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April 16, 2007
Monday Morning Media Madness
Here is your Monday Morning Media Madness for April 16, 2007:
• A tough comparison against a $40 million opening for Scary Movie 4 pulled the box office down 5% this past weekend. The weak comparison does little to year-to-date comparisons which remain up 6%. With the a very strong release schedule for the summer season set to kick off in early May, comparisons are likely to improve. In fact, this could end of being one of the best years ever. With the big movies this year yet to come, the box office is already running at an all-time best pace and is up vs. any year in the past five. This should be good news for Regal Entertainment (RGC) which has produced a total return of 19% in the past year. RGC shares have already recouped about $1.30 of the $2 special dividend they went ex-dividend in late March and the shares till have a 5.7% current yield. A target of $23-24 over the next couple of months is realistic.
• Comcast (CMCSA/CMCSK) is buying movie ticket selling site Fandango. Fandango will continue to exist as is and will also be the core of a new entertainment site called Fancast. Fandanago and Fancast should both benefit from more than 11 million broadband subscribers that buy broadband internet access from Comcast, 70% of whom use Comcast.net as their home page. Comcast is developing a sizable internet advertising business that has thus far gone largely unnoticed on Wall Street. According to a recent article in the Wall Street Journal, solely from its relationship with Google (GOOG), which provides search for Comcast.net, Comcast is receiving about $70 million in revenue. This deal is due to be renegotiated this year and Comcast could see a significant boost in its revenue. The Fandango deal may get investors to notice the rapidly growing internet advertising business buried within Comcast. This is just another positive in a bullish story for Comcast over the next couple of years....
• Going back to the movie business, movie critic and industry observer David Poland, who is an occasional guest on CNBC, wrote a piece this weekend on The Hot Button arguing that the movie business is looking much better on a secular basis for the major studios. His thesis has to do with the difficulty of smaller studios gaining distribution for their movies while the cost of producing and marketing a movie continues to rise. Poland has been one of the few voices who did not buy in the gloom and doom brought about the poor 2005 box office performance. I agreed with Dave as we both noted that the problem in 2005 was just some bad movies and a comparison against Passion of the Christ, a once in a lifetime niche film that grossed almost $400 million.
Posted by Steve Birenberg at April 16, 2007 09:33 AM in Media
