Although Christopher Nolan’s gritty Batman trilogy generated high returns for Time Warner over the years, its attempt to reintroduce Superman fell flat. Other movies such as Green Lantern, Jonah Hex and Catwoman have been disastrous.
With some of the most recognizable characters in comic book history, why has Time Warner Inc (NYSE:TWX) failed to pull all of its biggest characters together into a long-discussed Justice League movie? Why is Time Warner Inc (NYSE:TWX) sitting on top of a gold mine but having so much trouble rounding up the miners?
Warner Bros. vs. Buena Vista
In a previous article, I discussed how fast The Walt Disney Company (NYSE:DIS)’s media empire is growing compared to Time Warner, which was once the largest media conglomerate on the planet. Last quarter, Time Warner’s Film and TV entertainment division, Warner Bros., reported a 4% decline in revenue to $2.7 billion. Its net income grew 23% to $263 million, roughly 60% of which was attributed to its films. By comparison, The Walt Disney Company (NYSE:DIS)’s studio entertainment division posted 13% top line growth to $1.3 billion, which means that its Buena Vista studio is actually larger than Warner Bros.’ movie studio.
In 2011 and 2012, Warner Bros. faced a major problem – two of its core franchises, Harry Potter and The Dark Knight – were coming to an end. At the same time, The Walt Disney Company (NYSE:DIS)’s Marvel heroes were united in a series of profitable standalone movies that culminated in The Avengers, which has grossed $1.5 billion to date. Let’s compare the box office revenue of Marvel and DC films over the past few years.
Disney/Marvel | International Gross | Warner Bros./DC | International Gross |
Iron Man | $585,174,222 | Superman Returns | $391,081,192 |
Iron Man 2 | $623,933,331 | Batman Begins | $374,218,673 |
Iron Man 3 | $948,993,000 | The Dark Knight | $1,004,558,444 |
Thor | $449,326,618 | The Dark Knight Rises | $1,084,439,099 |
Captain America | $368,608,363 | Green Lantern | $219,851,172 |
The Incredible Hulk | $263,427,551 | Watchmen | $185,258,983 |
The Avengers | $1,511,757,910 | Jonah Hex | $10,903,312 |
Source: http://www.boxofficemojo.com/
Although Marvel’s returns look impressive, only two of these films were directly produced by Disney’s Buena Vista studios – Iron Man 3 and The Avengers. After Disney acquired Marvel in 2009, Marvel’s prior agreements with Comcast Corporation (NASDAQ:CMCSA)’s Universal and Viacom, Inc. (NASDAQ:VIAB)’s Paramount, which had previously produced its films, eventually ended. Starting with The Avengers, The Walt Disney Company (NYSE:DIS)’s Buena Vista took complete control of all of its related franchises. Meanwhile, all of the mentioned DC Comics films were directly produced by Warner Bros.
With sequels on the way for Thor, Captain America and The Avengers, The Walt Disney Company (NYSE:DIS) has already signed the majority of its main stars into multi-film deals. Meanwhile, Time Warner Inc (NYSE:TWX)’s only big DC Comics release is its Superman reboot, The Man of Steel, which is scheduled to be released this June. Meanwhile, Nolan’s Batman trilogy has concluded, and further possible sequels will not star Christian Bale. Green Lantern, meanwhile, was so poorly received by critics and the audience that any future release will likely be another reboot. Jonah Hex and Watchmen inhabit different parts of the DC Universe altogether, which are not related to Superman or Batman.
A lack of integration is destroying the DC movie universe
The impressive thing about Marvel’s ability to connect its franchises together into a cohesive Marvel movie universe is that it was done with the lack of several of its key franchises. Prior to Marvel’s acquisition by Disney, the movie rights to Spider-Man were sold to Sony Corporation (ADR) (NYSE:SNE)’s Columbia Pictures division, while the rights to X-Men, Fantastic Four and Daredevil were all sold to News Corp.‘s 20th Century Fox. In other words, Marvel assembled the Avengers universe, led by Iron Man, with one hand tied behind its back.
Meanwhile, Time Warner Inc (NYSE:TWX) has all the movie rights to its main DC characters but seemingly no way to assemble them into a single universe. While Marvel’s films have Samuel L. Jackson’s Nick Fury popping up in different films to recruit the Avengers, Christopher Nolan’s Batman films were not connected in any way to Green Lantern or Superman. In fact, both Nolan’s Batman and the new Superman film, directed by 300 and Watchmen director Zack Snyder, actively attempt to be grittier and more grounded in reality than their campier source material. It’s as if the directors dread the concept of Batman teaming up with Superman or Green Lantern, which occurs frequently in the print comics and cartoons.
Without the willingness to create a film where Batman and Superman team up, representing a merging of the more realistic and more magical sides of the DC universe, then a Justice League film, which could consist of Green Lantern, Wonder Woman, Flash and Aquaman, would be impossible. This has worked before in Warner Bros.’ animated series, but a live action version would be a monstrous undertaking. With Christian Bale and Christopher Nolan out of the picture, a new Batman must be cast, and new films featuring Wonder Woman and the other characters would have to be made.
In other words, if Time Warner wants to replicate Marvel’s success, it has to create an overarching story over multiple franchises with long-term plans to converge them all into a single movie.
Not all is lost yet
If The Man of Steel proves to be successful, then Time Warner shouldn’t simply let the film continue into another self-contained trilogy that eventually concludes with both the main star and director leaving the franchise. It needs to use its sequels to tie together the rest of the DC Universe just as The Walt Disney Company (NYSE:DIS) has with The Avengers. With Superman usually being regarded as the leader of the Justice League, then its sequels could open up a whole new exciting universe of comic book films, as dynamically connected as the books on which they are based. If Time Warner Inc (NYSE:TWX) is successful, then the returns could be enormous, as seen in this breakdown of Time Warner’s business segments in fiscal 2012.
Revenue | Y-O-Y Growth | Operating Income | Y-O-Y Growth | |
Networks | $14.2 billion | +4.0% | $4.9 billion | +10.0% |
Film and TV | $12.0 billion | -5.0% | $1.2 billion | -3.0% |
Publishing | $3.4 billion | -7.0% | $0.5 billion | -20.0% |
Source: Time Warner Annual Report
If Time Warner can unveil a full-fledged DC movie universe in the next two or three years, then its Film and TV gains can easily offset any weakness in its lagging Publishing segment. In addition, returns from its Hobbit trilogy should also boost the segment’s top and bottom line growth even more.
Therefore, Time Warner needs to hurry and round up the miners to start digging into its DC Comics goldmine.
The article What Time Warner Should Learn from Disney originally appeared on Fool.com and is written by Leo Sun.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
