Warner’s Wild Card : No Matter How You Count, ‘Batman’s’ Payoff Is No Joke

J ust how big is “Batman”?

Dazzled by the first $200 million-plus film to hit the box office since Universal’s “Back to the Future” in 1985, numbers crunchers from Wall Street to Hollywood are pounding their calculators over Warner Bros.’ latest blockbuster.

“They’re the gorilla . . . . They’re going to make a fortune,” said one envious competitor, after doing some quick math that shows Warner might sell $130 million worth of “Batman” videocassettes around the world.

Calendar decided to join the guessing game. What follows is a dual calculation of “Batman’s” prospects, compiled with help from securities analysts, Hollywood agents, studio executives, and others who have been monitoring the film.

Caution: Neither Warner executives nor other key individuals involved with the film were willing to share the real numbers. Our numbers are estimates--and, in some cases, plain old guesswork.

Because this is the movie business, moreover, you have to count twice.

To the right, the “Batman” numbers as they might shape up on a classic Hollywood profit statement sent to actors, writers and others with a stake in the movie. Next to those numbers is a calculation, from the Wall Street point of view, of income the film may bring to Time Warner Inc.

WALL STREET’S ARITHMETIC

TIME WARNER’S WARNER BROS. UNIT SPENDS:

Hard costs. The same money for star salaries and production costs listed on our Hollywood-style profit statement: $40 million.

Prints and ads. The same, very large marketing figure listed on the profit-statement side (assuming that none of this expense was “laid off” on outside investors, as studios sometimes do): $50 million.

Corporate costs. It’s virtually impossible to know how much of Warner Communications’ roughly $1 billion annual administrative and interest expense is attributable to a single film. But we do know that movie and TV operations accounted for 37% of revenue last year, so they may have contributed a similar share of expenses, or about $370 million. Warner releases up to 30 films a year, but let’s just assume that “Batman” accounted for a gigantic 10% of the studio’s expenses, or: $37 million.

Studio’s total cost: $127 million.

TIME WARNER GETS:

The studio recovers all its charges as listed on our home-made profit statement, i.e.:

Hard costs. $40 million.

Overhead charge. $6 million.

Prints and ads. $50 million.

Distribution fee. $110.3 million.

DC Comics cut. (Remember, DC is a Time Warner unit.): $16.7 million.

Interest. $15.8 million.

Profit participation. $12.5 million.

Also:

Warner Home Video. As a rule, a studio’s own video company takes 80% of the total revenue collected from cassette sales, known as the “distributor’s gross,” before turning the balance over to the film’s account. Assuming that cassette marketing costs are at least partially offset by a tie-in with some big advertiser like Pepsi, Warner’s video unit might keep $83.2 million from a big Christmas cassette sale in the United States, and an additional $22 million from foreign sales. That’s: $105.2 million.

Licensing Company of America. This Time Warner unit is handling the “Batman” merchandising campaign. LCA officials recently figured various companies would peddle about $250 million, wholesale, worth of “Batman” merchandise. Normally, as much as 9% of that amount would be paid to LCA, according to one merchandising industry insider. Assuming that Jack Nicholson and others may get a cut of the fee, however, let’s figure 6% will ultimately come to Warner: $15 million.

Warner Records. This in-house record label and the WEA Corp. music distributing unit are handling three “Batman” records. A Danny Elfman theme album is just shipping 200,000 copies, while the Prince sound track, in two different editions, has already sold about 2 million copies in the United States. Record sales are difficult to predict, since albums achieve blockbuster status by spinning off successful singles over the period of a year or more. But let’s suppose the albums together sell 8 million copies, a bit short of Prince’s 10-million seller, the “Purple Rain” sound track. If the records group keeps $2 each, after costs, that’s: $16 million.

Warner Music. Warner’s music division shares music publishing rights to the sound track with Prince. What’s the share worth? “Throw in another million,” says a Warner Records executive: $1 million.

Warner Books. One “Batman” mass-market novelization, with 1.3 million copies in print, and two related trade paperbacks, with 408,000 in print, mean still more dollars for Time Warner. Allowing for returns and marketing costs, the books might be worth another: $1 million.

CineAmerica Theatres. The 500-screen theater group, co-owned with Paramount, must count for something. Assuming that “Batman” played on 10% of those screens, CineAmerica, at roughly $110,000 per screen, will have pulled in about $5.5 million at the box office. The theater-owner’s take is 40%, or $2.2 million. Warner gets half, or: $1.1 million.

More imponderables. It’s hard to place a dollar value on some things, so we won’t. But it’s worth noting that Time Warner’s HBO unit can expect to pick up some new subscribers in a year or two when it starts marketing “Batman.” And don’t forget the sequel rights--Warner is currently talking with director Burton, Keaton and others over “Batman” II and III, which are likely to involve the Riddler and Penguin as villains.

Total corporate income: $390.6 million.

The bottom line. After subtracting the studio’s presumed $127 million in total costs, Time Warner appears to keep about $263.6 million. Even allowing for taxes and all the other expenses we may have missed along the way, that’s a lot of Bat bucks.