Grab some popcorn and an overpriced soda -- the show's about to start! Regal Entertainment Group (NYSE:RGC), the largest publicly traded chain of movie theaters in the United States, put on a pretty good show when it reported earnings this morning. Revenue grew by 6.5% to $685 million, and pro forma earnings rose to $0.23 per share, compared to $0.17 a year ago. Analysts had set a $0.27-per-share earnings target, expecting $679 million of gross sales.
In the conference call, management credited a slew of early-summer blockbusters such as Sony's (NYSE:SNE) The Da Vinci Code and Cars from Disney/Pixar (NYSE:DIS) for the strong sales, and noted that the unusually high number of family-friendly blockbusters boosted concession sales above normal levels. The current quarter should see healthy revenue as well, thanks to the record-breaking showing from Pirates of the Caribbean: Dead Man's Chest and what management called a promising slate of upcoming movies.
Hold it right there. I can understand that Will Ferrell and Ben Stiller are box-office draws, and it will be interesting to see how audiences receive a 9/11 movie starring Nicholas Cage. But the lineup of coming attractions gets worse, and when Regal starts to pin its hopes on such fare as Jackass: Number Two and Snakes on a Plane, I feel like I'm watching The Decline of Western Civilization Part III: The Cheap Entertainment Years.
Never mind the slow rollout of digital projection and distribution, or whether minimum-wage increases might affect future earnings. The problem with the movie industry today, and what I think will be the downfall of cinema as we know it, is the lack of quality content in recent years, as studios go for increasing numbers of cheap thrills and gross-out laughs.
Pirates is getting mixed-to-horrible reviews, yet it's breaking box-office records. It won't take much longer before moviegoers figure out that they're paying over and over again for yet another rehash of the same tired old formulas; they might as well just drop by the "classics" section of their local Blockbuster or Movie Gallery. Better yet, load up that Netflix queue with the great ones from yesteryear.
Regal seems to have other issues on top of that, judging from the weak bottom-line performance --though if you exclude its loss on debt extinguishment, its net income would have increased for the quarter. Until the old-line movie theaters can prove to me that today's flicks are worth seeing on a big screen again, my money is watching them from the cheap seats in the back. Far, far away.
Further Foolishness:
- One Fool takes a closer look at the movie industry.
- Two others go head-to-head over Netflix.
- You bought what?
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Fool contributor Anders Bylund owns shares in Disney and Netflix, but holds no other position in any of the other stocks discussed here. Foolish disclosure is a quality show every time, and you can check out Anders' holdings in 3-D Technicolor.
