- The box office took a pounding this summer but had it not been for the foreign box office it would have been much worse.
- Studios like Warner Brothers and Sony benefited the most as international audiences helped bail out under-performing movies.
- A few studios have a chance to reverse the trend in the fall, but luckily have TV subsidiaries to fall back on just in case.
With the passing of Labor Day comes the official end of the summer movie season and it's not been kind to Hollywood this year. In fact many analysts have essentially been giving the season a "F," which isn't surprising given that this year will mark a eight-year box office low with revenue down nearly 15% and attendance falling 5%.
Yet it's not all doom and gloom as some trends did emerge this summer that can help any investor with a media stock in their portfolio make the right moves to beat the box office at its own game.
The overseas market has long been a blessing to Cineplexes and all of those who invest in the companies that help populate its theaters. International crowds love American movies and in all honestly they are likely the only reason why any studio is still making movies in 3D.
In fact, the benefit of global distribution has never been more a relief to investors than it was this summer. Look at the below grid which features eight movies that were either failures in relation to budget or only turned a small profit.
(Data courtesy of The-Numbers.com)
If you're an executive at those studios or worse an investor in one of its parent companies taking a quick glance at any of the above will not be a pretty sight. They represent eight missed opportunities that should have done much better with audiences.
Now look at those same eight films when you add in their international totals. What a difference right? It's anywhere between an $18 million and $500 million difference.
(Data courtesy of The-Numbers.com)
Aside from Spider-Man 2 which ended up in freefall domestically, the most jarring example is Edge of Tomorrow which was just one in a long line of misfires from Warner Brothers (a subsidiary of Time Warner (NYSE:TWX)) last summer.
Going into the summer the hope was having a Tom Cruise vehicle in June and Channing Tatum headlined pic in July (Jupiter Ascending) would offset not having a prequel/sequel/etc. on its slate. Yet Tomorrow didn't catch fire and Ascending was shifted to next winter. While Tomorrow did end up with a $100 million gross, it took the entire summer to do it and it was still $78 million short of the movie's massive $178 million budget. Yet throw in international audiences (who love both Cruise and 3D) and now you go form a $78 million loss to a $186 million gain. Again, impressive right?
The fact is that the majority of movies this summer recouped its money when including international sales. Of course that's not something studios are especially proud of. No executive greenlights a film anticipating it will fail in their own backyard.
Think of the foreign market as the box office's equivalent of a government bail-out. It's a safety blanket of sorts. You want it to help pad your bottom line, not save it. It's hard to spotlight exactly which company's look poised to dominate domestically in the fall and beyond as there is no science to it anymore but Warner Brothers along with Fox (NASDAQ:FOXA) and Universal (a subsidiary of Comcast (NASDAQ:CMSCA)) look the most prepared to not need to rely on foreign support.
After a rocky season Warner Brothers has Horrible Bosses 2 and the final installment of The Hobbit to help it right the ship, while Fox has a pair of literary adaptations in Maze Runner and Gone Girl plus the latest Night at the Museum sequel. Of the group Universal may be the riskiest of three given it is relying heavily in October on the horror genre which has taken a hit in 2014, but they also have Angelina Jolie's Unbroken, which is current frontrunner for Best Picture at the Oscars and Dumb and Dumber To which could play well with all audiences looking for (incredibly) mindless fun.
In terms of overall parent companies Fox and Comcast are coming off strong summers thanks to X-Men: Days of Future Past, Dawn of the Planet of the Apes, Lucy and Neighbors which give them more room wiggle room with its fall slate of films. Unlike Time Warner, the pair also have a broadcast network to help pad its bottom line thanks to Fox TV and NBC. Both networks are entering the season with hot shows like Gotham and Constantine and well-received returning favorites like Sleepy Hollow and The Blacklist. Then again Time Warner also has cable giants HBO and TNT under its umbrella which shouldn't be overlooked.
It's been a rough summer for the movies, but a prosperous one for a handful of TV networks…maybe that luck will rub off the box office or at least help offset any more damage.
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