Investing in the Oscars: Meet the Hollywood Studio I Can't Wait to Own

Welcome to the Day After, wherein pundits and viewers take turns publishing mixed reviews of Seth MacFarlane's performance hosting the Oscars while laughing at how Jennifer Lawrence tripped her way up onto the stage to accept the Academy Award for Best Actress.

Me? I think last night's show wasn't so different from the ones that have come before, and that the real winners were the studios that funded superior stories at a huge profit. Here's a closer look at each of the Best Picture nominees and how they performed last night and at the worldwide box office:

Film
Studio
Oscars

Box Office / Budget*

Amour

Sony Pictures Classics

1

$18.35 / N/A

Argo

Warner Bros.

3

$206.89 / $44.5

Beasts of the Southern Wild

Fox Searchlight

0

$12.36 / N/A

Django Unchained

The Weinstein Company

2

$380.45 / $100

Les Miserables

Universal

3

$394.86 / $61

Life of Pi

20th Century Fox

4

$583.37 / $120

Lincoln  Buena Vista 2 $244.82 / $65
Silver Linings Playbook The Weinstein Company 1 $159.66 / $21
Zero Dark Thirty Columbia Pictures 1 $104.56 / $40

Sources: IMDb and Box Office Mojo. *In millions. N/A = not available.

Of the studios, News Corp.'s (NASDAQ: FOXA  ) Fox did best by collecting four wins for Life of Pi. Time Warner (NYSE: TWX  ) took home three wins, including Best Picture, for Argo, while Comcast (NASDAQ: CMCSA  ) subsidiary Universal Studios received three for Les Miserables. Walt Disney's (NYSE: DIS  ) Buena Vista Pictures nabbed two wins for Lincoln, a disappointment considering the hype surrounding the film.

Other items that stood out after reviewing the data:

  • Bob and Harvey Weinstein have a magic touch. Not only were Django Unchained and Silver Linings Playbook two of last year's best films, they were also two of the most profitable on a gross basis at 73.7% and 86.8%.
  • No film did better than four-time winner Life of Pi. Sure, it wasn't the box office success that Marvel's the Avengers was, but at nearly $600 million in gross receipts worldwide, it ranks as one of 2012's top earners and tops among the Best Picture nominees.
  • Each of the three most decorated films -- Argo, Les Miserables, and Life of Pi -- was an outstanding earner for its respective studio. As a group, the nine Best Picture nominees earned an extra $305 million at the U.S. box office between nomination day and Oscar night, Box Office Mojo reports.

My point? Quality work -- too often a rarity in Hollywood -- can pay off big. In the case of Fox parent News Corp. and Universal parent Comcast, Life of Pi and Les Miserables earned much more than executives could have hoped for.

A Hollywood rebel, breaking rules from the outside
If there's a downside to all this, it's that we can't buy shares of movies -- only the studios that produce them -- and all the big names are sufficiently diversified as to mute the impact of a blockbuster. The Avengers, huge as it was, amounted to no more than a modest bump in Disney earnings.

Of the Hollywood majors, only The Weinstein Company, based in New York, is a pure-play film producer and distributor. And with an enviable record: Aside from Silver Linings Playbook, which it produced and distributed, and Django Unchained, which it co-produced and distributed, Weinstein has been involved with Best Picture winners The Artist and The King's Speech in recent years. In 2009, the studio co-produced Inglourious Basterds with Django Unchained's Oscar-winning writer/director Quentin Tarantino, and with equally impressive results: $321.46 million in worldwide receipts on a $70 million production budget, according to Box Office Mojo.

I've dedicated a fair amount of our family portfolio to entertainment-related stocks. Most often, I opt for businesses that either have a knack for building outstanding franchises (i.e., Disney) or have inventory capable of producing several outstanding franchises (i.e., Warner). Weinstein has the former, and I suspect is busy acquiring the latter. A business I'd dearly love to own a piece of, in other words.

Right now, the only way to do that is to invest in Starz Media, a subsidiary of Starz  (NASDAQ: STRZA  ) , in which The Weinstein Company owns a 25% stake. The unit's Anchor Bay Entertainment division distributes home video versions of Weinstein films. But that's a consolation prize, at best, and I'd much rather have exposure to the entire enterprise.

So how about it, Bob and Harvey? Are you ready to take your studio public?

Go behind the curtain
I may be willing to wait for The Weinstein Company to file for an IPO, but you may be looking for a stock idea in the entertainment industry right now. If so, I have good news: The Motley Fool has written a new premium research report that lays out the case for investing in Disney today. This report includes the key items investors must watch as well as the opportunities and threats the company faces going forward. We're also providing a full year of regular analyst updates as news develops, so don't miss out -- simply click here now to claim your copy today.


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  • Report this Comment On February 26, 2013, at 7:07 AM, djstunt101 wrote:

    you write:

    Of the Hollywood majors, only The Weinstein Company, based in New York, is a pure-play film producer and distributor

    No mention of Lionsgate (LGF)? They have quickly taken their place along with "the big 6" (Sony, Time Warner, Disney, Comcast, News Corp, Viacom) with a reported 11% of the U.S. Market Share in 2012.

    LGF's performance has been pretty strong as well and they have a pretty promising pipeline. Take a look.

    Thanks and agree on the outlook for the sector. I think we could possibly be seeing the beginnings of a "land grab" for content and more and more devices are able to stream video....they are no good unless they have something to stream right?!

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