A strong opening for Disney’s Enchanted, a surprisingly good opening for This Christmas, and decent showing for another 6 to 8 films led the box office to an up weekend following two straight negative weekend comparisons. The top 12 films pulled in 4.4% more than a year ago according to BoxOfficeMojo.com. The depth of films finding an audience is important given the poor box office performance so far this quarter with the total take down 10%. The next two weekends represent the easiest comparisons of the quarter so if the quarter is going to turn around the time is now. Besides the depth of films finding an audience this weekend, the release of The Golden Compass on December 7th should boost comparisons.
Enchanted is the first film opening on Thanksgiving weekend to win the holiday box office in five years. Hollywood has been opening anticipated Thanksgiving blockbusters on the weekend prior to the holiday over the past five years. Disney chose to buck the trend and used its brand and a well-reviewed film with appeal to a broad demographic to capture the to spot and bring in $50 million over the five day holiday weekend. Enchanted continues an amazing hot streak for Disney content whether it is films (Pirates of the Caribbean, Wild Hogs, Pixar films, The Game Plan) or Disney Channel Films and TV shows (Hannah Montana, High School Musical). Enchanted could prove particularly rewarding as it will transfer to theme parks, consumer products, Broadway, and sequels.
The other big story form the weekend is the performance of 3D and Digital screens showing Beowulf. FantasyMoguls.com is claiming that fully half of the $56 million gross for the film so far has been in non-traditional theaters. Theatre companies are currently upgrading many screens for 3D and several studios including Dreamworks Animation are planning 3D releases in the next few years. Theatres are able to charge a premium ticket price for 3D and analysts find the economics of upgrading screens attractive. In an industry lacking organic growth in ticket sales and facing secular challenges from digital downloads and home theatres, 3D is a potential positive. I am already seeing bullish comments on 3D from theatre company analysts and expect this to be a higher profile theme for the group in 2008.
Northlake remains long Disney, partially due to its content hot streak. Northlake also remains long Regal Entertainment, which currently yields a very safe 6.2%. The rally in the bond market makes this yield very attractive and could setup a trading opportunity if the box office recovers in the next two weeks.