Lionsgate And 'Hunger Games' Poised To Go For Box Office Hat Trick During Traditionally Weak Weekend

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Includes: DWA, FOX, FOXA, LGF.A, TWX
by: The Entertainment Oracle

Summary

Historically this weekend is a Hollywood dead zone where no studio will unroll a major wide release due to Hollywood’s version of a “Thanksgiving hangover”.

Usually holdover films fare well in this window with “The Hunger Games: Mockingjay – Part 1” poised to be the latest beneficiary.

Lionsgate’s next-to-last ‘Hunger Games’ film opened lower than expected but has continued to slowly gain momentum and remains a major international presence.

Author UpdateDec. 8, 2014, 2:07 AMAs expected it was another forgettable weekend for the box office with the biggest surprise coming from the international market.

Domestically, Lionsgate’s (NYSE: LGF) 'The Hunger Games: Mockingjay – Part 1' earned another $21 million taking its total to $257 million, which will put it behind only Disney’s powerful duo of 'Captain America: The Winter Solider' and 'Guardians of the Galaxy' on the list of 2014’s most successful films.

Yet, given that 'Mockingjay – Part 1' is coming in well below 'The Hunger Games –Catching Fire,' it’s not seen as the same level of success (which is incredible, but that’s Hollywood). The studio shouldn’t be too worried as next year’s 'Mockingjay - Part 2' will see a boost from the “legacy” effect which comes with all the final films in a franchise, plus likely continued international success.

Last week’s combo of new releases from DreamWorks Animation (NASDAQ: DWA)/Fox’s (NASDAQ: FOXA) 'The Penguins of Madagascar' and Warner Brother’s (a subsidiary of Time Warner (NYSE: TWX)) 'Horrible Bosses 2' took second and third place, which incidentally is higher than what 'Bosses 2' opened to last week. 'Penguins' earned $11.1 million to rise to $49.6 million overall and 'Bosses 2' earned $8.6 million jumping to $36.1 million, just a few million shy of its $40 million production budget. It’s hard to spin either of these hits for either studio, which have both had a rough 2014.

Meanwhile overseas Fox bowed its holiday epic 'Exodus: Gods and Kings' in just 10 markets and netted a shocking $23 million in the process. Paramount tried a similar roll-out for early 2014 hit 'Noah' as religious films still get solid play worldwide.

'Exodus' comes to the States next week and is one of Fox’s final two films of 2014 along with the equally anticipated 'Night at the Museum 3.' Given 'Exodus’' opening internationally, Fox should be very optimistic about displacing 'Hunger Games' for top position at the box office next weekend.

This weekend marks a Hollywood rarity…a Friday box office release date nobody seems to want.

In fact you have to go back to 2007 to find the last time a major studio opened a movie wide on the first Friday in December. It was New Line (now a part of Time Warner (NYSE:TWX) and the film was His Dark Materials: The Golden Compass. It made $25 million and topped the charts in its opening weekend. Of course it also cost $205 million to make and failed to break $70 million domestically when all was said and done.

Compass was also meant to be the start of a new Harry Potter like franchise and despite a massive international haul (that brought it back to the black) was quickly shuttered. You can't blame the studio as its flopping was a big deal and you can't make a franchise that costs that much and expect to be bailed out by international audiences every time. That's just bad business.

Now I'm not saying Compass was the reason why no studio has ventured into that territory since but it is a lesson to remember. The real reason why films aren't released during this frame is because it just isn't profitable as distributors expect at least a 50% drop in attendance from the five-day holiday frame and nobody wants to be a part of a weekend known for its declines. It's Hollywood's equivalent of a "Thanksgiving hangover."

The other half of that equation is that at least one November tentpole always seems to have a built-in advantage with audiences and usually keeps a firm hold on top of the charts. That's why previous winners of this weekend historically include Twilight: Breaking Dawn - Part 1, Tangled, Skyfall and The Blind Side. In all likelihood The Hunger Games: Mockingjay - Part 1 will soon join that esteemed list.

Investor Analysis

Now entering its third week of release the Lionsgate (LGF) distributed adaptation of the fame young adult novel has not had an easy go of it after opening under-expectations. Yet as I've argued a handful of times, it's not the end of the world for the studio and its investors. Following this weekend the film should be at around the $250 million mark following an additional $20+ million haul.

Truthfully, the more the studio can add the better as Mockingjay - Part 1 is still about $85 million shy of what predecessor Catching Fire did last year, but right on track internationally where it has made over $250 million…so that half of the formula is still working perfectly. Again, remember this is a series designed for the long run, similar to Interstellar, which itself is still firing away.

So what should you expect from the other major studios? Well, DreamWorks Animation (NASDAQ:DWA) and Fox (NASDAQ:FOXA) (NASDAQ:FOX) should see around $13 million to $15 million for The Penguins of Madagascar and Warner Brothers/New Line should see another $10 million for Horrible Bosses 2. Like with Hunger Games, the less the films slip week to week, the better as both also opened well below expectations.

Personally I've wondered why WB didn't hold Bosses for this weekend, as it's well-known that "hard R" films don't usually fare well during the family friendly Thanksgiving weekend. Granted, the allure of a tentpole film opening on a holiday is usually too big to resist and the original Bosses shocked analysts with how well it did during its debut, so for a film that will easily re-coup its small ($40 million) budget, it was worth the studio to take a flier on that date. Yet Warner's also knows it has The Hobbit: The Battle of the Five Armies ready to unroll in a few weeks, so they weren't exactly putting all their holiday eggs in Bosess' basket.

Simply put, if you're investing in a major media company, this isn't the week to make any major buy/sell decisions as you aren't likely to get any new information. While this period marks the official halfway point of the season, we still have a little ways to go before we can close the book on what has been a less than exciting 2014 for the movies.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.