I spent all weekend hitting refresh on my browser monitoring the news on Lehman, AIG, and Merrill Lynch. Apparently a bunch of Americans decided to do something else: go to the movies.
The weekend box office rose 35% from a year ago, breaking a seven weekend losing streak. The last up weekend was the opening one for The Dark Knight, back in mid-July. Given the massive numbers produced by Batman, over $517 million so far in North America, the long losing streak is a reminder that most recently released films did not find big audiences and that the second half of the record breaking summer of 2007 was unusually strong.
Last weekend was the best ever for the same September weekend by about 20% as four films grossed at least $10 million. All of the films were adult-oriented but their demographics differed enough to give each a chance to find an audience.
The big weekend could be the start of good run for movie theatres….

Last year saw a 12 week run of negative comps that began the last week in September and extended through mid-December. With this week’s top four likely to have some staying power in a slow part of the year and a decent releases slate between now and mid-December, it is time to take another look at Regal Entertainment (RGC), the leading domestic theatre chain.
Quarter to date the box office is down just 2% giving RGC a decent chance to meet consensus revenue estimates that call for a flat quarter. Easy comps and an extra week means growth should return in 4Q. RGC shares are trading near their 52 week low thanks to Hollywood’s seven weekend losing streak which might make it a good time to step in for a trade. While you wait, the current yield is 8%. I’ll be brushing off and updating my RGC model this week.