Warner Bros.

TIME WARNER: THE MODERNCONGLOMERATE ERA

The year 1989 was a watershed for Warner Bros. on two interrelated fronts. One was the release of Batman , a feat of blockbuster filmmaking that effectively redefined the creation and propagation of the movie-driven global entertainment franchise. Batman reached $100 million in only ten days, a studio record, and went on to become the biggest hit and the most successful franchise in Warner's history to that point. Much of that success was due to the other epochal event in 1989, WCI's merger with Time, Inc., which marked another major stage in Ross's relentless expansion campaign and in the conglomeration of Hollywood as well. The Time Warner merger was actually a $14 billion "takeover" of WCI by Time, Inc., although it was engineered mainly by Ross in an effort to combine Warner's assets with a publishing giant whose holdings also happened to include crucial media assets like HBO. The release of Batman and the Time Warner merger took the studio, the parent company, and the industry at large into another realm, mobilizing an array of merchandising and other tie-ins.

Warner's expansion continued despite Ross's untimely death in December 1992, most notably with the $8 billion acquisition of Turner Broadcasting System (TBS) in 1996. This acquisition added substantially to the Time Warner mix, bringing in further cable holdings (CNN, TBS, et al.), three leading independent film companies (Castle Rock, New Line, and Fine Line), and the world's largest film and television library. Meanwhile, the movie studio surged to unprecedented heights, as Warner Bros. and Disney utterly dominated the movie industry throughout the 1990s in terms of revenues and market share. The studio's success was spurred by the Batman and Lethal Weapon series, as well as its Eastwood films (most notably Unforgiven , 1992) and a steady output of top hits like Robin Hood: Prince of Thieves (1991), The Fugitive (1993), Twister (1996), and The Perfect Storm (2000).

Time Warner's movie fortunes surged in the early 2000s, thanks largely to the franchises launched by The Matrix , Harry Potter and the Sorcerer's Stone , and The Lord of the Rings . Designed as global entertainment machines, all three added billions to the parent company's bottom line while indicating how complex and multifaceted even the movie division itself had become. Only the Harry Potter films were actually produced and distributed by Warner Bros., while Warner's distributed the Matrix films but had nothing at all to do with the Rings films, which were produced and distributed by New Line.

The success of those three franchises helped offset the truly catastrophic losses that accompanied Time Warner's merger in early 2000 with AOL, the Internet giant that promised to give the media company an insurmountable lead over its competitors in the burgeoning Digital Age. The deal, valued at an astounding—and massively overinflated—sum of $164 billion, was negotiated by Ross's successor, Gerald Levin, and AOL's Steve Case, and it was announced just as the "dot-com bubble" burst and the so-called New Economy collapsed. AOL-Time Warner had a brief disastrous run under Levin and Case, reporting losses of $99 billion in 2002; that same year Case was removed as executive chairman and the corporate name reverted to Time Warner. The conglomerate thrived in the following years under Richard Parsons, and was ranked by Forbes magazine in early 2005 as the world's top media company, with a market value of $79.1 billion. (Disney was a distant second at $57.2 billion.) By then Time Warner could count on Warner Bros. for one or two modest, critically acclaimed hits per year—most reliably from Eastwood-Malpaso, which delivered Mystic River (2003) and Million Dollar Baby (2004).

Given the state of the global entertainment industry and the media conglomerates that dominate and control it, however, Warner Bros.' prime directive is to generate and sustain the blockbuster franchises that now rule the industry. Both Warner Bros. and New Line have accommodated Time Warner on that score—more so, in fact, than any other motion picture subdivisions in Hollywood. The successful regeneration of Warner's Batman franchise with Batman Begins (2005) underscores the studio's (and the parent company's) franchise mentality, although the success and relative value of that now-antiquated series pales in comparison to Time Warner's more recent blockbuster cycles, particularly in terms of box-office performance. Taken together, Warner's first three Harry Potter films and New Line's Lord of the Rings trilogy comprise six of the top fourteen all-time worldwide box-office hits (as of mid-2005), generating $5.56 billion in theatrical release alone—only a fraction of what will be returned in DVD, television, and pay-cable revenues, and the myriad other revenue streams. These films are, for better or worse, the essential studio products in an age of global media conglomerates, and the defining products in terms of Warner Bros.' studio style.