Coinstar (NASDAQ: CSTR - option chain) shares are rising today after the company signed a supply deal with movie studio Paramount Pictures, a unit of Viacom (NYSE: VIA, VIA.B). Under the deal, CSTR's subsidiary Redbox will stock its $1-per-night DVD rental kiosks with Paramount Pictures DVDs. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on CSTR.

CSTR opened this morning at $32.55. So far today the stock has hit a low of $32.51 and a high of $34.49. As of 11:40, CSTR is trading at $33.12 up 83 cents (2.5%). The chart for CSTR looks neutral and S&P gives CSTR a neutral 3 STARS (out of 5) hold ranking.

I caught a very interesting post by Julia Boorstin over at CNBC.com. She discusses a movie studio that apparently wants to change the way movies are made. The company is called DF Indie Studios. Here's what it wants to do: make a dozen or so films each year on the cheap. What is cheap in Hollywood? Try $10 million or less. DF Indie Studios wants to go it alone, which means that it would rather not hook up with a Disney (NYSE: DIS) or a Time Warner (NYSE: TWX) to get distribution for its product. And Boorstin mentions that equity will be used as financing.

This movie-making model is right up my alley. I've written extensively about how Tinsel Town has gotten out of control when it comes to budgets and marketing expenses. Movies simply don't need to cost as much as they do. And projects give away way too many concessions in terms of cash-flow participation. Big stars tend to receive percentages of the gross that are too significant, in my opinion.

Viacom (NYSE: VIA), a media business that competes with Disney (NYSE: DIS), Time Warner (NYSE: TWX), News Corp. (NYSE: NWS), General Electric's (NYSE: GE) NBC Universal, and Sony (NYSE: SNE), doesn't have a lot to brag about in its third quarter. Revenue went up only 4%. Adjusted earnings fell 15% to $0.55, beating expecations by a penny. But I doubt that's much comfort in this particular case, considering that operating income at the company's media networks division dipped 4%, and an operating loss was reported for the studio division due to difficult comparisons (i.e., Transformers helped the year-ago quarter).

Like clockwork, Executive Chairman Sumner Redstone praised Viacom's content and fully supported CEO Philippe Dauman. Maybe Redstone should take a strong look at Viacom and sit the CEO down and have a serious discussion with him about the realities of entertainment programming. Right now, MTV is suffering from ratings challenges. Dauman has to step up his game in this regard.

I mean, come on, MTV is a powerful brand with the youth, and he needs to lean on the folks running it to work harder and become more innovative and creative. I will say that I liked that the earnings release mentioned a desire to engage better cost controls at its studio division. Paramount definitely needs to lower overhead expenses. Hollywood likes to spend money; shareholders most certainly do not. So I think Redstone should aggressively make this clear to Dauman.

Since last year's summer movie preview featured mostly sequels and adaptations, this year's preview has been expanded to include more than just potential "blockbusters." The following is a chronological list of not only the most hyped film fare of the summer, but other noteworthy smaller entries, and a short commentary on each.



5/2 - Iron Man, Viacom (NYSE: VIA)'s Paramount Pictures
The first of two big Marvel Entertainment (NYSE: MVL) adaptations of the summer, the Robert Downey Jr. led Iron Man has been getting a ton of hype and critical acclaim. This is the second year that a comic book adaptation has kicked off the summer, following last year's Spider-Man 3, which grossed over $150M over its opening weekend.

5/9 - Speed Racer, Time Warner (NYSE: TWX)'s Warner Bros.
Another big-budget adaptation of a generations-old cartoon. Last year's Transformers was, to my surprise, a huge success, so maybe Speed Racer, in the capable directing hands of the Wachowskis, can be as well.

Film financing fascinates me. There's so much involved; determining the risk associated with a particular project (on some level, this is impossible to do, since you can't predict how the public will react to a cinematic concept), figuring out how much exposure to the film industry a studio and/or equity entity should have, trying to eliminate the potential to be blinded by the alluring glamor that an association with a Hollywood investment by necessity implies -- believe me, there's a lot of complicated financial and social politics going on when one puts together a deal.

So, the following article from Reuters caught my attention. It concerned Viacom's (NYSE: VIA) movie asset Paramount. The article states that Paramount is having something of a tough time lining up funds from investors for its next slate, and that it might be looking to set up about $400 million.

The problem is, hedge funds and other investors haven't profited as much as they expected to from their piece of the action in the movie business. Therefore, they could be reticent going forward in terms of supplying studios with monies to produce celluloid entertainment. This is very understandable in my opinion; the movie business is hit-or-miss, and evaluating a project's ability to secure a return is about as easy as receiving a compliment from Simon Cowell. The Reuters piece implies that deal structures will have to change, which is something I've discussed previously -- I definitely think movies could be cheaper if the powers that be would just get their acts together.

All movie studios want to find their own Lord of the Rings/Harry Potter franchise. Disney (NYSE: DIS), for example, seems to be headed on the right track with its Narnia brand. Viacom (NYSE: VIA) made a solid effort this past weekend by releasing The Spiderwick Chronicles to the mass multiplex marketplace -- unfortunately, things didn't turn out so well, at least as I'm seeing it.

According to Boxofficemojo, Spiderwick is in a battle with Disney's Step Up 2 the Streets for second place. The latter is right now estimated to have grossed $19.7 million for the three-day weekend of February 15 through February 17; the former has just over $19 million to its credit. So, Spiderwick could exit its current third-place showing and move up in the rankings, but it won't catch up to the big winner, News Corp.'s (NYSE: NWS) Jumper. I'll tell you, I had no idea this one was going to "jump" -- what a horrible, horrible pun, huh? -- to the top of the box office charts this weekend with a $27 million take.

Final numbers will be coming later today, and we'll get a better indication of how all the movies did once Monday's holiday figures are added; also, the second weekend is always the ultimate tell. But, as of now, I don't think Viacom's Spiderwick fantasy -- which is distributed by Paramount and is co-branded with Nickelodeon Movies -- will approach the economic prestige of Time Warner's (NYSE: TWX) Potter property. Better luck next time.

Disclosure: I own shares in Disney.

Viacom (NYSE: VIA)'s Paramount unit will launch the next version of its popular Jackass film series online. On December 19, Jackass 2.5 will be offered free at the Blockbuster (NYSE: BBI) website only for streaming -- users will not be able to download the film. Starting a week later, the DVD-version will go on sale.

The project will be supported by advertising, and according to The Wall Street Journal, "Blockbuster paid a guarantee of around $2 million to Paramount for exclusive rights to Jackass 2.5."

The entire model represents a threat to the traditional movie revenue model. Theater owners, who are still powerful distributors for feature content, are likely to be upset. And what about the airline version of the movie, or the one that would run on HBO? Those may simply be unavailable.

But as the number of broadband homes rises and the number of people who grew up with a PC increases, the opportunity to launch video content outside of traditional channels will increase. Whether that will put studios at war with their traditional distribution outlets remains to be seen, but a series of battles is likely.

And you'd need a new Oscar category: "Best Film Released Online."

Douglas A. McIntyre is an editor at 247wallst.com.

This summer was a very profitable one for box offices nationwide, with four movies grossing over $300M, and at least another nine grossing over $100M -- signaling in a big way the resurgence of the movie industry, which had been struggling for the last few years.

The four big $300M+ winners of the summer were Sony Corporation (ADR) (NYSE: SNE) 'sSpider-Man 3, which grossed $336M in the U.S., Viacom, Inc (NYSE: VIA)'s Paramount's Shrek the Third, which grossed $320M, Transformers, also from Paramount, which grossed $311M, and The Walt Disney Company (NYSE: DIS)'s Pirates of the Caribbean: At World's End, which grossed $308M.

Three of the four were third installments of well established big-budget franchises, so their success is hardly shocking, but the Transformers success clearly marks the start of a new blockbuster franchise (the release date of the sequel has been announced -- June 26, 2009). The robot-action extravaganza, which was directed by Michael Bay, was definitely a surprise, as I remarked in my summer movie preview that Transformers "has flop written all over it... there cannot possibly be enough substance in a story about alien robots that transform into vehicles to make this a hit with the general public." I was wrong -- very wrong. The movie killed at the box office, grossing over $330M on a $150M budget, and prompting a re-release on IMAX, which opened last week.

Last week I blogged about the premiere of the long-awaited Transformers movie and how Susan Linn, a psychologist who co-founded the Campaign for a Commercial-Free Childhood, said the movie was improperly marketed towards children.

While Ms. Lind's complaint fell on deaf ears, Transformers rocked the box-office this week with $67.6M in the box office in its first weekend and $152.5M worldwide since its opening one-week ago today – beating the original Spider-Man with the biggest first-week revenues for a non-sequel.

The Wall Street Journal believes the Transformers debut, which research firm Merriman Curhan Ford & Co said was nearly twice as strong as the studio's expectations; has a strong chance of hitting $300M in domestic ticket sales.

Could this summer hit become a franchise?

Viacom, Inc. (NYSE: VIA)'s Paramount has been without a new franchise in nearly a decade. With key cast members Shia LaBeouf and others already optioned for another movie, will Transformers be their first? The answer has to be yes: Transformers 2 is slated for 2009, according to IMDB.com. Producer Lorenzo di Bonaventura is already in talks with director Michael Bay, who kept the movie down to a $150M price-tag, half the cost of Pirates and Spider-Man sequels.

Paramount has gone without a franchise for ten years and now has the opportunity to have three by 2008. The other potentials: The Spiderwick Chronicles, directed by Mark Waters, and a new version of Star Trek directed by J.J. Abrams, although that's already an established brand name. Sadly, neither of these directors compares to Michael Bay and his re-creation of the Transformers, but the potential for a franchise is there.

While Transformers fans will wait in agony over the next two years for a sequel, Viacom's Paramount looks to be sitting pretty with dreams of being in franchise heaven. Keep an eye on the big screen to find out if Paramount's dreams come ever true.

I recently blogged about my concerns if Evan Almighty flopped this weekend.

I, as well as many others, would classify the $32.1 million opening weekend of Evan as a flop. Peter Sanders of the WSJ believes that Evan Almighty was the first "major pothole" in Hollywood's sequel-filled summer. He also put Evan in the same category as Spider-Man 3, Shrek the Third and Pirates of the Caribbean: At World's End, by saying May's blockbuster "threequels" were all expected to fall short of their previous domestic sales numbers.

Could that be true? Looking at the numbers, Sanders has a good argument. That's only if you thought sequels should outperform the original. Other than Shrek II, most of the recent sequels made less than its predecessors. Even the Harry Potter franchise couldn't make a sequel that outperformed the $317.5 million earned from Sorcerer's Stone.

The Wall Street Journal reported that Blockbuster Inc (NYSE:BBI) will support the Blu-Ray DVD format in their 1450 stores, dealing a crushing blow to its technological rival, the HD DVD format.

While the battle to buy Blu-Ray or HD DVD disks have baffled Americans for the past year, Blockbuster has made the decision to stick with Blu-Ray after consumers were choosing the technology more than 70 percent of the time.

The decision may have been made for Blockbuster already, since all major studios except Universal Studios, which is owned by General Electric Co (NYSE:GE), release films in Blu-Ray. That means no Miami Vice, Evan Almighty, Knocked Up or The Bourne Supremacy for Blu-Ray.

Boo-hoo.

But don't worry, The Walt Disney Co (NYSE: DIS) will release its films exclusively in Blu-Ray. Warner Brothers, a unit of Time Warner Inc (NYSE: TWX) and Paramount Pictures, owned by Viacom Inc (NYSE: VIA) will make films in both formats.

Regardless of which company uses Blu-Ray or HD DVD format, both are incompatible on standard DVD players, although standard DVD's will be able to play on a HD DVD or Blu-Ray player. You'll have to pay up to watch too, both formatted DVD players aren't cheap.

Last year I previewed the big-budget summer movies, giving you a look at ten interesting films that were on the docket for the summer of 2006. This year I'm back with an even longer list (bloated like these films' budgets) of 15 movies you may want to escape to -- or possibly run screaming from.

Of these fifteen movies, Spiderman 3 and ten others are sequels, which in itself indicates something about the state of the industry (And I didn't even include Rush Hour 3 in this list, because, honestly, who wants to see that?). Two of the remaining four movies, Transformers and The Simpsons, are based on animated television shows, leaving only two original ideas in the whole lot -- Knocked Up and Ratatouille. Please, don't shoot the messenger.

Anyway, here is the list, chronologically, of the movies that Hollywood's brain-trust believes you will shell out your cash to see in the air-conditioned darkness of your local movie-house, along with my opinion of how they'll fare. The first on the list, Spider-Man 3, is already out in Asia, but will not be released here until May. All release dates below are for the U.S.

5/04 - Spider-Man 3, Sony Corp's (NYSE: SNE) Sony Pictures
Being the first blockbuster of the summer almost guarantees a successful open, and the popularity of the franchise seals that guarantee. One problem, however, is that "success" measured by any normal means won't be enough, as this movie had an estimated budget of $258M.

5/11 - 28 Weeks Later, News Corp's (NYSE: NWS) 20th Century Fox
The highlight of the horror/zombie genre for the summer, this follows the surprise success of Danny Boyle's 28 Days Later, which reinvented the zombie film with faster zombies and smarter characters.

5/18 - Shrek the Third, Viacom's (NYSE: VIA) Paramount Pictures
One of the only cartoon franchises that has held its own against Pixar (Ice Age being the other), the draw of this fairytale romp is that while kids love the story, there are enough winks at the adult audience to make parents happy to take them.

5/25 - Pirates of the Caribbean: At World's End, Walt Disney (NYSE: DIS)
Money in the bank for Disney, and since it was shot simultaneous with the second Pirates installment, it wasn't even as expensive to make as this summer's other budget hog, Spider-Man 3.

Viacom Inc. (NYSE:VIA) Chairman Sumner Redstone was recently bragging about his company's Paramount film studios to the press like a proud parent. It also underscores why he doesn't need Tom Cruise.

The company's "Dreamgirls" film has snagged eight Academy Awards nominations, "Babel" is nominated for "Best Picture" and "Norbit" now has the top spot at the box office. Plus, the studio has promising features such as "Transformers" and a new Indiana Jones film in the pipeline.

Redstone makes the point to the Hollywood Reporter that Hollywood continues to overpay "the talent." "Because it is not the talent that makes the movie, it is the script," he said. "'The play's the thing,' as someone once said. And if you have a great script, the talent rushes to appear in it and at not too heavy a price."

He's right of course and so was Shakespeare.

High-priced actors will appear in a low-budget film if they like the script. They will also appear in bad, big-budget films for a big pay check. Fans will only put up with their favorite stars appearing in bad movies for so long before that actor's brand is tarnished. That's why Redstone was smart to end Paramount's deal with Cruise.

Paramount's rebound will help Viacom's bottom line, particularly when these movies come out in DVDs.

Since he's interested in good scripts, I wonder if I should mail Redstone my coming-of-age comedy about an aspiring hip-hop star from the mean streets of Scarsdale. Does anybody have his email address?

After watching the music industry suffer from illegal digital piracy, the film studios are taking extra precautions to avoid the same fate. As a result, Apple Computer Inc. (NASDAQ:AAPL) is coming under pressure from some of Hollywood's biggest studios to rework the operating environment of its iTunes platform.

The studios, including Universal, 20th Century Fox, Paramount and Warner Bros, are enthusiastic about following Disney by offering their content via iTunes, but remain concerned about the platform's ability to prevent piracy.

Rightfully so when one considers that the average cost of a major studio release nowadays is approaching $100 million. The movie studios feel they have a lot more at stake than their (sister) record labels. One movie executive said, "We're very willing to do a deal but we're keen to get some concessions from Apple that will account for the differences between the value of music and television content and feature film content."

With the development and announcement of iTV, it is even more important for Apple to demonstrate that it can protect more than just copyrighted music. If it succeeds in placating the film industry, consumers might just plan to replace their DVD player with Apple's iTV player.

Paramount Picture's recent decision to cut loose Tom Cruise may be just the opening salvo in an upcoming battle between Hollywood studios and high-priced, high maintenance celebs. While overall movie receipt totals for this summer were up, the increase was driven by higher ticket prices, not increased attendance. Moviegoers are increasingly likely to be videoviewers instead. More than 1 million viewers have downloaded the video clip of a young man mixing Diet Coke with a mint and spewing the resulting concoction out of his mouth. Even more odd, 400,000 viewers have downloaded a clip of rabbits munching on vegetation.

Memo to viewers: GET LIVES! Seeing this image on the wall, AOL's strategy to become a premier video viewing destination begins to make a great deal of sense.

Movie production costs continue to skyrocket, with no assurance that money spent on production will be recouped at the theatres. By contrast, the number of no or low-cost video and video clips grows exponentially every week. As well, hundreds of hours of TV programming and thousands of movie titles are added to an increasing number of video-on-demand channels. With its recent purchase of GameDaily, Userplane and Truevo, AOL Video is moving to capture audience eyeballs. AOL also concluded a deal to distribute movie titles from 20th Century Fox, Sony Pictures Home Entertainment, Universal Pictures and Warner Brothers Home Entertainment Group.

Currently, AOL's business model allows viewers to access some ad-supported TV programming on demand free of charge. AOL plans to charge $9.99-$19.99 per movie download. For this fee, howwver, viewers will NOT own the movie. Purchasers may not burn the movie onto a DVD, though the movie may be played repeatedly over a period of days on several different Windows-supported devices. It remains to be seen whether consumers wil pay this fee for short-term ownership only.