Time Warner (TWX), whose colleagues include The Walt Disney Company (DIS), General Electric Corporation's (GE) Universal, and Sony Corporation (SNE), did an incredible job at the box office in 2009. It could even end up being the top studio, although there is currently some ambiguity on that count. This article over at Variety says that News Corp. (NWS) might come out ahead once all is said and done.
Nevertheless, according to Moviefone, Time Warner's movie operations captured an estimated $3.99 billion at multiplexes around the globe. Yes, it's an impressive feat, and it was done with the help of a major franchise. Harry Potter and the Half-Blood Prince grossed well over $900 million on a worldwide basis. Even more amazing was the performance of surprise comedy hit The Hangover. And to think, that one had an R rating, something that tends to limit the potential for big success.
Time Warner execs obviously did a good job at the movies, but the investor in me tends to get a little cynical when I hear about such top-line feats. Wouldn't it be better to see who had the most profitable collection of films during the year, the ones with the best profit margins and cash flows?
Too bad we'll never hear about it. Such information is not required to be given out. And I would argue that it should be, since it would give investors a valuable insight into deal structures and budget construction. Analysis of the financial impact of content generation would be a much easier job.
Another thing that needs to be kept in mind is the number of projects released. As Moviefone pointed out, Time Warner released a large quantity of celluloid. Viacom (VIA) did a great job of exploiting its smaller slate, taking full advantage of blockbusters such as the Transformers sequel.
Because DVD sales are down, and digital distribution has been altered by the web, studios are presumably looking to maximize the grosses during exhibition. The goal should be to do it on a smaller number of pictures. I'm not sure there's any way to influence success in this regard, since the movie business is an unpredictable, hit-or-miss affair.
The best advice I can give Time Warner and the rest is to keep the shareholder in mind. That should be the industry's major resolution for the new year. Of course, Hollywood is a self-centered industry which oftentimes focuses solely on using other people's money to produce cinematic shrines for big egos. I'm not sure that will ever change, so whenever an individual considers investing in content, it behooves said individual to know the risks and to do a lot of research. Shares of Time Warner have done well in 2009. If the company's hot streak in theaters suddenly cools, it could be a different story in 2010. For now, execs can bask in the glory of being the best.
Disclosure: I own Disney, GE; positions can change without notice.
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