B. Riley & Co analyst Eric Wold is so encouraged that he raised his earnings estimates for Regal, Carmike, and Cinemark this morning — the second time he has done so in less than two weeks. And yesterday Stifel Nicolaus’ Benjamin Mogil upped his projections for Regal and Cinemark, also citing recent theatrical sales. The domestic Q4 box office is up 20.2% to date vs the same period last year. Even if sales cool slightly and the quarter finishes +17.4% then “it would just beat out the current Q4 box office record currently held by 2009, while also representing the sixth highest quarterly box office revenues in history,” Wold says. The good news is that theaters aren’t just benefiting from expected blockbusters led by Sony/MGM’s Skyfall and Lionsgate’s The Twilight Sage: Breaking Dawn Part 2. The $100M+ ticket sales for Sony’s Hotel Transylvania, Fox’s Taken 2, Warner Bros’ Argo, and Disney’s Wreck-It Ralph “demonstrate the continued broad-based strength of both box office and attendance trends even during what could be considered a less-than-optimal movie-going environment (e.g., tough economy and natural disasters),” Wold says.
And he’s optimistic about Warner Bros’ The Hobbit: An Unexpected Journey, which opens on December 14. That film, alone, could generate more box office revenues than theaters saw last year from Paramount’s Mission: Impossible – Ghost Protocol and Warner Bros’ Sherlock Holmes: A Game of Shadows combined. Wold notes that The Hobbit will be released in both 3D (traditional and high frame rate) and IMAX formats — which have high ticket prices — while only Mission: Impossible was in IMAX last year. The analyst is hedging his bet slightly, forecasting that the Q4 box office will end +15%. He says it’s “realistic,” though, to imagine +19%. If he’s right, then the full year domestic box office could end up +7%.
But Wold warns that the euphoria could evaporate in the first three months of 2013. He expects only three films to generate $100M+ domestically including Disney’s Oz: The Great And Powerful, Paramount’s G.I. Joe: Retaliation (which opens March 29, the very end of the quarter), and Fox’s A Good Day To Die Hard. That may be no match for last year when four films crossed the $100M mark in Q1, including Lionsgate’s The Hunger Games. Even so, Wold expects domestic box office sales to rise by a low- to mid-single digit percentage in 2013 due to “a fairly robust movie slate, increased usage of premium formats (3D, private large formats, IMAX), the potential launch of dedicated alternative content channels to drive midweek visitation as well as the accretive contribution of additional acquisitions.”