November 30, 2001
Disney TV Units to Show 'Harry Potter' and Sequel
By JIM RUTENBERG
Capitalizing on the record-breaking release of "Harry Potter and the Sorcerer's Stone," Warner Brothers has sold the basic cable and broadcast television rights for the film, and the next in the Harry Potter series, to the Walt Disney Company in a deal worth at least $130 million, the companies said last night.
Details remained somewhat sketchy as executives fine-tuned the deal, in which Disney would show the film on its ABC network as well as its family-oriented basic cable outlets, ABC Family and the Disney Channel.
But it was definitely in record territory.
People close to the deal said Disney was basically agreeing to pay $70 million for "The Sorcerer's Stone," and therefore at least $60 million for the second movie, "Harry Potter and the Chamber of Secrets."
The amount Disney paid for "The Sorcerer's Stone" easily exceeds the amount it paid for "Dr. Seuss' `How the Grinch Stole Christmas,' " which it bought from Vivendi Universal (news/quote) for about $60 million.
Though it was less than the $80 million each that the Fox network agreed to pay for "Star Wars: Episode 1 — The Phantom Menace" and "The Lost World: Jurassic Park," those deals included the purchase of the rights to show it on pay cable, valued at about $15 million in each case.
The deal for "Harry Potter," however, does not include a pay television window.
The deal gives each side something it desperately needs.
Warner Brothers receives a huge cash commitment at a time when its parent company, AOL Time Warner (news/quote), is under pressure from Wall Street to increase income. And it can say to shareholders that it held out for the best possible deal and did not succumb to the temptation to sell it to its own television division, the Turner Broadcasting System, which had expressed interest in it as well.
For Disney, the deal gives it the rights to the hottest property in the film business, one that is extraordinarily popular with families, its core customer base, said Steve Bornstein, president of the ABC Broadcast Group.
Under the terms of the deal, Disney can show the movie on the ABC network — which is struggling this television season — and also on its cable channels the ABC Family Channel and the Disney Channel.
Disney just recently acquired the Family Channel from Fox's parent, the News Corporation (news/quote), Saban Entertainment and Allen & Company, and the deal for "Harry Potter" gives it a promising film for a network it is just starting to build.
One executive said that Disney had secured the rights to show it numerous times over the course of 10 years, though he would not say exactly how many.
That, he said, made the huge purchase price much more palatable for the company. And because of that, he said, Disney considers this deal richer than the one it struck for "The Grinch" because it represents numerous runs over three different programming outlets, while the "Grinch" deal covered only the ABC network and the Disney Channel.
But the deal is not without risks for Disney. It cannot show the movie on ABC until May 2004, which is far off. And the deal does not include the rights for pay cable, which, of course, will show it before ABC does. Executives said the film would be shown on HBO, which is carried in about a third of homes with televisions, and its affiliated pay cable networks.
Though theatrical releases traditionally do quite well on television, the latest showing of a blockbuster movie was less than impressive.
The Sunday night broadcast of "The Phantom Menace" on Fox was watched by 17.7 million people, a reasonable number in general, but not considering the purchase price.
Executives close to the Disney deal said it was extraordinary in at least one respect: in agreeing to pay so much for the second film, Disney was betting on a horse not yet been born.
