ABC Defends Price of ‘Potter’ Deal

ABC paid top dollar for the television rights to the blockbuster “Harry Potter and the Sorcerer’s Stone” and the first sequel because the films fit with parent Walt Disney Co.’s family fare and could help draw advertisers and viewers to its newest cable network, company executives said Friday.

But the size of the deal with Warner Bros., in which ABC paid $70 million for the first movie and at least $60 million for the second installment, has raised eyebrows among network rivals, who see it as too expensive. Critics say that by the time ABC airs the first “Potter” film, the property could be overexposed after appearing in theaters and on pay TV, videos and DVDs.

The price is among the highest ever for broadcast rights to event movies. News Corp.’s Fox Network paid $80 million each for rights to “Star Wars: Episode I The Phantom Menace” and “The Lost World: Jurassic Park.” But those deals bypassed pay television and aired directly on Fox.

Before airing on ABC in 2004, the “Potter” film will be broadcast on HBO, the pay-TV network owned by AOL Time Warner.

Disney executives Friday dismissed any suggestion that they overpaid for the two films.

“I believe it’s more sour grapes than anything else,” said Mark Pedowitz, executive vice president of ABC Entertainment TV Group. “From where we sit, a property like this has greater value than you can ever imagine.”

As part of the 10-year licensing agreement, Disney plans to air the Potter films on the ABC network, as well as on family-oriented cable outlets Disney Channel and the newly acquired ABC Family. Disney acquired TV rights from Universal Pictures to “Dr. Seuss’ How the Grinch Stole Christmas” for a reported $60 million.

“Harry Potter and the Sorcerer’s Stone” has grossed close to $200million in just three weeks. “The Grinch” was the highest-grossing movie last year, racking up about $260 million at the domestic box office.

ABC, faced with a slide in ratings--the network is now in fourth place among viewers in the key 18-49 age group--and declining advertising revenue, is seeking to find more outlets for its programs and ways to cross-promote them by creating more linkages between network and cable holdings.

“The ‘Harry Potter’ deal will add enormous value to three key programming platforms, the television network ABC Family and the Disney Channel both from an advertiser and viewer perspective,” said Steven Bornstein, president of the ABC Broadcast Group. Executives at the other major networks say privately that they had not bid aggressively to license the “Potter” films and that ABC overpaid.

Moreover, some network officials questioned the escalating fees being paid for movie rights, given the exposure films receive across multiple platforms--including theatrical release, videos, DVDs and pay television--before reaching a broadcast network.

Norman Horowitz, a consultant who has previously overseen domestic distribution for MGM and Columbia Pictures, said the shortage of true family hits--and the enduring value of perennials such as “The Wizard of Oz”--makes a movie such as “Harry Potter” particularly valuable.

Such a franchise “doesn’t diminish, it keeps going and going,” Horowitz said. “It’s a mistake-proof acquisition. You can’t hurt it, and there isn’t a lot of stuff like that.”

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‘Harry Potter’s’ Many Releases

ABC this week purchased TV rights to the first two “Harry Potter” movies from Warner Bros. for an estimated $130 million. The first film won’t be aired until 2004, after the repeat appearances of other “Harry” properties:

November 2001: “Harry Potter and the Sorcerer’s Stone” opened in theaters.

Summer 2002: Release of “Sorcerer’s Stone” on video and DVD. The expected publication of J.K. Rowling’s fifth book in the seven-book Harry Potter series.

November 2002: Theatrical debut of the second installment, “Harry Potter and the Chamber of Secrets.”

December 2002: “Sorcerer’s Stone” expected to air on HBO.

Summer 2003: Expected release of “Chamber of Secrets” on video and DVD.

May 2004: Broadcast television debut of “Sorcerer’s Stone” on ABC.

Summer 2004: Theatrical release of the third film, “Harry Potter and the Prisoner of Azkaban.”

Sources: Warner Bros., ABC