You've done well, Dr. Jones.

Viacom's (NYSE:VIA) Indiana Jones and the Kingdom of the Crystal Skull scored an opening weekend as big as its wordy title, ringing up an estimated $151.1 million in the United States and Canada since its Thursday debut. The film's heady showing trails only Pirates of the Caribbean: At World's End as Hollywood's highest-grossing Memorial Day opening weekend of all time.

This should normally drum up a round of applause at the local multiplex, but shareholders aren't seeing a whole lot of that these days.

"Stakes," they mutter. "Why'd it have to be stakes."

Throw me idol, I'll throw you the whip
The summer season is off to a strong start. Even before Indy's exciting debut, Iron Man blew exhibitors away, scoring the second-largest opening for a non-sequel in Hollywood history.

And who cares if Indy came up short to Jack Sparrow? The movie chains have to feel pretty good that the three strongest Memorial Day weekend box office takes just happen to have occurred in each of the past three years (since the bronze medalist here is 2006's X-Men: The Last Stand).

Unfortunately, you're not getting that kind of excitement when you pull up a stock chart.


Friday's Close

52-week High


Regal (NYSE:RGC)




Cinemark (NYSE:CNK)








Consumers haven't abandoned the multiplex, yet Carmike can't turn a profit, AMC can't seem to complete its IPO, and Regal joins Cinemark in stuffing money into shareholders' pockets to keep them around.

True, Regal and Cinemark offer chunkier yields than most fixed-income alternatives these days, yielding 6.9% and 5.1%,  respectively. One can only imagine how poorly the stocks would be doing if they weren't at least appealing to yield-chasing income investors.

The actual exhibitors aren't the only ones smarting. Companies that have tied their fortunes to celluloid are also hurting as badly as the bankrollers of Speed Racer. National CineMedia (NASDAQ:NCMI), the ad network that many multiplex operators use to waste your time before the movie trailers start, is trading for less than last year's $21 IPO price. Access Integrated Technologies (NASDAQ:AIXD), a profitless player in the important migration of exhibitors from reel systems to digital projectors, has shed 84% of its value since peaking two years ago.

The true Grail will bring you life ...
Hit movies are lining up nicely this summer. Multiplexes offer close and reasonably affordable escapes in a dicey economy where gasoline is at a premium. Shouldn't the industry be thriving?

Not exactly. Regal's first quarter hints at a troublesome trend for the operators. Admissions inched up slightly during the three months ended in March, but concession sales shrank slightly. This is huge, because the exhibitors' fattest margins come from moving pricey tubs of buttered popcorn and gallon-sized sodas.

Regal sold $166.1 million at the concession stand this past quarter, at a cost of a mere $22.7 million. Movie chains have the flexibility to inch ticket prices higher every year, but if penny-pinching patrons respond by skimping on the Twizzlers and cola, ticket-takers' papercuts will be the least of the industry's concerns.

My favorite play in this sector is IMAX (NASDAQ:IMAX). The big-screen operator has been making headlines by landing juicy joint-venture partners like AMC and Regal to introduce its digital systems this year.

Studios are also warming up to IMAX, since the company can provide supersized versions of their films in an environment where IMAX-licensed exhibitors can charge a premium. IMAX has teamed up with Hollywood for a few clunkers this year, like The Spiderwick Chronicles, Shine a Light, and now Speed Racer, but its fortunes should improve with next week's Kung-Fu Panda, and the upcoming Batman Begins sequel, The Dark Knight, come July.

As home theater experiences improve, the local multiplex will have to try harder to distinguish itself. It has few better allies in that regard than IMAX's towering screens and sense-awakening technology. Since IMAX takes a cut from the box office and the licensing, it won't suffer from a concessions slowdown, unlike the actual operators.

The digital systems are also key catalysts, providing the industry with a lower cost base and greater programming flexibility than the old reel-based machines.

You don't have to be an archeologist like Indiana Jones to dig the potential, especially at a time when everyone else appears to be looking for hidden treasure somewhere else.

Further Foolishness from the silver screen: