Bad news for the heirs of Superman co-creator Joe Shuster is good news for Time Warner (TWX +0.00%) investors: Warner Studios is now free to make a film about its signature superhero team -- the Justice League of America -- starring its titular character.
Why now?
Last week, a California court denied a claim that would have restored Shuster's 50% claim on revenue derived from the character he and Jerry Siegel co-created in 1932 and sold to DC Comics in 1938. Superman would go on to star in Action Comics #1 and define the superhero genre that's bringing billions to modern box offices.
Warner wants a bigger slice of that action. According to the Los Angeles Times, the studio will build on next year's Superman reboot -- Man of Steel, starring Henry Cavill -- by releasing a JLA film in 2015. The team-up would compete directly with Joss Whedon's sequel to Marvel's The Avengers, which has earned studio parent Walt Disney (DIS +1.72%) more than $1.5 billion at the global box office. DVD and Blu-ray sales of the film are also going strong.
I have mixed feelings about Warner's win. As a fan of the comics medium and a writer, I want to see creative professionals profiting handsomely alongside those who publish their works. And yet the Times reports that DC has already paid some $4 million to Siegel's and Shuster's estates, a handsome sum. Judge Otis Wright apparently sees no compelling legal argument to award Shuster's heirs any more.
But that doesn't mean the battle is over. Shuster's family is expected to file an appeal. Meanwhile, on Nov. 5, a separate court will hear arguments regarding a 2008 ruling that awarded 50% interest in certain Superman profits to the Siegel estate. Warner is seeking a reversal, the Times reports.
Meanwhile, back at the Hall of Justice...
Time Warner needs the victory. Sure, a Justice League film would feature several DC characters, but it would feel empty without Superman. He's one of the original seven members of the JLA, which debuted in 1960 in DC's The Brave and the Bold #28. Marvel's top team, The Avengers, wouldn't arrive for another three years.
If only it mattered. Ask a knowledgeable Disney investor to name the assembled Avengers and I'll bet they would get at least Captain America, Hulk, Iron Man, and Thor -- four out of six. How many Warner investors know the names of the original seven JLA members?
If you answered only comic book nerds like me, you're probably right. Outside of Superman, the wider viewing public is unlikely to know Aquaman, Martian Manhunter, or Green Lantern. They aren't big enough names, and DC's efforts to build them up have thus far fallen flat. Witness how badly Ryan Reynolds' portrayal of Green Lantern performed at the box office. History says turning a JLA screening into an Avengers-sized cash machine would be, at best, difficult.
Building a better brand
Yet there are options. Look at television: Marvel has thus far been better at developing live-action superhero flicks, but DC has been amazing at developing animated and live-action TV properties.
Smallville, which starred Tom Welling as a young Superman, ran for 10 seasons, and Arrow, which is modeled on JLA member Green Arrow, has thus far scored a ratings win for Warner's CW network. There's also Justice League and Justice League Unlimited, which aired more than 90 episodes over five seasons on The Cartoon Network. Every bit of that material is fair game for a JLA live-action film.
Let's hope the studio takes full advantage. Not only can we expect Whedon's Avengers 2 to be as epic as the first -- creating a tough comparable for whoever takes on the JLA film -- but with Harry Potter gone, Warner is lacking franchises even as Lions Gate (LGF +0.00%) is building a new one in The Hunger Games.
Franchises matter for investors because of the various ways they kick off high-margin merchandising revenue. Take The Walking Dead, an edgy comic book series that has since been adapted into a hit TV show by AMC Networks (AMCX +1.01%). There's also a popular social game that attracts more than 130,000 daily active users as of this writing. Activision Blizzard (ATVI +0.00%) is working on a first-person-shooter console game to be released next year, presumably in time for San Diego Comic-Con.
Between TV, toys, and interactive game development, Time Warner already has most of the elements for transforming a Justice League film into a franchise. But those mechanisms won't matter if the story stinks. I don't see DC Entertainment Chief Creative Officer Geoff Johns allowing that to happen, but the social age is also different from anything we've seen before. Early reviewers could take to the Social Web and destroy the film before it has a chance to wow audiences.
Such is the power of Facebook (FB 0.80%). With more than 1 billion users worldwide, the social network captures the zeitgeist in ways we've never before seen. Tomorrow we'll get a closer look at what this massive footprint meant for third-quarter earnings. Wall Street is expecting a sequential drop in profits as Facebook continues to spend heavily on infrastructure.
