Harry Potter Inc: Warner Bros’ $21B Empire

Final Harry Potter Already Wrecking Foreign/Domestic Records

EXCLUSIVE: With history’s most successful movie franchise coming to an end with the Friday release of Harry Potter And The Deathly Hallows Part 2, it’s a good time to ask: How much loot was conjured up en masse? And the answer is startling. You can find about $21 billion by adding up gross sales the series has generated since 1998 from films, videos, video games, licensed merchandise, and books. (See detailed breakdown below.) Time Warner has already seen an estimated $1 billion in profit from the films and its work as custodian of a global entertainment brand. The tally should continue to grow, probably by a lot, with the release tomorrow of Warner Bros’ Harry Potter And The Deathly Hallows – Part 2 — although Hollywood accounting has a way of making profits vanish. (Here‘s how the black magic worked for Harry Potter And The Order Of The Phoenix in a studio accounting statement obtained by Deadline’s Mike Fleming. Though the film grossed $938.2 million worldwide, the document conveys that the film is still $167+ million in the red)

Things have turned out so well that it’s easy to forget what a huge risk Warner seemed to be taking more than a decade ago when it bought the Potter rights. The studio didn’t know how the series would end. And J.K. Rowling, who wrote the series, was a wild card. Many wondered whether U.S. audiences would warm to the all-British movie cast that Rowling required.  “The casting of the kids was the biggest place where it could have gone wrong,” Warner Bros Pictures Group President Jeff Robinov tells me. Some Warner executives also chafed at Rowling’s demands that there be no Potter-related fast food offerings and that Warner show restraint in product licensing. “I can only say now to all the parents out there, if the action figures are horrible, just tell the kids that I said don’t buy them. Sorry, Warners,” Rowling told a 60 Minutes interview.

Virtually everybody agrees now that Rowling was right to keep the franchise faithful to her vision. And Warner was right to embrace that vision down to small details in licensed merchandise. “We had a guideline that was perhaps frustrating to our colleagues in Consumer Products but has held well for us as a company which was to look to create artifacts, not souvenirs,” DC Entertainment President Diane Nelson tells me. She oversaw the Potter franchise from the beginning. Marketing plans also adapted as fans became older and the Potter saga grew darker. “We held on to fans as they aged in a way that’s never been seen before,” Nelson says to me.

Here’s how all of the Potter business decisions have turned out so far:

Movies. The first seven films accounted for nearly $6.4 billion in ticket sales, with 68% of the total coming from overseas, according to Box Office Mojo. The only other franchise that comes close is James Bond: Its 23 films beat Potter if ticket prices are adjusted for inflation.

Home Video. Consumers have spent nearly $3.9 billion globally — with 44% of that coming from the U.S. — to buy 302 million videos of the first six Potter films, Warner says. IHS Screen Digest says that Warner probably collected about $1.5 billion just from domestic video sales, which would more than cover the studio’s estimated $1.4 billion production budget for all eight films. Read More »

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STUDIO SHAME! Even Harry Potter Pic Loses Money Because Of Warner Bros’ Phony Baloney Net Profit Accounting

Mike Fleming

EXCLUSIVE: Signing a deal that makes anyone a net profit participant  in  a Hollywood movie deal has always been a sucker’s bet. In an era where studios have all but eliminated first dollar gross and invited talent to share the risk and potential rewards, guess what? Net profit deals are … Read More »

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