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Originally Posted by darryl
That's what I thought about the figure too. I've had some experience with internal allocation of overheads and other costs, and have come across more than a few cases where the allocation is not meant to be accurate but serves some other purpose, such as minimising taxation or achieving some political aim.
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Yes, It can be a morass.
Yet another old friend had a first job out of college working for a magazine publisher that produced men's magazines with lots of color pictures of nude women. He realized very quickly that the official numbers were works of fiction. The magazine publisher was a wholly owned subsidiary of a Mafia family, and existed as a way to launder cash for the illegal sides of their business. (The VP running the outfit had a portrait of John "the Teflon Don" Gotti on his office wall till Gotti finally got busted and jailed.) They were deliberately doing things as inefficiently and expensively as possible to give themselves more opportunity to launder funds.
But even if there are two sets of books, someone needs to have a clear idea of what the costs really are.
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It does occur to me that players in an industry without price competition would not exactly encourage regulatory attention by publicising very high costs to all and sundry, nor would this encourage potential new entrants. And, of course, the actual figures are closely guarded secrets.
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Just to clarify, do you consider publishing to be an industry
without price competition?
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Thanks for your reply. It is not the practice of allocating overheads which is of course essential which I question. It is simply this particular figure. I should have been clearer.
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You were clear enough.
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Dennis