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The Box-Office Massacre, Part 2
If it's not a sequel or a remake, it probably won't be in theaters in 2006. And most movie-studio stocks will continue to reel. The exceptions: Disney and Sony.
By Robert Walberg
If you were a making a movie about this years box-office performance, you might call it The Big Chill 2. Box-office revenue in the U.S is expected to decline by a little more than 5%, to $8.9 billion, according to Exhibitor Relations, a company that tracks box office receipts.
Hollywood executives like to blame the slow, steady decline at the box office on on-demand cable, straight-to-DVD movies, increasing piracy and video games. Rising fuel prices and declining disposable incomes are also cited as reasons for the decline, though that seems like a stretch considering movies are still a relatively cheap form of entertainment.
While there is probably some truth to each of Hollywoods claims, the real problem confronting the industry is a lack of imagination and creativity. Most of big titles this year were sequels to successful franchises ("Star Wars," "Harry Potter" and "Batman") or remakes ("War of the Worlds", "Charlie and the Chocolate Factory" and "King Kong").
Flogging the franchises
Movies that combined fresh, well-written stories with memorable performances were few and far between. They also tended to be about subject matters that appealed to a more narrow audience and, as such, did little to bolster the box-office numbers. Movies that fit this category included "Capote," "Walk the Line" and "Good Night and Good Luck." Award season might give these films a modest box-office boost, but it will be too little and too late to reverse Hollywoods slump.
Unfortunately, the big movie production companies are once again leaning heavily on sequels in 2006. Among the retreads: "X-Men 3," "Basic Instinct 2," "Mission Impossible 3," "Garfield 2," "Pirates of the Caribbean 2," "Superman Returns," "Terminator 4" (without Arnold) and "Casino Royale" (with a new James Bond).
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Good luck and good night. Aside from "Mission Impossible," none of these movies can be considered sure things. The concepts are either tired or weren't that interesting to begin with (hello, "Garfield"?). Even Bond isnt dependable this time around, with Pierce Brosnan out.
And this year's remakes -- "Charlottes Web," "All the Kings Men" and "The Pink Panther" -- are either proof that Hollywood's screenwriters are out of ideas or, more likely, that studios are unwilling to take any chances with new ideas. Given the rising cost of making and distributing a movie, studios want to increase their odds of success. The best way to do that, in their view, is to create and flog movie franchises until the franchises are utterly exhausted.
Dimming stars
Another missing ingredient from recent films is the lack of a sure-fire star. Few, if any, actors are box-office gold the way Eastwood, Stallone, Schwarzenegger, De Niro and Nicholson used to be. Tom Hanks, Tom Cruise, Julia Roberts and Russell Crowe are about as close as we get to truly bankable stars today, but only Cruise delivered a hit last year.
In 2006, Hanks seems certain of a hit as the lead in "The Da Vinci Code. Based on the best-selling book, the film will be distributed by Sony Pictures, a division of Sony (SNE, news, msgs). Sony might have a number of hits next year, actually, as other promising titles include "Open Season," "All the Kings Men," "Stranger than Fiction" and "Marie Antoinette."
Another studio in position to improve on last years performance is Walt Disney (DIS, news, msgs). It has two movies on its slate -- "Pirates of the Caribbean 2" and the latest from Pixar (PIXR, news, msgs), "Cars" -- that are virtual locks at the box office.
Most movie-industry stocks have slumped badly this year, with an average decline of 11.4%. By contrast, the S&P 500 ($INX) is up about 4% year to date. Though the price declines might make the industry tempting to bargain hunters, until the industry starts taking some risks with original, buzz-making movies ("Syriana," "Brokeback Mountain" and "Capote" are a nice start, but not nearly enough), theres little reason to get excited.
As a whole, movie makers will struggle to keep pace with the broader market. I see just two studios with shots at gains this year: Disney and Sony. I still think Disney could climb to as high as $30 -- a 24% gain from today's stock price -- with new management (Michael Eisner out; Robert Iger in) and a lineup that will build on the success of its "Chronicles of Narnia: The Lion, the Witch and the Wardrobe." Sony, led by "The Da Vinci Code," could see its shares climb to $44.
At the time of publication, Robert Walberg did not own or control shares of companies mentioned in this column.
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