Smaug a winner for Time Warner

BREE FOWLER AND JAMES WEIR
Last updated 05:00 07/02/2014

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Media giant Time Warner's revenue rose 7 per cent to US$4 billion ($4.8 billion) in the December quarter, helped in part by the release of The Hobbit: The Desolation of Smaug, which is on the way to becoming a US$1b movie.

The latest Hobbit film was only released on December 13, near the end of Time Warner's financial quarter, so the latest revenues include just a couple of weeks of the film's returns.

Even so, Time Warner made a profit of almost US$1b in the last three months of 2013 alone.

After two months on release, the New Zealand-made Hobbit film has made US$854 million around the world, according to Box Office Mojo website. The movie has pulled in more than a quarter of a billion in the United States alone.

In New Zealand, box office sales have reached $9.2m in two months, but revenues are dropping fast, to $65,000 in the past four days, making it the 11th most popular film at present.

The first in the Hobbit trilogy, An Unexpected Journey, has had box office takings of $1.02b and Smaug was earlier given 50/50 odds of also topping US$1b in worldwide sales, by overseas industry commentators.

Director Sir Peter Jackson's biggest selling film was The Lord of the Rings: The Return of the King, which has earned US$1.1b worldwide, making it the seventh best-selling film of all time.

Return of the King was on release for more than 24 weeks in total.

Smaug is ranked 36th on the all time list, but it has only been on release for eight weeks, so far.

All three Hobbit films were estimated to have cost a total of $676m to make, double the amount spent on the Rings trilogy. Past estimates suggested New Zealand taxpayer grants for Warner Bros to make the Hobbit films here would cost the Government a total of about $100m.

During the debate about the grants for The Hobbit, NZ First leader Winston Peters called on Warner Bros to give back the Government's $67m subsidy for the first Hobbit movie, after it hit US$1b in sales. Warner Bros New Zealand subsidiary, 3 Foot 7 Limited, understood to be the vehicle for making The Hobbit trilogy, received a Large Budget Screen Production Grant of $31.3m last year.

Over three years, the total grant was $98.3m from taxpayers.

The report for the March 2013 financial year showed direct production costs of $216m in the year, and almost $319m in the previous year.

The Government has claimed the film created 3000 jobs in New Zealand, based on figures from Jackson's Wingnut Films.

Initially, the Large Budget Screen Production Grant give a cash grant equal to 15 per cent of New Zealand production spending. The grant has been given to films including The Lord of the Rings trilogy, King Kong, The Chronicles of Narnia: The Lion, the Witch and the Wardrobe, The Waterhorse, Avatar, The Adventures of Tintin, Rise of the Planet of the Apes, and The Hobbit.

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In December the Government announced that big-budget international screen productions would be able to claim back 20 per cent of spending in New Zealand, up from 15 per cent. Some productions would get as much as 25 per cent back, meaning James Cameron's Avatar sequels would get at least $125m in taxpayers' money in return for spending at least $500m making the films here.

Time Warner's net income was US$983m in the latest quarter, compared with US$1.11b, in the same quarter a year ago. Time Warner's profits for the year were almost US$3.7b. 

- with AP

- BusinessDay

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