ABC has acquired the television rights to "Harry Potter and the Sorcerer's Stone" and its first sequel from Warner Bros., in a deal estimated to be worth nearly $140million--an amount that could establish a new record, according to the companies and sources close to the deal.
The Walt Disney Co.-owned network will pay about $70million to televise the first film over a 10-year period beginning in May 2004, including the right to run the movie on both ABC and Disney's cable channels, according to knowledgeable sources.
The network's fee for the second movie will be based on its box-office performance but probably will be slightly less than the fee for the first film.
Disney and Warner Bros. jointly announced the deal Thursday but would not publicly confirm the value of the transaction.
Steve Borenstein, president of the ABC Broadcast Group, said the deal "provides clear and distinct opportunities" for Disney's various channels and added that "Harry Potter" is perfectly aligned with the network's family themes.
The previous record amount paid by a network for broadcast rights was reportedly $80 million, which News Corp. allocated for both "Jurassic Park: The Lost World" and "Star Wars: Episode1 The Phantom Menace," although those agreements bypassed pay television and went directly to Fox broadcast network.
By contrast, before going to ABC, the "Potter" movies will premiere on pay service Home Box Office, which, like Warner Bros., is a unit of AOL Time Warner Inc.
Given that "Harry Potter" is expected to garner an estimated $15million from the pay TV component, the film's total revenue from domestic television sales appears to establish an industry record.
The sequel, "Harry Potter and the Chamber of Secrets," will be released in November 2002. "Sorcerer's Stone," released earlier this month, thus far has grossed more than $190 million in the U.S.
Despite the film's success, executives at rival networks said there was no bidding war over the movie and expressed surprise at the reported price.
Still, Disney recently acquired a cable network that it has renamed ABC Family (formerly the Fox Family Channel) from News Corp., and part of its long-term strategy involves exposure of programs on ABC, ABC Family and the Disney Channel to defray production and acquisition costs.
The studio has placed a high priority on family-oriented fare and needs such films to feed its "Wonderful World of Disney" franchise, which not only leads off Sunday nights for ABC but provides a showcase for Disney's theme parks and other assets.
The network recently signed an agreement to acquire TV rights to Vivendi Universal's "How the Grinch Stole Christmas," worth a reported $60 million.
ABC is grasping for lifelines as it struggles through a dismal television season in which its prime-time ratings have dropped sharply, leaving the network in fourth place among adults ages 18 to 49--the demographic most important to advertisers.
Though television ratings for feature films have diminished in recent years, Fox drew strong ratings with "Phantom Menace" during the just-concluded November rating sweeps, as did ABC with an uncut telecast of DreamWorks SKG's war film "Saving Private Ryan." Both movies attracted nearly 18 million viewers and won their respective Sunday night ratings.
After a period of acrimony last year in which AOL Time Warner temporarily dropped ABC from its cable systems and Disney subsequently lobbied against government approval of the America Online-Time Warner merger, the two studios have collaborated on several significant deals.
ABC recently concluded an elaborate agreement with Warner Bros. Television on the upcoming dramatic series "The Court," which is to play into the network's rerun, or "repurposing," game plan. The deal grants the network rerun rights to the program on ABC-owned cable channels within eight days of its initial network broadcast.