The Report: How Warners Won the Year

Issue 53 - How Warners Won the Year: Inception/Iron Man Split
Melissa Moseley/Warner Bros. and Francois Duhamel/Paramount/Courtesy Everett Collection

Passing Paramount, studio tops $1 billion for 10th year running.

The race that decides which studio takes home the biggest share of the 2010 domestic box office won’t cross the finish line for several weeks, but it's already safe to call a winner.

For the third time in as many years, Warner Bros. is on top: Year-to-date, it's collected more cash that any other studio. It has sold $1.48 billion worth of tickets in North America. That translates to a 16.6 percent share of overall box offfice. Warners also notched a statistical victory in July, when it became the first studio to cross the $1 billion mark at the domestic box office for 10 consecutive years.

Likening himself to “the coach of the team, or maybe the quarterback,” Warners president and COO Alan Horn, who is stepping down in April after 11 years overseeing Time Warner’s film operations, credits an executive lineup that’s “like a finely oiled machine,” racking up a decadelong record of consistency.

“We really just have an experienced, hardworking team that knows everything from A to Z about development, production, marketing and releasing on a global basis,” Horn adds, specifically citing the contributions of motion picture group president Jeff Robinov, former and current marketing heads Dawn Taubin and Sue Krolland domestic distribution chief Dan Fellman.

“Early on, with the support of [Warners chairman] Barry Meyer, we instituted an event strategy,” he says of the reasons behind the studio’s win streak. It kicked it off in 2000 with The Perfect Storm, followed by the first Ocean’s Eleven and Harry Potter movies in 2001, setting the stage for Warners’ successful run.

The studio also created new opportunities by erecting its tents outside the traditional summer and year-end slots. With 2006’s 300, it carved out territory in March, where this year it released Clash of the Titans, which grossed $163.2 million domestically.

Unfortunately for Paramount — at least as far as market-share bragging rights go — Warners’ claim to the crown this year also means that for a third consecutive year, Paramount, which commands a 16% share, must settle for second place.

The studio had languished in the back of the pack during the decade’s first half until Brad Grey came aboard as chairman in 2005, striking distribution deals that filled its pipeline with high-profile movies from Marvel and DreamWorks Animation.

As a result, the Viacom-owned studio dominated the summer thanks to Marvel’s Iron Man 2 (which grossed $312.1 million) and DWA’s Shrek Forever After ($238.4 million), and it isn’t giving up without a fight, though.

Heading into the critical holiday movie season, Paramount just unleashed DWA’s Megamind, which bowed to $46 million), and it has several titles in the on-deck circle including its pre-Christmas release of the Coen brothers’ Western True Grit.

But Paramount's lineup still isn’t expected to nose out Warners. That studio just countered Megamind with the buddy comedy Due Date, which debuted to $32.7 million; it has a gold-plated annuity arriving Nov. 19 in the form of Harry Potter and the Deathly Hallows, Part 1, which should gross in the neighborhood of $300 million domestically; and it could attract a multiplex worth of families and nostalgic boomers when Yogi Bear hits theaters in December.

So far this year, Paramount has fielded more $100 million-plus domestic grossers than Warners, by a score of 6-3. But Warners has powered ahead on sheer volume: It has released 21 movies to Paramount’s 12, tilting the market-share race in its favor.

“It’s like saying, ‘Let’s play baseball; you guys get six outs, and we get three,’ ” Paramount executive vp distribution Don Harris jokes. “See how the score comes out.”

Even as Warners has focused on a steady diet of four to six tentpoles a year — a number Robinov is looking to increase as he takes over film operations from Horn — it also has been rolling out an average of two pictures a month, while other studios like Paramount and Disney, facing tighter production budgets, have opted for leaner release slates.

Warners, meanwhile, has filled up its dance card with movies from New Line — a division of Time Warner absorbed by the studio in 2008 — as well as well-funded production partners like Legendary Pictures and Village Roadshow.

Market share, of course, is only one measure of a studio’s success, and a fairly crude one at that. By that measure, Warners is only slightly ahead of Paramount.

But at the end of the day, Warners will take home a lot more money. Although Paramount collects an 8 percent distribution fee on the films it handles for DWA and Marvel, it has no investment in those movies.

Warners, by contrast, is a 50-50 partner with co-financier Legendary in its big summer hit Inception, which grossed $291.1 million domestically, so it will take home half of that movie’s profit.

And when it comes to Harry Potter, Warners doesn’t have any partners, so everything the boy magician conjures is gold for the studio, giving Horn every reason to run a final victory lap.