If this weekend's box office results say anything, it's that success in the movie business resists predictability. How else do you explain the money that Time Warner's (NYSE: TWX) The Hangover is grossing? I haven't seen the film, so I'm sure there's something to it. Nevertheless, it just didn't seem like it would be a big hit. Guess the word of mouth on it has been pretty good.
Hangover, as of early estimates at Boxofficemojo, took in $33 million at domestic theaters over the past three days, good for first place. It beat Disney's (NYSE: DIS) Pixar project Up, which took in about $30 million and came in second. Hangover actually was the number-one movie last weekend as well. So far, it's taken in more than $100 million.
Sony's (NYSE: SNE) action thriller The Taking of Pelham 1 2 3 took up third place with $25 million. Such an opening statistic was weak if you ask me. You got Denzel Washington and John Travolta powering the picture. And Hangover beat it? Again, you can say what you want, but Time Warner's comedy on the second weekend out didn't seem a match for Washington and Travolta.
This is why I say that media companies shouldn't be afraid to either negotiate less pay for talent or forego big stars altogether in favor of strong cinematic concepts and storylines. I'm sure Washington and Travolta cost Sony a lot, not only in terms of upfront fees, but in regard to financial participation as well. What did it get the company? Third place. It wouldn't be so bad if studios didn't have to risk so much capital. As it is now, it's very difficult to make a profit from theatrical exhibition alone because of rising budgets, marketing costs, and complicated deal structures that favor talent's interests over the interests of shareholders. According to data at Boxofficemojo, Hangover cost $35 million to make. Pelham set investors back $100 million. And let's not forget that Land of the Lost, starring Will Ferrell, continues to do awful business. It came in fifth this time around, and it hasn't even cracked $40 million in total domestic gross. General Electric's (NYSE: GE) Universal, the film's distributor, must be down in the dumps. I am, too, since I own GE!
Any trading ideas this week from Tinsel Town? I'd say that you should keep your eye on Time Warner and Disney. Sony doesn't interest me, and GE is not one you'd necessarily bet on due to just NBC Universal. Time Warner seems to have been a bit in favor with the market recently, but it's been such a sleepy stock for years that I'd be careful buying it. Disney also has bounced off recent lows, so that one might be cool on a pullback. Hopefully Up will continue to perform and help out when it comes to synergy and cash flows.
Disclosure: I own Disney, GE; positions can change without notice.
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Reader Comments (Page 1 of 1)
6-15-2009 @ 9:23AM
murph said...
The Hangover is a riot. Just wait until it hits video. American Pie/Anchorman/Borat type sales.