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June 30, 2008

Wall-E Drives Cleans Up The Box Office

A whirlwind weekend had me all over the place so just a brief comment on another great weekend for the box office this morning. But first, major props to Providence, RI where I dropped my daughter off for a summer in the Early College program at Rhode Island School of Design. The city has done a fantastic of development, preserving the incredible wealth of historic buildings and using the river as a focal point for civic activity.

I took my daughter and her older brother to Wall-E for a Friday matinee. The film is every bit as good as the reviews. Hopped on a plane to Providence first thing Saturday morning, back to Chicago by noon on Sunday where I got in my car and drove 8 hours to my place on Lake Superior in Northern Wisconsin. Looking forward to some slower time to start the new quarter. Hopefully some space, peace, and quiet will allow me to do some good thinking about the very difficult market environment.

As expected, Wall-E led the pack with a solid $62 million, meeting expectations. It was the third best opening for a Pixar film and reversed a two film trend of declining opening weekends for Pixar. The film opened slightly better than Cars and with stellar reviews (look for talk of a best picture not best animated picture nomination) and indications it is playing beyond families with younger children I think it could go north of Cars $245 million....

....The surprise on the weekend came from Wanted which crushed expectations and pulled in $50 million. With two openings so large, the weekend was up 22% for the top 12 films according to BoxOfficeMojo.com. That is enough to bring the year to positive territory for the first time in months. The quarter also ended up vs. a year ago despite tough comps with June powering 17% ahead of 2007, a gain of $150 million.

With a bunch films with good legs and strong word of mouth and a big opening anticipated for the new Will Smith film on the holiday weekend, look for the box office strength to continue. Comps remain very tough in July and August but the summer is shaping up better than expected which makes the theater stocks intriguing for a trade after the huge drubbing they have taken in the past several months. A few analysts upgraded Regal Entertainment last week on just such a theory. I think the stocks bounce now but will pullback again when comps go negative again later in July so I'd hold my fire unless you are a short-term trader.

Northlake is long and have been recommending Dreamworks Animation I want to mention that Kung Fu Panda fell 46%, a little worse than I was hoping for but understandable given the direct competition from Wall-E. It is now running about $3 million behind Cars which grossed $244 million. I think it gets north of $220 million (I have a bet on that with one of the street analysts who is cautious on the shares). North of $220 means estimates must continue to rise so I think the market and Wall-E induced weakness in DWA late last week sets up a buying opportunity.

Posted by Steve Birenberg at June 30, 2008 10:46 AM in Box Office