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Is "Watchmen" Worth The Legal Battle?

I caught a pre-screening of one of the most hotly-contested and highly-anticipated movies of the year.

"Watchmen" - the source of a multi-million dollar lawsuit between Warner Bros. and Fox - opens tonight nationwide. I have to say its performance at the box office will be incredibly telling about the state of the movie industry. Expect the power of marketing, the fanboy, and the success of the filmmaker's last film, "300," to help it prevail at the box office.

It's on track to have a huge weekend: Tickets for its 1,600 midnight screenings are selling out fast. Nearly all online ticket sales this week have been for the movie, and it's rolling out to 3,611 screens, the most ever for an R-rated film. The film doesn't need to perform over a long period of time. If it can pull off a $70 million opening weekend like "300" did, Warner Bros., Fox and Paramount will consider the investment and the legal battles well worth it. In effect, a movie of this type doesn't have to be fantastic (like "The Dark Knight") in order to recoup the investment.

Flawed movies, if they've got great ad campaigns, can still deliver studios big results.

The reportedly $120 million plus budget movie has a lot working in its favor; a huge ad campaign, a recognizable brand with a fan base (that smiley face button with a drop of blood on it is pretty striking). But, on the downside, it's rated R, which reduces its potential audience, it's almost three hours long, which limits the number of times theaters can screen the film each day, and the brand, while recognizable, lacks the narrative and familiarity of other superhero stories like Batman or Spider Man.

Would I see it again? Probably not. Its really dark and violent, way too much gratuitous blood for me. But I'm not the target audience and neither are critics — it's meant for 18-to 35 year old guys and I expect them to turn out in droves.

Warner Bros. has proven hugely successful at its strategy of marketing big brands — whether it's "Batman" or "Get Smart." It builds campaigns around a simple, compelling message thats easily communicated in a poster. "Watchmen" is a dark twist on that strategy. The logo is there, but the brand message is more elusive, the narrative opaque, and the movie is simply a lot darker than other Warner Bros. hits. But if this movie can perform in line with 2007's R-rated hit "300," (made by Watchmen's filmmaker it pulled in $500 million worlwide) then the years of development and legal battle will be worth it.

Hollywood is on the edge of its seat to see how the film delivers afer watching a year-long lawsuit between two studio powerhouses — Fox and Warner Bros — with financing from Paramount Pictures and hedge fund-backed Legendary Pictures also on the line. Fox, which acquired rights to "The Watchmen" graphic novel in 1986, sued Warner Bros. last year just as the studio finished production on the film. Fox said it retained distribution rights to the film because a producer on the film, Larry Gordon, failed to exercise his right to acquire Fox's remaining interest in the intellectual property. (Needless to say, this made Gordon look really bad, and you'd think Warner Bros. would have triple checked that all the legal rights were secure before starting production).

Millions of dollars of legal fees later the studios found a resolution: Warner Bros. distributes the movie without Fox's logo; Fox gets between $5 million and $10 million in cash, its millions of dollars of legal fees covered, and an additional 5 to 8.5 percent of the film's gross. If the movie performs as well as "300" does Warner Bros. payout to Fox will be unfortunate, but certainly worthwhile.

Media Investors: this film is unlikely to affect the bottom lines or stock prices of TWX, NWS, or VIA. The revenue (mostly going to TWX) is spread out between all three, and the movie studios are small divisions of the larger companies.

An ironic twist: Warner Bros. made tens of millions of dollars on "Slumdog Millionaire," which it originally developed, but then Fox produced and distributed. Now it seems like Warner Bros. will have to hand some of that money right back.

Questions? Comments? MediaMoney@cnbc.com

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  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.