Holiday Box Office Bodes Well for the Big Players

The most intense period of the year for movie box-office revenues drew to a close over New Year’s weekend, with results that bode well in 1999 for the major entertainment conglomerates that own Hollywood’s studios.

Though the holiday season produced three significant money-losing studio films, five others will generate huge profits, and one or two more could join the list before long.

Several of these films, such as “Rugrats,” “A Bug’s Life” and “The Waterboy,” serve as engines to other revenue bonanzas down the line, including sell-through video and merchandising, not to mention the potential for both theatrical and direct-to-video sequels.

The Thanksgiving and Christmas holiday seasons have become vitally important to the overall annual profit picture of the motion picture industry--second only to the more extended summer period--bringing in between 17% and 20% of the year’s total box-office revenues.

The holiday period also keeps getting longer. It now extends from the first weekend in November, which saw the release of the blockbuster comedy “The Waterboy,”, through the Martin Luther King holiday weekend in mid-January. The hits built during this period will continue to draw in revenue to the entertainment companies for months and years to come.

The highlight of the season is Christmas week, which this year generated more than $250 million at the box office in the United States, the biggest week ever.

The movie business is hit-driven and, as expected, the season racked up more losers than winners for the studios. But only three of those were huge losers.

Universal faced the worst news, hemorrhaging serious money on two costly failures: “Meet Joe Black” and especially “Babe: Pig in the City,” which marked the death not only of a movie but a hoped-for long-term franchise. “Babe’s” early overseas openings suggest no relief in sight, though “Joe Black” might make some inroads in the foreign market, where Brad Pitt is popular.

Universal also had its biggest hit in almost two years with “Patch Adams,” which grossed almost $70 million in just 10 days and is expected to be a worldwide performer based on the star power of Robin Williams.

Disney had a disappointment in “Mighty Joe Young,” a remake as eagerly awaited as “Psycho” (which is at least expected to break even). Like “Babe,” “Mighty Joe Young” could not compete with the other strong family films in the market.

Disney also had two of the season’s most profitable ventures, the low-budget sleeper “The Waterboy” and the computer-animated bonanza, Pixar’s “A Bug’s Life.” Either film could emerge as the holiday season’s top grosser.

Though the modestly budgeted “Waterboy’s” foreign potential is uncertain, its video future as a sell-through item should be potent, given the fanaticism of 10-to-13-year-old males for the Adam Sandler comedy and Disney’s second-to-none video marketing moxie.

As for “Bug’s Life,” Disney may be splitting its profits with Pixar, but it should nonetheless see quite a windfall, what with merchandising and video sales, not to mention sequels (both theatrical and direct-to-home video) that accompany the studio’s animated blockbusters.

Disney action film “Enemy of the State” will gross more than $100 million but generate only modest profits due to its high price tag.

The other major holiday moneymaker was Paramount’s “Rugrats,” a $25-million animated feature based on the successful Nickelodeon series. Again, merchandising and video sales and the establishment of a potential theatrical franchise are a source of obvious contentment at Viacom, the parent of Paramount and Nickelodeon.

The studio’s “Star Trek: Insurrection,” however, showed signs of wear and tear in the long-lived franchise and was pricier than most of its predecessors. There should still be profits, however, from the dependable home video and cable TV markets as well as the growing foreign popularity of the “Star Trek” series.

Warner Bros.’ “You’ve Got Mail” looks to be the studio’s most profitable movie since “City of Angels,” even if it came with high-priced actors Tom Hanks and Meg Ryan, who will earn a piece of every dollar that comes to the studio. “Mail” is likely to perform close to the level of “Sleepless in Seattle” both in the U.S. and abroad, where initial engagements have been strong.

Warner Bros. will make some money from its reissue of “The Wizard of Oz” and the studio won’t lose much on “Home Fries” or “Jack Frost,” which could be a steady video seller in holiday seasons to come.

“Stepmom” also has a chance to move up into the majors if it plays well through January, though the true measure of its profitability will depend on its overseas performance. Unlike romantic comedies or action films, the offshore appeal of female-oriented dramas is harder to predict, though in this case the film features Julia Roberts, one of the world’s most consistently popular stars. In any case, with about $50 million in 10 days, “Stepmom” is a strong domestic performer.

Sony had a lesser hit in “I Still Know What You Did Last Summer,” which fell apart quickly, indicating that the teen-scare-flick mania is beginning to abate. This was further substantiated by the modest performance of Miramax’s year-end entry “The Faculty,” which reportedly cost more to market (about $30 million) than it did to make ($23 million). And since the movie’s not as likely to be another “Scream” here or overseas, Miramax will have to count on video and television sales to squeeze out a profit.

Miramax actually will do better with the Italian film “Life Is Beautiful,” for which it paid $7 million for most territories around the world outside of Italy. With the film’s record $25 million expected in the U.S. and more than $25 million already from its foreign engagements, profits should be beautiful for Miramax.

Unless it performs far better than most costume pictures, the company’s critically successful “Shakespeare in Love” has a way to go toward significant profits. Miramax split the $42-million production cost with Universal, which took overseas rights. Oscar nominations or wins could boost the film enough. Miramax had no luck with the latest Woody Allen release, “Celebrity.”

DreamWorks SKG’s “Prince of Egypt” is doing well enough in the U.S. that it conceivably could reach $100 million at the domestic box office.

DreamWorks principal Jeffrey Katzenberg says the movie will be profitable when it hits $85 million domestically, a contention that is greeted with skepticism in the industry.

Nevertheless, if total worldwide box office goes over $200 million worldwide, “Prince” could ultimately be profitable, even if it cost more than $100 million to make. DreamWorks estimates video sales will be at least as good as “Small Soldiers,” which they say has sold 6 million units to date. Add in television rights and “Prince” could inch into the black.

Fox had no good news for the holidays, with “The Siege” being its first significant money loser in a while.

New Line also missed financially with low-budget efforts “Living Out Loud” and “American History X.”

PolyGram/Gramercy, now a part of Universal, should break even on the low-priced “Very Bad Things” and the somewhat more successful, but also more costly, period drama “Elizabeth.”