Potter ‘Disapparating’ Forces Warner to Conjure Anew

Warner Bros., releasing its seventh “Harry Potter” movie tonight, faces a task even a wizard would find daunting: replacing a series that will have rung up $7.5 billion in ticket sales by the time it ends next summer.

With J.K. Rowling’s story about the teen sorcerers ending with an eighth film in July, Time Warner Inc.’s film studio will rely on DC Comics superheroes like Christopher Nolan’s Batman, “Sherlock Holmes” sequels and two “Hobbit” prequels to the “The Lord of the Rings” trilogy to help fill the void.

“We have been developing properties that are starting to look like franchises,” Alan Horn, Warner Bros. president and chief operating officer, said in a phone interview. “Is ‘Sherlock’ a franchise? I would argue yes. Is ‘The Hangover’ series a franchise? I would say, yeah, you could argue it is.”

DC Comics superheroes will form the backbone of the slate. The “Potter” films, along with series such as “The Lord of the Rings” and “Matrix,” have made Warner Bros. the top- grossing studio in seven of the past 10 years. In 2009, “Harry Potter and the Half-Blood Prince” accounted for 14 percent of Warner’s $2.11 billion in domestic ticket sales, according to Box Office Mojo, an industry website.

“I don’t think there’s one obvious successor,” said David Bank, a New York-based analyst with RBC Capital Markets. “If I were looking for it somewhere, it’s the DC catalog.”

Plans for DC characters include a “Green Lantern” movie in June 2011. The film stars Ryan Reynolds as a test pilot with super powers. The studio is developing a new “Superman” film, more “Batman” installments and movies based on Wonder Woman, the Flash, Green Arrow and Aquaman, Horn said.

Midnight Showings

The “Potter” movies, which introduced film fans to the game quidditch and wizardly travel known as “disapparating,” have provided the studio with stability in an unpredictable industry, said Bank, who rates Time Warner “outperform.”

More than 2,200 showings of “Harry Potter and the Deathly Hallows -- Part 1” were sold out as of Nov. 17, according to Fandango.com, the online seller. The movie, which opens at midnight tonight, may take in as much as $900 million, said Porter Bibb, an analyst with Mediatech Capital Partners in New York. The film cost about $250 million to make, according to the Internet Movie Database.

The series so far has produced a profit of about $1 billion when income from home-video, merchandise, games and other products is also tallied, and ranks as the No. 1 film franchise in worldwide sales, according to the studio. Warner Bros. yesterday was investigating how a portion of the latest movie was obtained by file-sharing Internet sites.

DC Films

Since New York-based Time Warner completed the spinoff of its cable TV service in March 2009, Warner Bros. has become a larger part of the company, doubling its share of revenue to almost 42 percent from half of that previously. Filmed entertainment contributed 14 percent of profit last quarter.

Time Warner, which also owns HBO and CNN, closed unchanged at $30.54 yesterday in New York Stock Exchange composite trading. The stock has gained 4.8 percent this year.

The company, which has owned DC Comics since 1969, made the unit part of its film division last year in a move that highlighted the importance of the characters for future films.

“We’re doing our best to get the DC properties lined up like airplanes taking off from the runway,” Horn said. A second “Sherlock Holmes” film with Robert Downey Jr. is scheduled for Dec. 16, 2011. A “Hangover” sequel reaches theaters May 26.

Not every DC entry has been a hit. “Jonah Hex,” starring Josh Brolin as a bounty hunter in the Old West, took in $10.9 million worldwide last summer. It cost $47 million to make, according to Box Office Mojo.

Part 2

“Deathly Hallows -- Part 2” is scheduled to open July 15 and will be in 3-D. The studio abandoned plans for a three- dimensional version of “Part 1” after running out of time.

Time Warner fell 3 cents to $30.51 at 4 p.m. in New York Stock Exchange composite trading. The shares have gained 4.7 percent this year.

Including “Deathly Hallows -- Part 2,” the series is expected to produce $7.5 billion in theaters, Warner Bros. Chief Executive Officer Barry Meyer said on a September conference call. The first six films averaged $903 million in global ticket sales, a total of $5.4 billion, according to Box Office Mojo.

Warner and Metro-Goldwyn-Mayer Inc. will try to duplicate that success with two films based on “The Hobbit,” the J.R.R. Tolkien book featuring characters who appeared in the “Rings” series. Peter Jackson, who directed “The Lord of the Rings” films, also is directing “The Hobbit.” The first movie is scheduled to reach theaters in 2012.

Animation Decision

The “Potter” movies were among the first Horn took on when he came to Warner Bros. from Castle Rock Entertainment in 1999. The studio and filmmakers considered turning the Potter books into an animated movie series, said Horn, who plans to step down in April.

After settling on live action, the studio asked Steven Spielberg to direct the first movie, Horn said. He decided instead to do the science fiction movie “Artificial Intelligence: A.I.” and director Chris Columbus was chosen to direct the first and second Potter movies.

“The thing about multiple books, a series, is there’s an obvious opportunity to capitalize on it,” Horn said. “But the first one had better be good. You don’t get many chances to have an introduction, a first meeting.”

To contact the reporter on this story: Michael White in Los Angeles at mwhite8@bloomberg.net.

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net.

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