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Did 'Termintaor Salvation' need Arnold Schwarzenegger?

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It was a busy weekend at the box office. The Memorial Day holiday period is a time when studios try to set a good financial tone for their summer slates.

And it looks like News Corp. (NASDAQ: NWS) is the winner. The media company's Night at the Museum: Battle of the Smithsonian project, starring Ben Stiller, grossed an estimated $53 million at domestic multiplexes over the past three days according to Boxofficemojo. That was a good performance. The first Night at the Museum took in $30 million in its first three days of release back in Christmas 2006.

I was surprised that News Corp. came out on top. Did anyone out there think that Terminator Salvation, from Time Warner (NYSE: TWX), wouldn't be number one?

The sci-fi flick made $43 million over the three-day weekend. It actually opened on Thursday, so it has a little more money in the bank than Museum does as of this writing. But that doesn't take away from what I perceive to be a major upset. Now, Salvation is comfortably ahead of both Sony's (NYSE: SNE) Angels & Demons and Viacom's (NYSE: VIA) Star Trek (both of those pictures are credited with very similar estimates, so we'll have to wait until final numbers are released to see which one is third and which one is fourth), but you would think it would have the power to beat out a museum full of fantastic shenanigans. I mean, this is the Terminator franchise we're talking about!

Here's the interesting thing about Salvation. It actually presents a neat little opportunity to consider how much a star's brand equity brings to the table. As we all know, current governor of California Arnold Schwarzenegger is inarguably the franchise's major trademark. I suppose that, if Schwarzenegger had toplined the project, the movie would have grossed more than it did.

But let's look at Terminator 3: Rise of the Machines. That feature was released to the market during the Fourth of July period back in 2003. Believe it or not, Machines actually grossed a very similar amount as Salvation in its debut weekend. It went on to gross $150 million total in the domestic market.

Now, let's look at Terminator 2: Judgment Day. This took in a little over $200 million at domestic theaters. What does this tell me? Well, it tells me that adding Schwarzenegger to the cast wouldn't have been a wise move from a film-investment viewpoint. Although there's no way of knowing, I think the Schwarzenegger premium probably wouldn't have been worth the risk. I honestly don't believe that studios should use expensive stars as much as they do. There's just no way of knowing when their association will click and when it just won't make a difference.

And consider this. Christian Bale has just come off of one of the most successful (as well as one of the most overrated) movies of all time, The Dark Knight. That film grossed $1 billion across the globe. Did he do anything for the Salvation movie's risk profile? Stiller may have presumably helped Museum's cause, but how can we exactly quantify how much of the movie's concepts and effects are responsible for the overall success?

My fellow media investors, I would proffer that movies continue to be too expensive. And I think stars are overvalued commodities and that their salaries need to see a major correction. Salvation reportedly carried a budget of $200 million. And it obviously cost a lot to market. Movie economics is not an attractive subject. Take a look at Disney's (NYSE: DIS) latest earnings report and you'll see what I mean.

I hope the CEO of Time Warner takes a look at the weak weekend gross of Salvation and really thinks about how he should change the cost structure of content development.

Disclosure: I own Disney; positions can change without notice.

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Last updated: November 24, 2009: 10:46 PM

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