Company Management
The Warner Bros. Entertainment Inc. is one of Hollywood’s major production and distribution firms. Founded on April 4, 1923, the company began with four brothers; Albert, Sam, Harry and Jack. The brothers originally jump-started started their film business in 1903 while they moved around throughout Ohio and Pennsylvania. They bought about 200 films by 1908 and eventually showed Edwin S. Porter’s The Great Train Robbery, the first motion picture to tell a definite story.
The brothers then moved to California and premiered a full-scale picture named My Four Years in Germany in 1918. They eventually bought property at 5842 Sunset Boulevard for $25,000; this launched their West Coast Studios. According to the Warner Bros. website, the current employee population ranges anywhere from 5,000 to 10,000 per day in the North American area depending on the type of production and an additional 2,000 people overseas.
Kevin Tsujihara is the current chairman and executive officer for the company with many operating officers and divisional executives that work underneath him in the many branches of the company.
Assets
Warner Bros. Pictures is considered the forefront of the business making $4.93 billion in worldwide receipts. In 2016, some of its highest grossing films included The LEGO Batman Movie, Kong: Skull Island, and Wonder Woman (warnerbrothers.com). It also has Warner Bros. Pictures International and Warner Bros. Pictures Domestic Distribution. New Line Cinema is another Time Warner company that also drives a lot of revenue. It was founded in in 1967 and became a part of Warner Bros in 2008.
Warner Bros. Entertainment is another branch that was founded on October 25, 2005. It includes Warner Home Video, Warner Bros. Digital and Warner Bros. Interactive Entertainment. Each one of these departments represented a different stage of distribution for films.
Warner Bros. Entertainment also owns DC Entertainment which was founded in 2009. It is the home of the entire brand and various consumer products. It also holds the rights to the Harry Potter franchise. The Wizarding World of Harry Potter in Universal Studios in Hollywood, CA and Orlando, FL was considered groundbreaking. J.K. Rowling is a major asset to the company for creating the fictional world.
Business Model
Warner Bros. Entertainment creates various outlets of entertainment content, each catering to a specific fan base and age range. It is considered one of the industry leaders with 17% percent of the market share (warnerbrothers.com). However, film distribution is one of the most difficult steps in the movie-making process.
One of the first steps of film distribution is intellectual property. Agents will typically see a piece of work and see potential before agreeing to represent somebody. Agents will help pitch the ideas to producers. They will then make sure that the production company, in this case Warner Bros., holds the copyright to the IP. An executive can then option a piece of property if they feel that it would be a successful production for the company. Parties on both sides of the project will come to terms and draw up a Literary Property agreement that insures that Warner Bros. gets all the conditions and rights that they want.
After a film is produced, it spends three to six months in its theatrical phase. According to Dan Manzel, Senior Vice President Cable Network/Digital Sales Warner Bros. Domestic TV Distribution, the film then spends another three to six months in the electronic sell-through phase. This includes DVD sales, iTunes and pay-per-view outlets. Most studios then have what is called the “premium pay window” (Manzel 2017). Since Time Warner also owns HBO, it gets the film for 13 months during the post pay window. HBO has a window before and after cable. After that, it becomes a Library Title for Warner Bros.
After HBO, the film will then rest (Manzel 2017). There will then be a six month period where the company will attempt to sell the film to cable networks where it has the potential to have about a six year life. A company like Netflix will not even have the potential to buy the film for at least ten years.
Revenue Model
Warner Bros. Pictures uses the leasing model. It distributes around 18-22 films each year and will fully finance or co-finance films that it produces and maintain distribution rights to rent out its movies to other outlets after its theatrical run. The company is also an example of vertical integration. Warner Bros. Television licenses more than 79,000 hours of television programs. About 7,400 feature films and about 50 series make up that time. Warner Bros will get a percentage of the box office sales at theaters and about 15-17% of cable box office sales. Also, due to the vertical integration of the company, they will receive a percentage of the sales from HBO and any other pay-per-view outlets (Manzel 2017).
It also has revenue from all of its consumer products that are licensed such as toys, home decor, publishings and distribution rights.
References
Elin, L. (n.d.). Acquiring a Literary Property for Film and Television. 1-6. Accessed on Blackboard.
Manzel, D. (Speaker). (2017, September 21). Guest Speaker. Syracuse University, Syracuse.
Lieberman, D. (2014, October 16). ‘Friends’ Licensed To Netflix In Warner Bros Deal
Retrieved September 11, 2017, from http://deadline.com/2014/10/friends-netflix-streaming-deal-851909/
Turow, J. (2017). Ch. 12 The Movie Industry. In Media Today: Mass Communication in aConverging World(pp. 335-365). New York, NY: Routledge.
Tyson, J. (2000, September 18). How Movie Distribution Works. Retrieved September 17, 2017, from http://entertainment.howstuffworks.com/movie-distribution1.htm
Warner Bros. Entertainment. (2017, September 11). Retrieved September 11, 2017, from http://www.timewarner.com/company/operating-divisions/warner-bros-entertainment
Warner Bros. Entertainment Inc. Company Overview. (n.d.). Retrieved September 07, 2017, from https://www.warnerbros.com/studio/about/company-overview
2016 Time Warner Annual Report. (n.d.). Retrieved September 11, 2017, from http://www.timewarner.com/sites/timewarner.com/files/downloads/twx_2016_annual_report.pdf