Oscar Nods Mean Little for Investors

by Beth Gaston Moon | February 27, 2012 2:00 pm

Oscar Nods Mean Little for Investors

It’s no surprise The Artist took home the Best Picture Oscar[1] last night. After all, the Academy of Motion Picture Arts & Sciences likes to reward originality, and the black-and-white, almost entirely silent film was certainly a unique throwback. Love it or hate it, it was unlike any other movie in theaters this year.

The French film was the first silent motion picture to take home the night’s most coveted statue since 1929. That wasn’t the best year for stocks[2], and while, thankfully, we won’t see a repeat of Black Tuesday, the so-called Oscar bounce that nominated or winning films often see at the box office isn’t looking likely[3], either. That goes for cinema-related companies as well.

Although receipts at the domestic box office have enjoyed an 18% surge in 2012 so far, most Oscar titles have not reaped the benefit. In fact, the nine Best Picture nominees still in theaters have seen just a 13% lift since nominations were announced on Jan. 24.

According to BoxOfficeMojo.com, that is the eighth-worst awards-season bonus in the last three decades. The Artist, which was nominated for 10 awards and won five (including Best Picture, Best Actor, and Best Director) has netted all of $31 million at the box office.

The Iron Lady — which catapulted Meryl Streep to her 17th award nomination and her third win — has earned a relatively measly $25 million in box-office receipts. Both of these films are distributed by the privately held Weinstein Company.

The most successful Best Picture nominee, in terms of box-office receipts, is The Help, which was distributed by Buena Vista films, a division of Walt Disney (NYSE:DIS[4]). It couldn’t enjoy an in-theater Oscar-nomination bounce, however, since it concluded its run last fall.

It’s also unlikely that subscription-based video-rental companies such as Netflix (NASDAQ:NFLX[5]) have benefited from movie-awards season. Is someone going to go through the hassle of setting up a subscription just to check out the few titles available in DVD or streaming format? Similarly, any increased activity at Redbox, a division of Coinstar (NASDAQ:CSTR[6]), will likely be negligible.

So what’s a part-time investor and full-time movie buff to do? Is there a way to trade the studios if an Oscar bounce seems out of the question?

One simple way to evaluate movie stocks is to look ahead at the studios’ next high-profile offerings. The box-office trend this year has favored blockbusters rather than smaller critical darlings, so what’s on the calendar for moviegoers hungry for action (and popcorn)?

It’s unrealistic, of course, to think that one movie can have a profound long-term effect on a stock, but upcoming titles are one thing to consider when doing fundamental research on entertainment stocks.

In the short term, the series of John Carter sci-fi novels is coming to the big screen in early March thanks to Disney. One thing that makes this project notable is that it is Pixar’s first live-action effort. If successful, it could open a whole new world of opportunity for the studio behind Toy Story, Finding Nemo, and others.

Lions Gate Films (NYSE:LGF[7]) is the studio backing The Hunger Games. The movie version of the wildly popular trilogy of young-adult books hits theaters on March 23, and theaters are already taking pre-orders. Lion Gate’s highest-grossing films to date have been The Expendables and Fahrenheit 9/11, which respectively took in $274 and $222 million. Games could break this record if the film is as successful as its literary predecessor.

And to coincide with the 100th anniversary of the Titanic’s ill-fated maiden voyage, the 1997 tour de force film of the same name is being re-released in 3D format. Many of the filmgoers that made it the highest-grossing film of all time (until James Cameron topped his own record with Avatar) may want to revisit Jack and Rose in a 3D. But will they see the movie multiple times again, as many people (including me) did 15 years ago? That’s probably about as likely as the ship dodging that iceberg.

Any proceeds from this effort would be shared by News Corp’s (NYSE:NWS[8]) 20th Century Fox studio and Viacom’s (NYSE:VIA[9]) Paramount Pictures. You may remember that the two studios shared the financial burden on what was then the most expensive movie of all time.

Later this year, look out for a third installment of the Men in Black franchise and a reboot of the Spider-Man story. Both are being distributed by Columbia Pictures, a division of Sony (NYSE:SNE[10]).

As of this writing, Beth Gaston Moon owns shares in Netflix.  

Endnotes:
  1. Best Picture Oscar: http://www.chicagotribune.com/entertainment/movies/oscars/chi-oscars-academy-awards-main-20120223,0,1626683.story
  2. That wasn’t the best year for stocks: https://www.nytimes.com/library/financial/index-1929-crash.html
  3. nominated or winning films often see at the box office isn’t looking likely: http://www.marketwatch.com/story/this-year-its-anything-but-an-oscar-bounce-2012-02-24
  4. DIS: http://studio-5.financialcontent.com/investplace/quote?Symbol=DIS
  5. NFLX: http://studio-5.financialcontent.com/investplace/quote?Symbol=NFLX
  6. CSTR: http://studio-5.financialcontent.com/investplace/quote?Symbol=CSTR
  7. LGF: http://studio-5.financialcontent.com/investplace/quote?Symbol=LGF
  8. NWS: http://studio-5.financialcontent.com/investplace/quote?Symbol=NWS
  9. VIA: http://studio-5.financialcontent.com/investplace/quote?Symbol=VIA
  10. SNE: http://studio-5.financialcontent.com/investplace/quote?Symbol=SNE

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