1
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PostPosted: Tue Oct 24, 2017 9:53 am Reply with quote
This kind of reminds of the sneaky business practice that is Hollywood Accounting. That is, Movie Company A might be legally separate from Movie Company B, but Company A will pay "itself" through a shell company until Company A appears in the red.
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