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November 28, 2005

Weekend Box Office Report: Thanksgiving

With the box office in a seasonally important season, I plan to issue occassional updates when key movies open or key weekends pass. This past Thanksgiving weekend generally contained good news for the big Hollywood studios and that means investment implications exist for Disney, Time Warner (Warner Brothers), Viacom (Paramount), Sony, News Corporation (20th Century Fox), and Lions Gate Entertianment. Follow the "Continue Reading" link below for this week's update.

Weekend box office had more good news for Time Warner (TWX) and Disney (DIS) and disappointing news for Lions Gate Entertainment (LGF). Sony has a hit with Walk The Line and despite horrible reviews Paramount (part of the new Viacom (VIA) will not suffer from the release of Yours, Mine, and Ours.

The latest Harry Potter film continues to track very well, with its 5 day holiday weekend gross nearly matching the gross of the initial, and most successful, film in the series over the comparable weekend. This first Potter film went on to gross $317 million in the U.S. and $659 in international markets. The current film is trailing the first film in international markets but I don’t know for sure if the timing of openings is the same. In any event, Goblet of Fire looks set to bring in around $1 billion in global box office against a production cost of $150 million and marketing costs of at least $50 million. TWX will make several hundred million off this film, much of which will hit the income statement in 2006.

DIS executives have to be happy with Chicken Little which saw just a 16% decline on the 3 day weekend. Granted this past weekend was a holiday with kids off school on Friday but at $118 million gross to date in U.S. markets, the film is still tracking close to Shark Tale and will likely produce as much profit for DIS as the average of the Pixar Animation (PIXR) films have. Next up for DIS is the Narnia film to be released on December 9th.

LGF saw a disappointing 5 day gross of $6.1 million for the Usher film In The Mix. On the last conference call, management stated it was looking for a $10 million tally after the first weekend. LGF will lose a few million on this film prior to the DVD window but I don’t expect the disappointing opening to cause any earnings problem in the quarter. Next up for LGF is the horror film Hostel on January 6th followed by the sequel to Diary of a Mad Black Woman in February. I think LGF shares will trade down today.

Fox has a hit in Walk The Line which has grossed over $50 million already and fell just 12% on the 3 day weekend. The film cost about $40 million and I'd guess prints and advertising could be anywhere from $20 to $40 million. Regardless, this film will be very profitable for Fox and is likely headed for a Best Picture nomination and several acting nominations.

Rent is performing well for SNE but that stock will rise and fall on consumer electronics sales, particularly in the TV area.

VIA will be happy to get out of Yours, Mine, and Ours without a major loss. The opening 5 day weekend of $24 million is better than feared but will likely take a huge hit next week. However, given the struggles at Paramount of late, this is good news.

Finally, NBC Universal owned Focus Features shows the inherent volatility of the film business as it has a hit in Pride and Prejudice, which also looks like a Best Picture contender, and flop in The Ice Harvest, which had two big name stars. Neither film is going to move the needle at General Electric or Vivendi.