Jeff Bewkes Is Right: Time Warner Can Improve The DC Universe

| About: Time Warner (TWX)


Time Warner's DC universe of films and episodic series is an important driver of shareholder value.

The comparison between DC and Marvel possibly shows that there is a gap between quality.

It is possible for DC to replicate the Marvel success story.

Time Warner (NYSE: TWX) and Disney (NYSE: DIS) use movies and television series to drive their respective businesses. Time Warner, however, is, to many, not necessarily in the same league as Disney. There's some truth to that; obviously, Marvel is Marvel and DC, while not Marvel, is still DC - i.e., a very popular brand name in the comic book industry. DC can look at this disparity (perceived or not) as something of an opportunity for growth.

CEO Jeff Bewkes recently conceded that his portfolio of super-being celluloid should be reviewed for quality issues. He mentioned adding some "lightness" to the movies, which I think can reasonably be interpreted as increasing the number of comedic moments, as well as idiosyncratic character traits, to them. It's a fair assessment. When one thinks of Marvel, one probably simply thinks of a fun time while consuming culinary junk from the concession area. When one thinks DC, one might think something different - something less than that, perhaps, or a darker experience, or even other things. The point is, there is a difference between DC and Marvel (between Time Warner and DC). DC films generate money. Suicide Squad captured a gross of over $740 million around the globe, according to Box Office Mojo. Batman v Superman: Dawn of Justice collected over $870 million worldwide.

Those are big numbers... but they could be bigger. Disney's summer Marvel offering, Captain America: Civil War, saw a worldwide take of over $1.1 billion. I'm not going to say that Time Warner is doing badly because its own two projects didn't hit a billion dollars - that would be inaccurate. I will say, though, that it would be better to hit a billion dollars than not. The more tickets sold, the better off the revenue streams down the line will be; merchandise, Blu-ray, digital, all of that tends to perform more ideally when the box office gross is bigger.

Bewkes is correct: optimizing DC stuff will help. I think it is indeed possible that Time Warner has the ability to create parity between DC and Marvel in terms of quality and overall tone. Kevin Smith said something interesting; in this article over at The Wrap, he is quoted as saying, "DC isn't ever going to do what Marvel does." I'm not sure exactly what he meant by that, but I don't think it was necessarily a disparaging remark against DC; instead, I believe he is saying, from the perspective of a comic book aficionado and an expert on the subject, that DC has a certain way of doing things and that Marvel has a certain way of doing things, and that he enjoys both from a specific perspective unique to each universe. Even so, I believe that Bewkes should prove to Smith that DC can, in fact, make movies that operate on the same engine and fuel as Marvel movies, simply based on the fact that Marvel seems to be more popular in the minds of mainstream audiences. Indeed, Smith, who is very close to the industry and subject matter, can appreciate both mythologies, but that cannot be said for outright casual patrons of the entertainment form. The bottom line is that no patent exists on Marvel's style structure; DC should replicate it for future entries in its film franchise.

One thing to keep in mind is that it is possible to play Disney's game. 21st Century Fox (FOX, FOXA) did very well with Deadpool earlier in the year. The picture, based on a Marvel character, brought in over $780 million on a global basis. That was with an R-rating. That was with it not being Disney. Or Time Warner. That was not what was expected for this project, especially considering it was released during the winter. Yet, it happened. Many have said that its particular approach to the story, its specific execution helped to bring in more ticket sales than one might have thought was conceivable.

If you are a shareholder of Time Warner, as I am, then you want the company to play the Disney game as closely as it can. I also own Disney, and I have confidence that there is room for two very popular cinematic universes. Although I don't generally watch comic book films or episodic series, I do believe, from an analysis of the stats and the body of opinion that exists, that Jeff Bewkes should be encouraged in terms of the direction he wants DC to take.

Disclosure: I am/we are long TWX, DIS.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.