Despite blockbusters such as "Transformers: Age of Extinction" and "22 Jump Street," box-office figures for the season have been fairly weak so far. The numbers for the Fourth of July weekend were especially poor, as many consumers presumably eschewed going to the movies in favor of barbecuing to commemorate the nation's independence. While pundits do not see the results as a cause for immediate panic, summer box-office weakness may have an impact on the bottom lines of movie makers such as Time Warner's (NYSE: TWX) Warner Brothers and Viacom's (NASDAQ:VIAB) Paramount.
The summer doldrums
According to Rentrak, the No. 1 company which gauges box office and film industry figures, U.S. box office figures for the Independence Day weekend fell to their lowest in 15 years partly because of a limited lineup of new releases. It has been a poor summer for the industry. With sales down 17% year over year since May 2, year-to-date sales of $5.44 billion are down 3.8% from a year ago.
Between July 4 and July 6, sales came in at $132.2 million for the lowest take since 1999 and sank around 45% compared with last year's holiday. While the comparison with 2013 was a difficult one, with "Iron Man 3" netting $174.1 million on its debut versus this year's $91.6 million opening of "The Amazing Spider-Man 2," industry executives are worried.
Granted, it didn't help to have the Fourth of July fall on a Friday, which is usually an important day of the week for the industry, but other warning signs have appeared. Four major movies saw their sales drop more than 60% on their second weekends, which is unusual. According to Paul Dergarabedian, senior analyst at Rentrak, "Dawn of the Planet of the Apes" and "Guardians of the Galaxy" will now have to make big splashes for the industry's results to recover, but 2014 receipts will probably lag behind last year's $10.9 billion record high.
In the spotlight
Let's take a look at the weekend in a bit more detail. The new Transformers movie, which features massive battling robots that can morph into everyday vehicles and was expected to be the top hit this summer, earned around $37.1 million over the Fourth of July weekend and around $100 million in its opening weekend and this put it in the top spot for the summer. The movie was expected to take in $38.5 million over the Independence Day weekend.
The film is giving a much-needed boost to Viacom's Paramount film division, as Box Office Mojo ranked it last among the six major studios and it has had the fewest releases this year. During the six months ended March 31, filmed entertainment was good for roughly a quarter of Viacom's overall revenue, while the segment reported a decline of 21% for the period.
The second highest grossing film for the Fourth of July weekend was Tammy from Time Warner's Warner Brothers film division. The road movie has also missed analyst expectations so far with earnings of $32.9 million while analysts had hoped for a figure closer to $45 million. On the other hand, this isn't too bad for a movie that cost only $20 million to make.
While the movie received a harsh treatment by critics and garnered a C+ on Cinema Score, Warner Brothers' management appeared to be pleased with the movie's performance. It is doubtful that this would have been the case if it had been a more expensive film to make. Also, the weak critical reception makes it unlikely that the movie will have much more room to run. The company has the most films on the roster for this summer, although a string of poor receptions this year that have included "Edge of Tomorrow" is putting a lot of pressure on upcoming releases.
The bottom line
Analysts and film industry pundits were somewhat worried over the summer box-office figures, with the worst Independence Day weekend performance since 1999 adding to the consternation. There were several mitigating factors, such as July 4th falling on a Friday, but the full-year take is still unlikely to match last year's record performance. As such, the bottom lines of the film divisions of Time Warner and Viacom may be taking a bit of a hit going into earnings.