Movie Studio Math

You have to love how movie studios do their math. I was reading an article about the upcoming Mission: Impossible 4 movie and it provided some interesting information about M:I3.

Although that movie clocked global box office of $400 million worldwide, DVD revenue of $200 million and an additional $100 million in television sales, the studio barely broke even. Cruise, guaranteed 22.5% of the studio's gross receipts, walked off with $80 million, leaving Paramount with nothing to gain from its $180-million production investment, said people with knowledge of the matter.

So, let's put the math down to make it easy:

$400 m
$200 m
$100 m
------
$700 million

Minus

$180 m (studio's production costs)
$080 m (Cruise's take from the gross profits)
--------
$260 million

Net profit

So, you are left with about $440 million in profit.

How, exactly, is the studio not making money on the deal? Did it spend over $440 million on advertising costs? How in the hell can they justify "barely broke even" when discussing $440 million?

Of course, this wouldn't be the first time studios have fudged the numbers. There have been a number of cases of those with profit shares in movies not being given a dime by studio and having sue... some of which are some of the most profitable movies of all time or, at least, their era.

This article shows a number of examples of the creative accounting done in Hollywood. I especially like this one:

Winston Groom's price for the screenplay rights to his novel Forrest Gump included a share of the profits; however, due to Hollywood accounting, the film's commercial success was converted into a net loss, and Groom received nothing.^[7] That being so, he has refused to sell the screenplay rights to the novel's sequel, stating that he "cannot in good conscience allow money to be wasted on a failure".

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Addendum

A friend pointed out that the profits from sales of DVDs do not necessarily go into the pockets of the studios (some do have distribution arms that produce and distribute DVDs, but many do not). So even taking that $200 million entirely out of the equation, you are still left with a profit of $240 million... still profitable.