Michael Jackson wins Halloween box office race, 'Saw VI' continues to suffer

However, I have to once again give more credit to another film in the marketplace, the one that came in second: Viacom's (NYSE: VIA) Paranormal Activity. You might wonder why this is.

Well, it all comes down to a simple metric: the per-theater average. Activity may have grossed about $5 million less than Jackson's feature, but it earned more per multiplex than did the King of Pop. Activity took advantage of the Halloween holiday, and if This Is It wasn't in theaters this weekend, the low-budget horror project would have most likely been number one.

When I say low budget, I mean seriously low budget. The film is said to have cost $15,000. Millions were spent to market the movie, of course, but Viacom should still reap a more than decent return on its capital.

Lions Gate Entertainment (NYSE: LGF) continues to be tortured by the studio's latest exercise in cinematic bloodshed, Saw VI. This is a humiliating failure for Lions Gate. The new Saw sequel came in fifth, and the flick's total to date stands at roughly $23 million. Yes, after two weekends out, Jigsaw has trapped an amount of money that should have been captured during the debut weekend. The killer's brand equity isn't what it used to be, to understate the point.

Here's what Lions Gate should do. Come back next year with a final Saw movie. I don't mean final as in forever; I mean final as in take a few years off. Reduce the budget by half (at least), and make the film on a quick-and-dirty schedule. By giving the franchise a rest, Lions Gate can allow interest in the series to recharge. And by promoting Saw VII as the last one, perhaps even attaching a marketable subtitle such as The Final Cut or The Last Trap, Lions Gate would almost be guaranteed a decent turnout. No matter what, for the sake of investors who own the company's stock, management must make a prudent decision on the future of the series. I would argue that the way in which management handles the Saw debacle will offer plenty of insight into its ability to create shareholder value in the future.

How can Viacom maximize the profits for Activity? I've said this before, but it bears repeating: pull the film from theaters now and port it over to DVD in time for the holidays. That probably won't happen, and I'm sure you know why. The magic $100 million level could be in reach for the surprise phenomenon, which has so far grossed well over $80 million, and Hollywood simply loves to brag when a very cheap piece of celluloid that has no business hitting $100 million nevertheless does the impossible.

Who cares about bragging? Shouldn't profit be the ultimate motivator? Since Halloween has come and gone, Activity should call it a day and be readied for a Christmas release. This way, Viacom isn't tempted to waste money on further marketing of the theatrical release. After all, the bulk of the potential gross has probably already been made. The whole idea of narrowing the windows between channels of distribution is so full advantage can be taken of the momentum behind a project. In addition, promotional dollars can be conserved since, in theory, not much more selling is needed if a movie quickly heads on over to retail shelves.

Will Lions Gate and Viacom do right by shareholders? Well, I don't have a lot of confidence that they will. Studio execs do what they want. They may care about the bottom line, but oddly enough, they don't do enough to protect it; instead, they seem to be more concerned with status and dealmaking. I hope it's different this time.

Disclosure: I don't own any company mentioned; positions can change without notice.