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AOL needs magic ending
August 30, 2001: 1:55 p.m. ET

Firm banks on huge box office from Harry Potter and Lord of Rings films
By Staff Writer Chris Isidore
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NEW YORK (CNNfn) - AOL Time Warner Inc. will be depending on magical powers to save what has been a lackluster year, at best, for its movie studios' box office.

The company's Warner Brothers studio's November 16 release of "Harry Potter and the Sorcerer's Stone" is seen in the industry as a near sure-thing blockbuster. The tale of a young boy's training in witchcraft is the first of a series of movies based on the wildly successful children's books.

The eagerly awaited first Harry Potter movie is due in theaters Nov. 16.
A month later, on Dec. 19, the company's other studio, New Line Cinema, unveils the first of its three movies based on J.R.R. Tolkien's classic novels as "Lord of the Rings: The Fellowship of the Rings" hits theaters.

But even with the popularity of the books and a slightly different target audience, the two sister studios may end up taking away from one another's biggest movies of the year at a time when their parent needs all the help it can get to boost sagging revenues.

"I think it's an enormous roll of the dice for AOL Time Warner," said Gregg Kilday, film editor at Hollywood Reporter. "The two movies were developed independently. The 'Lord of the Rings' was in development for some time. As that was happening, Warner Brothers won the Harry Potter movie, and because that was such a hot property they wanted to move ahead as quickly as possible."

The studios are arguing that they're not concerned about the two movies crowding one another. They point out that the Lord of the Rings movie will likely have a PG-13 rating, steering it towards a slightly older audience than the PG-rated Harry Potter movie.

"There is absolutely enough breathing room between the release of the two films for both to do very, very well," said Steve Elzer, spokesman for New Line. "To suggest only one film can play at any one time is ludicrous."

But Kilday and others have their doubts.

"You'll never find anyone at AOL Time Warner to admit it, but in the best of all possible worlds, having had one out this summer and one this winter would be preferable to both coming out at year's end," Kilday said.

The Harry Potter movie could find itself competing for audience with Lord of the Rings, another fantasy epic from a different AOL Time Warner studio.
Nick Nunziata, owner of, which stands for Cinematic Happenings Under Development, said his site's message boards have been ablaze with people saying there's room for only one of the two fantasy epics, speculation he hopes isn't correct.

"I can't think of anyone who didn't see both 'Star Wars Episode 1' and 'The Matrix' in '99," he said. "It's not like people will chose one or the other. But I think Harry Potter will have to make $200 million not to be considered a disappointment."

Both movies are estimated to cost in the $100 million range, and the studios are betting that both will be the first of a strong franchise for years to come.

The success of the Harry Potter books gives Warner Brothers a chance to start an important movie franchise.
In fact, New Line has made the unprecedented move of shooting all three Lord of the Rings movies already, at about $300 million in total cost, while the next Harry Potter movie is due to start shooting in November just as the first debuts.

With new Harry Potter books still being published, the potential long-term benefit for Warner Brothers of a successful launch of the movie series is staggering. Of course that means a disappointing launch will hurt more than just this year's outlook.

"I don't think they're looking to Harry Potter to rescue this year. It's a long term issue for them, it's a launching of franchise," said Dana Harris, a reporter who covers Warner Brothers for Variety.

The studio has had a relatively weak year so far. No film has yet topped the $100 million box office mark. "AI, Artificial Intelligence," the film it did with director Steven Spielberg and his DreamWorks SKG studio, was seen as a disappointment, with only $78 million in revenue, and animated movie "Osmosis Jones" is one of the bigger duds of the year, grossing only $12 million in its first three weeks despite opening on 2,300 screens. Action-adventure movie "Swordfish" also has been somewhat disappointing, with a box office of $69 million.

A number of Warner Brothers films, including animated offering "Osmosis Jones," have failed to live up to expectations.
Still, Warner Brothers clearly is banking on a strong finish to the year. In addition to Harry Potter it has a number of older-targeted movies set to go.

"Ocean's Eleven," due out Dec. 7, is the remake of a Rat Pack casino heist movie starring Brad Pitt, George Clooney and Matt Damon and directed by Steven Soderbergh, who was nominated for two Oscars for the movies "Traffic" and "Erin Brockovich." Despite the star power some estimates put the cost of the film at only $25 million to $30 million,'s Nunziata said.

"People will work with Soderbergh for pennies," Nunziata said. "I don't think it's possible for that film to fail."

It also has the latest Stephen King movie, "Hearts in Atlantis," due out Sept. 28, and the new Jim Carey movie, "The Majestic," due out Dec. 21.

"Universal had all its heavy hitters lined up for summer months. Warner Brothers didn't have anything in the summer that was a guaranteed hit," Kilday said. "It's as if they saved all their heavy hitters for the top of seventh, or later."

Filmed entertainment is the second-largest revenue source for AOL Time Warner, the media conglomerate formed by the January merger, which includes CNNfn. Only its Internet services add more to the top line. But that top line has been under pressure with the current softness in the spending on different forms of advertising.

A cautionary statement on revenue outlook by Mike Kelly, the company's chief financial officer, while he was discussing second-quarter results has led analysts to cut the full-year revenue forecast to $39.4 billion from their earlier forecast of $40.5 billion. And that cut was for the most part still assuming huge box office numbers for the company's fall and pre-holiday films.

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All initial indications are that the films, especially Harry Potter, will do the massive box office the studios need. The series of books are an unprecedented publishing success, with their U.S. publisher, Scholastic Corp. (SCHL: down $0.44 to $38.31, Research, Estimates) having 50 million copies in print.

A survey by NPD Group, a New York marketing firm, found that half of all U.S. children between ages six and 17 who have heard of the movie intend to see it, as do about one in five adults.

Those kinds of numbers are not surprising given that 60 percent of children and 18 percent of adults surveyed said they had read at least one of the books. Even a sizable fraction of those children who had not read one of the books said they intend to see the movie, according to the NPD survey.

Warner Brothers and New Line both have the challenge of matching the imaginations and expectations of fans of the fantasy novels they're bringing to the screen this fall.
The Lord of the Rings movies tend to appeal to a somewhat older audience, with many more readers being adults who read the books as children. But the decades-long wait for a movie version may only serve to heighten long-time fans' expectations.

So besides the risk of competing with one another, both movies face the challenge of meeting the very high expectations of the books' legions of devoted fans.

"Nothing is keener than a child's imagination," Variety's Harris said. "Matching that imagination is a very tall order. It's a guarantee not everyone will be happy; some will say this isn't right or that's not right."

Despite all the hopes of both the studios and the books' fans, there is a risk if the movies don't live up to all the hype and expectations.

"The readers of these books spent a lot of time with books, they know them inside and out," Kilday said. "They have very strong opinions how they should look on the screen. If you don't execute a movie they approve of, they can turn on you very quickly." graphic


Revenue concerns dog AOL as profits grow - July 18, 2001

Harry Potter weaves magic for publisher - March 28, 2001

Harry Potter film gets Coca-Cola as partner - Feb. 20, 2001

Harry Potter is here! - July 7, 2000


Harry Potter official movie web site

The Lord of the Rings official movie web site

Warner Bros.

New Line Cinema

AOL Time Warner

CHUD - Cinematic Happenings Under Development

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