Thursday, July 16, 2009

What Did Warner Bros Do to Earn Harry Potter $

In my research on the ante-bellum Workingmen's movement in Philadelphia, I found that workingmen's advocates argued that all wealth was created by labor. Here's Philadelphia shoemaker and labor leader William Heighton advocating that view in 1827.
In order to fully illustrate our present condition and relative situation in society, we must consider our country as containing two classes, viz—The working or productive class, and the non-productive or accumulating class. The former class [produces] every article which comes under the term Wealth; the latter class [produces] nothing valuable, but grow rich by accumulating the productions of the former, thus enjoying all the advantages and benefits of wealth which they never produced. (William Heighton, speech at Universalist Church, 1827)
I thought of the workingmen's views when I saw a short article by Julia Boorstin for her "Media Money with Julia Boorstin" on According to Boorstin, Warner Bros. Corporation has made one billion dollars in profit on the Harry Potter movie series.

This movie is just huge for Warner Brothers, certainly its most important
franchise for the next couple years. After this film there are another two due
out in 2010 and 2011. With a built-in audience and appeal to what Hollywood
calls "all four quadrants" (men, women, young, old), the box office numbers are
stunning. The first five films generated $1.4 billion at the US box office while
they brought in $4.5 billion globally. . .

David Davis, a banker at boutique media firm Arpeggio Partners tells me that when it comes to licensing fees, Warner Bros. gets a much higher percentage for Harry Potter than pretty much any other brand. Davis says that so far Warner Bros. has generated about a billion dollars in PROFIT from the franchise, and it stands to generate another billion dollars.

But now that the Republicans have put "socialism" back on the table, one wonders what Warner Bros. did to "earn" their billion dollars in profits. It makes sense that J. K. Rowling is a billionaire. She wrote the books that became the basis for the movies. Given that there's no Harry Potter without J. K. Rowling, she deserves the cut she gets from everything in the Harry Potter commercial universe. The same is the case with the screenwriter, directors, producers, actors, and technical people involved in making the films. They all deserve to be benefitting from the fruits of their labor.

But I wonder what Warner Bros. corporation did to deserve its billion dollars in profit. Why should the top management of the company, who probably did very little with the film, benefit so much in the form of salaries, bonuses, stock options, and executive perks. What exactly did they do to make the Harry Potter films?

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