"Beerfest" is one of the handful of movies that Warner Bros. has on the 2006 annual box office list (it ranks no. 83, with $19 million in total gross). I saw it and would say it is one of the worst movies in the past ten years (and I loved "Jackass: Number Two" so don't think I am just being a film snob).

The point is, investors were certainly hoping that Warner would do better this year. A recent downgrade of the TWX stock by JPMorgan was based, in part, on the projections that the financials of the company's film unit would get worse.

And, things are not looking up at the Time Warner film unit. It has had no hits this year, and even "Jackass" ($51.4 million so far), could ultimately pass "Superman Returns" ($198.5 million), which is Time Warner's biggest box office release in 2006. "Superman" cost so much to make that it almost did not matter how much money it brought in. It was going to lose money under even the best of circumstances.

Aside from "Superman," Warner has had some other pictures that the studio had hoped would be hits. "Poseidon," a remake of the ship disaster movie demonstrated that hope springs eternal. Even the first version with Gene Hackman in the starring role was an awful movie. "Lady In the Water," by kooky director M. Night Shyamalan, was another hopeful. The movie will probably not hit $50 million. Most analysts thought that the animated film "The Ant Bully" would do well. It had voice-overs by Julia Roberts, Nicolas Cage, and Meryl Streep. It is unlikely that any of them worked for free. The film may not do $30 million in the US.

The film-making business is notoriously fickle. But the costs of running a studio are not. Disney decided to cut 450 people at its production unit earlier this year and cut the number of movies it would put out. At least if it had a dry spell its costs should be less.

For Time Warner and its stock to stage a full recovery, it will not suffice that its cable and network businesses do well. The film unit will have to pull its own weight. Right now, it isn't.

Douglas McIntyre is a partner at 24/Wall St.