The box office continued its late year recovery with the three day weekend for the top 12 films rising 40% from a year ago. This strong performance builds the prior weekend’s gain of 37%. As recently as December 13th, the quarterly box office was running down 9.5% but two weekends of strong gains have reduced the deficit to 4.6%. With three films paying very well (National Treasure 2, I Am Legend, and Alvin and the Chipmunks) and another popular franchise to be released n Christmas Day (Alien vs. Predator), the box office should continue to expand vs. a year ago through the end of the year. By year end the quarterly decline may be around 2% and the year to date gain should be greater than 5%. The quarterly results will be at least as good as recently lowered estimates for the theatre stocks imply suggesting that the group could receive a January effect bounce starting any time. I remain long Regal Entertainment.
In other media news, News Corporation announced that it is selling 8 TV stations in mid-size markets for $1.1 billion. These stations have been for sale since mid year so no surprise here. However, I think the sale will remind investors that News Corporation is shifting its asset base toward a higher long-term growth profile. I remain long a small amount of News Corporation, looking to get much longer in the next few weeks as I free up cash from year end and early 2007 trades.