First-night nerves in movie mayhem

Lauren Chambliss12 April 2012

IT'S the time of year when the big entertainment companies release seasonal films and earnings forecasts rise or fall on the strength of a single movie's opening day box-office receipts.

Disney, the giant media company with theme parks, TV and cable operations has been floundering since epic cartoon Treasure Planet bombed on its first box-office weekend.

Harry Potter is working his special brand of box office magic, pulling in nearly $300m (£190m) in the US in its first few days. That's good news for AOL Time Warner, also expecting a box-office bonanza with the US release on 18 December of The Lord of the Rings: The Two Towers.

Vivendi Universal is riding high with several hot Christmas releases - rapper Eminem's 8 Mile and drug drama Empire - giving a lift to chief Barry Diller's reported effort to spin off the movie giant from its troubled French parent.

Working out whether a film will hit or miss has become an obsession on Wall Street, where at this time of year investors spend almost as much time reading Hollywood's Daily Variety as they do the Wall Street Journal.

The movie craze reaches a peak in the next week with the release of several sure blockbusters and a few wannabes, including the second instalment of The Lord of the Rings trilogy; Maid in Manhattan, a Jennifer Lopez-Ralph Fiennes vehicle; a Martin Scorsese film about New York Irish gangs; several comedies; and a Star Trek sequel.

The first Lord of the Rings film sold $860m in tickets. New Line Cinema, a unit of AOL Time Warner, has shipped 35m DVDs and videotapes and expects to sell 18m more by the end of the year. The budget for the trilogy - all three were shot simultaneously - was $310m.

On the other hand, Disney was forced to drop its guidance on early next year after Treasure Planet flopped and Disney shares fell by about 15%.

'Movies are just one small piece of business for most of these companies and sometimes there is an over-emphasis on one data point - the opening day weekend,' said Marie Driscoll of Argus Research. 'Investors sometimes look at the trees instead of the forest.'

Meanwhile, a month-long slide in AOL Time Warner's shares has been halted by Potter's magic and the promise of a ringing run for the second cinematic adaptation of JR Tolkein's epic.

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