GE's 'Couples Retreat' or Viacom's 'Paranormal Activity' -- which is really No. 1?

And now, we come to the movie in the fifth spot on the chart. For those who have followed any of my box-office ts, it will come as no surprise at all that this is the most significant story of the weekend to me. It is actually quite important from a shareholder point of view. The question is, will media CEOs take the lesson of movie number five to heart?

Viacom's (NYSE: VIA) Paranormal Activity grossed approximately $7 million at 160 theaters. The per-theater average is obviously enormous. What's so amazing about this release is that Activity, which Mark Fightmaster discussed over the weekend, was produced by some enterprising filmmakers for only $11,000. While this the generally discussed number, I have absolutely no idea if that is completely accurate or not because I remember when The Blair Witch Project came out there were a couple different numbers floating about concerning its true cost. Whether or not $11,000 is the actual number or not doesn't matter. The point is this: you don't need to spend a lot of money to make a marketable film. I'm sure a bunch of capital was allocated to sell the piece, but let's be real: Activity should return a decent amount of profit.

Concept, not budget or presence of celebrity thespians, can be the ultimate factor of success. No, I'm not arguing that Hollywood should focus exclusively on films with budgets akin to the minimum deposit in a mutual fund. What I am saying is that films should be lensed for several million dollars instead of several hundred million dollars. Produce more product, yank films out of theaters as soon as they've made a decent profit, put them on DVD as soon as possible. A crazy scheme? Media leaders should get a little crazy, because we live in crazy times. Who would have thought that the home-video market would be brought to its knees by the disruptive effect of digital technologies? And what about dollar rentals? Everyone is going nuts about that, too.

New ideas about distribution will need to go hand-in-hand with lower budgets. The old Hollywood model can no longer sustain itself. Sure, that could be an example of hyperbole, but check in with the studio divisions of many media companies. They've been a drag on their corporate masters. And if you want to perform any cash-flow models on earnings derived from celluloid investments, you better be ready to add a lot of leeway for future risk.

I don't think Activity will be as financially successful as Blair Witch, but I can't wait to see what next weekend brings for Viacom and its haunted little film. Every executive in Tinsel Town is paying attention. Whether they're learning or not is up for debate...

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