Revenue recognition: Principal and agent arrangements

This paper considers the assessment of the key principal/agent considerations in various practical examples, including physical books, eBooks, television content and film production. We hope this insight provides food for thought for media companies when considering whether they are acting as principal in new or existing routes to market.

Principal/agent assessments are becoming increasingly complex as digital transformation results in an ever-increasing variety of content formats and routes to reach the ultimate consumers.

For the media company- often the ‘content provider’ in such arrangements- the assessment of whether it is selling its content to a retailer/distributor, or to consumers via an agent, has a direct impact on whether it recognizes its revenues net or gross. This affects two key metrics: revenue and percentage profit margin. Careful selection and communication of appropriate revenue recognition accounting policies is therefore a key part of managing capital markets stakeholders.

This paper covers:

  • Physical books
  • eBooks
  • Television content
  • Film production

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