For example. Let’s say the movie costs $100 to make. And they value the movie at $100 based on future sales. And they have $1000 in profit from other stuff they do.
So the cost of$100 and value of $100 offset each other so they pay taxes on the full $1000. Tax rate is 21% so they pay $210 and keep $790.
But if they write off the value to zero that means they have a $100 loss. So you subtract that from the $1000 of profits and pay taxes on $900. Thats $189 in taxes. You subtract that from $1000 and keep $811.
So if they don’t write it off in scenario1 they keep $790, but if they write it off they keep 811.
They still spent $100 and made nothing so that’s bad. But they are able to keep an extra $21 so really only lose $79.
Losing $79 is less bad than losing $100.
Less bad than what? Apologies if it was outlined in the article, I can't get it to load over my crap connection.