Unless you are completely out of touch with pop culture, you probably know that Disney's (NYSE: DIS) High School Musical 3: Senior Year is coming to theaters today. However, there's another film that's coming out as well, one that's darker, and quite a bit bloodier to boot: Lions Gate Entertainment's (NYSE: LGF) Saw V.
This is actually going to be one of the most exciting weekends ever for box-office observers. Exactly how high will Musical gross over the weekend? That's the big question. I've read guesses that center around the $30 million mark. I've seen one pundit predict $40 million. Well, let's consider the following. Saw IV was released last year around this time. It grossed about $31 million in its debut weekend according to data at Boxofficemojo.com. Saw II and Saw III grossed a similar amount in their respective opening weekends. Given the fact that the Musical franchise has captured a lot of zeitgeist equity the last couple years, and given that it isn't limited by an R-rating, I'd have to assume that we're looking at between $40 million and $50 million for the opening weekend. I say it will be toward the upper end of that range.
Now, where does this leave Saw V? Actually, this weekend is even more interesting than it appears at first glance. Lions Gate's stock has been declining along with the market, but it certainly also has critics in terms of the quality of its earnings and cash-flow growth, as well as the fact that it spooks some people because it has direct exposure to the very risky movie business. The studio, without a doubt, needs Saw V to hit it out of the park. It desperately needs to be number one. For one thing, the opening grosses for the franchise have, as I sort of alluded to earlier, plateaued. To me, that means that Lions Gate is increasing its risk with every new sequel. For another thing, investors who are losing money on Lions Gate want to know that management is capable of determining the life cycle of a franchise; they want to have faith that the powers that be recognize when sequels should stop, or when they should bypass theatrical exhibition and see release on other media. If Saw V doesn't live up to its gore-rich reputation, then Wall Street might lose faith in Lions Gate. From my perspective, I have to wonder if people aren't getting sick of the movies. I love the concept, and the character of Jigsaw, as portrayed by Tobin Bell, is a brilliant psychotic icon of industrious ingenuity, rampant contradiction, and cruel philosophical wit. That being said, here's the bottom line: the first movie was undeniably great, the rest were...eh, letdowns. The novelty, for me at least, was contained within the frames of the first flick only.
Unfortunately, no matter what, Saw V can't be number one. It just can't. Again, I have to go back to its rating and the family-friendly nature of the Disney project (plus, it'll be in fewer theaters). What's fascinating, though, is the fact that this is the third film in the Musical franchise. Might one make the same argument that the novelty has worn off? Doubtful, since this is the first time a Musical movie is hitting the multiplex. We're talking a different beast. And the advertising campaign is kind of clever. One ad I saw had an announcer state something to the effect of (this is not verbatim by any means) "if you like Hairspray and Mamma Mia!, you'll love High School Musical 3." Pretty savvy, Disney. The company wants older demos to feel it's okay to visit the cable-channel-movie's onscreen incarnation. And if those older demos want to bring kids along, then the more the merrier! By the way, the picture is going to serve as a huge test for the franchise itself: does it have legs strong enough to propel it to further entries with a different cast? Using new talent to keep the concept going has been proffered.
So, in a sense, both High School Musical 3 and Saw V are arguably experiments to see how much further the attention span of the content consumer can be stretched. I suppose all sequels could be deemed that, but I think in this case the characterization is particularly profound. After all, Jigsaw is making his fifth Halloween appearance in a row, and the Disney movie is the third entry in what might be a series that plays best on the small screen. And another element to consider about the latter is that some kids might feel more comfortable watching the trials and tribulations of the singing students at East High in the privacy of their own homes. I mean, there has to be a certain quantity of peer-pressure backlash manifesting itself at this point in the fad's cycle. Of course, as an aside, the secret truth is that movie studios could experiment with concepts and distribution paradigms almost as long as they wanted to, so long as they kept budgets and talent salaries under control. That's the big mistake of companies like Time Warner (NYSE: TWX), General Electric's (NYSE: GE) NBC Universal, Sony (NYSE: SNE), News Corp. (NYSE: NWS), and Viacom (NYSE: VIA). That's right, I'm calling them all out because they're all at fault: they pay way too much for talent.
Shareholders of both Lions Gate and Disney have a lot on the line this weekend. Lions Gate shareholders had better hope the company increases the latest Saw's debut gross over last year's because the halo of a number-one ranking will not be shining over the mutilated cranium of Jigsaw this time. Disney shareholders better pray that their movie isn't just number one, they should be angling for number one with a bullet. They want the franchise and merchandise brand to keep the contributions coming to operating income (it's been reported that the movies have delivered over $200 million in operating profit). Let the games begin...
Disclosure: I own Disney and GE; positions can change at any time.
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Reader Comments (Page 1 of 1)
10-27-2008 @ 2:00PM
Andrew said...
Do you realize that it costs $10 million to make a SAW movie. It is profitable for Lionsgate before Day 2, as the international rights are sold off. They don't need to be #1 nor do they need to beat HSM as no one expects them too. Do some research and learn about movie financing and how Lionsgate operates.