Entertainment Quarterly Industry in Review
Film: As Usual, Unpredictable
Naysayers will call it the summer of “Gigli” and “Hollywood Homicide.” But it could just easily be the summer of “Finding Nemo” and “The Matrix Reloaded” and “Pirates of the Caribbean.” The movie season was, in short, a mixed bag of successes and clunkers that by Labor Day had studio executives on the defensive as they nervously prepared for the congested fall and holiday lineup.
From early May through the Labor Day weekend, domestic grosses reached $3.8 billion, up 2 percent from a year earlier Factor in a 4 percent increase in ticket prices and the box office is below the summer of 2002, the first decline in three years… Through Sept. 21, box office receipts are down 1.1 percent from 2002 and attendance is down 4.9 percent, according to movie tracker Exhibitor Relations.
The summer’s biggest lesson: that the movie business is its usual unpredictable self… For every surprise clunker, like the Fox retro-comedy “Down With Love,” which barely generated $20 million, there was Paramount’s “The Italian Job,” which opened months ago to tepid reviews and by late last month was still on more than 400 screens with total domestic box office of $105 million.
The quarter’s biggest case of head scratching involved the disappointing numbers from sequels, with the possible exception of “Matrix” and “Terminator 3” Any sequel proposal not already green-lighted for next year will likely receive a cool response among studio heads (until there is a blockbuster sequel that defies the pattern).
As attention turns to the last quarter, distributors must jockey their release dates so as not to get outmaneuvered by another studio’s film that has more screens and a bigger marketing push Squeezed into just a few weeks, the competition will be fierce, with Warner Bros.’ next “Matrix” installment on tap, along with “The Alamo,” “Peter Pan” and the “Lord of the Rings” finale.
Mark Lacter
TV: Networks Jockey for Position
The biggest television story in the third quarter didn’t involve a show but a sale NBC’s purchase of Vivendi Universal SA’s U.S. entertainment assets in a deal valued at $14 billion While the deal awaits final approvals, the Hollywood buzz immediately went into overdrive on what it will mean not only for hot shots like “Law & Order” producer Dick Wolf but for the thousands of Universal employees who once again must get used to a new corporate parent.
The synergies are especially compelling for television, since the deal involves Universal’s USA Network and Sci-Fi channel (NBC already owns Bravo and CNBC and has been re-purposing some of its network product) Don’t expect many directional clues from NBC executives until the sale is finalized, but unlike media mergers in recent years, this one seems more carefully crafted and frugal
As for programming, the typically lower-rated summer period saw a stream of reality shows, with “Queer Eye for the Straight Guy, “For Love or Money” and “The Restaurant,” all on NBC, showing ratings strength… Only the strongest reality fare will stay in the lineup this fall as the networks introduce a host of new shows and try to maintain audiences for the older stuff.
The major networks will keep trying to stem the steady loss of viewership to cable channels (or at least steer viewers towards the cable channels they own)… CBS is likely to maintain its ratings edge, with well-established crime dramas and sitcoms… NBC looks to develop several new series to replace “Frasier” and “Friends” while ABC, which showed some improvement last year after imploding in 2001-2002, faces an even tougher rebuilding year following the death of John Ritter, who starred in the popular “8 Simple Rules for Dating My Teenage Daughter.”
Mark Lacter
Music: Legal Action Strikes Chord
An effort to stamp out illegal swapping of music files landed on front pages as the first round of lawsuits were filed by members of the Recording Industry Association of America. But the initial PR impact is questionable: Among the targets of the 261 federal lawsuits filed are a 12-year-old girl and a retired schoolteacher who said she only used her computer for e-mail (with help from her husband). While many of the biggest swappers shrugged off the threat, a late September report from Nielsen/NetRatings found that activity on sharing network Kazaa was off 40 percent since the legal flurry.
Also contributing to the swap stop may have been Universal Music Group’s September price-cutting initiative. The industry’s largest label announced it was slashing the suggested retail price of its CDs to $12.98, a 30 percent cut Retailers, suffering through a double-digit decline in CD sales over the last few years, cheered the move as bringing customers back to the stores. Some retailers wanted to be able to price CDs even lower.
There was continued uncertainty over the future of AOL Time Warner’s Warner Music Group. Its debt-laden parent had been in discussions to merge the unit with German media giant Bertelsmann, but late last week it appeared those talks had faltered A sale to U.K.-based EMI was floated as a possibility Warner has climbed to second place among the five largest labels, taking in an estimated 17.8 percent market share.
Jonathan Diamond
Radio: Another Spanish Conquest
All eyes were on Washington this summer, where new rules on media ownership passed by the Federal Communications Commission faced immediate challenges in Congress. The rules, if sustained, would relax ownership restrictions across radio and other media formats.
Last month the FCC approved Univision Communications Inc.’s $3.2 billion purchase of rival Hispanic Broadcasting Corp., bringing 65 radio stations in 17 major markets into the fold of the Los Angeles-based Spanish-language powerhouse Concerns over market concentration delayed the approval for one year, but Univision President Ray Rodriguez maintained that competition would be enhanced.
Other competitive rumblings are being made by Fox News, which has decimated competitors on cable TV and now is taking aim at Walt Disney Co.’s ABC News Radio and Westwood One Inc. (partly owned by Viacom Inc.). Fox News Radio Service, launched last spring, plans an expansion with 24-hour news updates and longer syndicated news segments.
Through August, ad revenues in the L.A. market rose 8.5 percent year-to-date, making it the fifth fastest growing market in the country, according to George Nadel Rivin, partner in charge of broadcast services at accounting firm Miller Kaplan Arase & Co. Nationwide, year-to-date revenues were up 3 percent, according to Rivin
L.A.’s market leaders during the summer months, based on preliminary figures from Arbitron, continued to be Emmis Communications Corp.’s hip-hop station Power 106, KPWR-FM (105.9), followed by Infinity Broadcasting Corp.’s KROQ-FM (106.7). Third is a race between KFI-AM (640), a Clear Channel Communications Inc. station, and KSCA-FM (101.3), a Spanish-language station now in the Univision stable, which rose several notches since spring.
Anthony Palazzo
Video Games: Pulling Out of the Funk
Traditional summer doldrums hit local video game maker Activision Inc. hard As its blockbuster “Spider-Man” game tailed off over the course of 2003, the company has been relying on sales of “Wolfenstein: Tides War” and “X2: Wolverine’s Revenge,” though neither has been among industry top seller lists in recent weeks. The company pinned its holiday-season hopes on upcoming releases “True Crime: Streets of L.A.” and “Tony Hawk’s Underground.” Activision also signed original “Spider-Man” creator Stan Lee as a consultant last month. The company is currently producing “Spider-Man 2” to coincide with the movie sequel’s release next summer.
THQ Inc. improved its summertime sales on the strength of its “Finding Nemo” game, which was released on all major game platforms. The company also published 10 new games for Nintendo’s Game Boy Advance handheld console during the quarter ended June 30 Second quarter sales of Game Boy titles fell short of the year-ago period’s, when the popularity of “Sonic Advance” drove sales THQ acquired the exclusive license to make games based on Warner Bros.’ upcoming animated movie “The Polar Express” last month.
Redwood City-based Electronic Arts Inc.’s L.A. studio released a new version of “The Sims” game in January and is set to release two new versions of its “Medal of Honor” series by the end of the year.
Michael Thuresson
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