‘Potter’ Magic Gives Warner Shot to Retain Box Office Crown for Fifth Year

“Harry Potter and the Deathly Hallows, Part 2” may collect as much as $400 million in U.S. ticket sales, positioning Warner Bros. to come from behind and take the 2011 box office crown from current leader Paramount Pictures.

With a record $169.2 million sales in the U.S. and Canada last weekend, the eighth and final movie based on J.K. Rowling’s books may help Time Warner Inc. (TWX)’s film studio retain the annual top spot for a fifth straight year.

“We’re going to overtake them,” Dan Fellman, president of domestic theatrical distribution for Burbank, California-based Warner Bros., said in an interview. “We’re going to give them a run for the money.”

Warner Bros., second in 2011 ticket sales in the U.S. and Canada behind Viacom Inc.’s Paramount, has 10 more releases this year, according to Box Office Mojo. Those include ‘Happy Feet 2,” a 3-D sequel to a 2006 animated film that grossed $384.3 million globally, and a “Sherlock Holmes” sequel with Robert Downey Jr. Paramount has eight, including “Captain America,” “Mission: Impossible” and Steven Spielberg’s “Tintin”

Warner Bros. has held the domestic lead for four years, including revenue from New Line Cinema, which once operated separately. The studio had collected $960.8 million in U.S. ticket sales as of July 17, second to Los Angeles-based Paramount’s $1.19 billion, according to Box Office Mojo. The studio will draw on characters such as Batman and Superman from its DC Comics library to fill the gap as “Harry Potter” ends.

Photographer: Warner Bros. Ent. /Courtesy Everett Collection

“Harry Potter and the Deathly Hallows, Part 2” may collect as much as $400 million in U.S. ticket sales, positioning Warner Bros. to come from behind and take the 2011 box office crown from current leader Paramount Pictures. Close

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Photographer: Warner Bros. Ent. /Courtesy Everett Collection

“Harry Potter and the Deathly Hallows, Part 2” may collect as much as $400 million in U.S. ticket sales, positioning Warner Bros. to come from behind and take the 2011 box office crown from current leader Paramount Pictures.

Paramount already has had a noteworthy 2011 considering that domestic ticket sales are down 7.2 percent and attendance is off 8.6 percent from a year earlier, according to data from Hollywood.com Box Office.

Paramount’s Slate

Paramount boasts the highest average sales for any major studio since 2007 at $117 million per release. The company expects to keep that lead this year, according to Katie Martin Kelley, a spokeswoman.

The studio, led by Chairman Brad Grey, is vying for leadership with a slate of 15 films, compared with 22 for Warner Bros. The annual box-office tallies also include revenue from movies that carried over from 2010.

“Definitely having ‘Potter’ out there allows Warner to pull even with Paramount over the long haul,” said Paul Dergarabedian, who tracks the box office for Hollywood.com. “By the time we get to the end of the year with the strong lineups those studios have, it’s going to be another horse race.”

Photographer: Hannah Hoffman/AFP/Getty Images

A Harry Potter fan reads "Harry Potter and the Deathly Hallows" before the midnight film premiere of "Harry Potter and the Deathly Hallows Part 2" outside the Uptown Theater in Washington, DC. Close

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Photographer: Hannah Hoffman/AFP/Getty Images

A Harry Potter fan reads "Harry Potter and the Deathly Hallows" before the midnight film premiere of "Harry Potter and the Deathly Hallows Part 2" outside the Uptown Theater in Washington, DC.

Warner wins high marks for creating franchises from films not based on books or other materials, said Matthew Harrigan, an analyst with Wunderlich Securities in Denver who recommends both Time Warner and Viacom shares.

“The Hangover” comedies, with a combined $1.03 billion in worldwide sales, are one example, Harrigan said.

‘Green Lantern’

Warner also has had misses this year. “Green Lantern,” based on the DC Comics hero and made for about $200 million, generated $146 million in worldwide sales, according to Box Office Mojo. That raises questions about whether comic book superheroes can be enduring box-office hits.

“Warner Bros. is hoping DC will take over after Potter,” said Tony Wible, an analyst with Janney Montgomery Scott LLC in Philadelphia who also recommends both Time Warner and Viacom. “The ‘Green Lantern’ may suggest there is more uncertainty over the move,” he said in an e-mail.

Warner has had hits with its Christopher Nolan-directed Batman films, including “Batman Begins” and “The Dark Knight,” which generated $1 billion in global ticket sales. Other DC-based pictures in development include “The Flash,” “Wonder Woman” and a new iteration of “Superman.”

Comic-Book Heroes

Paramount’s own comic-based superhero film, “Captain America: The First Avenger,” opens July 22. The movie may collect $57 million in the U.S. on its opening weekend and $160 million during its domestic run, based on the forecast of Box Office Media LLC’s Boxoffice.com. The picture, based on a Marvel comics character, cost $140 million to make, according to the Internet Movie Database.

The eight “Harry Potter” movies rank as the most- successful series. Since the first film in 2001, the movies have generated more than $6.9 billion in worldwide ticket sales, including $542.2 million for “Deathly Hallows, Part 2” after one weekend.

The studio’s profit from all “Harry Potter” products, including DVDs, video-on-demand, video games and consumer products, before this weekend’s release was about $1 billion on $19.7 billion in sales, according to a person familiar with the situation.

Time Warner shares rose 65 cents, or 1.8 percent, to $35.45 yesterday in New York Stock Exchange composite trading and have gained 10 percent this year. Viacom shares rose 90 cents, or 1.8 percent, to $50.31 and have increased 27 percent this year.

“Potter” products will continue to contribute for years to come, Harrigan predicts.

“There will always be an evergreen ‘Harry Potter’ component to Warner earnings, but it will never be as strong without an original movie,” Harrigan said. “It does beg the question, how do you replace that?”

To contact the reporters 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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