James Cameron: News Corp's Billion Dollar Man

Hollywood is on fire these days at the box office, having just set records for cinema receipt revenue in 2009 of more than $10.5Billion the trend looked to continue into 2010, and at the center of box office success now stands a single filmmaker: James Cameron.

The latest film from the man behind Terminator, Aliens and Titanic is called Avatar, and it seems like quite a few people have seen it already. $1.0Billion in ticket sales worldwide in only 17 days makes Cameron the only Director with 2 films crossing the lucrative billion dollar mark. His last directorial feature Titanic just happens to be the biggest movie of all time with a box office gross of $1.8Billion.

All good news for News Corp (NWS), as its 20th Century Fox movie division has hit a home run here with the marketing and technical logistics of Avatar, a 3D adventure film based on a far away world showcasing next generation computer generated characters. By no means was this film a sure thing and with reports of ballooning budgets and muted anticipation the execs at Fox certainly had reason to worry. Cameron's eye for visuals and his general audiences flair for story-telling went on to rule the day and 3 weekends into its box office run Avatar remains at number 1, at a time when blockbusters generally open to huge crowds and dramatically fall-off at a clip of nearly 50% each weekend. For Avatar, buoyed by the holiday season, each weekend's drop has been nothing short of remarkable, under 10% in both cases, signaling continued word-of-mouth and repeat business.

News Corp. over the last month, in the lead up to Avatar and its continued success has seen its stock rise 14%, this compares for a 2% rise in the Dow and a 5% rise in the Nasdaq. But there's another success story to come from the Avatar-verse, and that's the pioneers of the biggest movie experience around, IMAX (IMAX). With the stock gaining 23% over the last month, Avatar is to be the biggest IMAX movie to date besting the performances of Transformers: Revenge Of The Fallen and The Dark Knight.

IMAX is being promoted heavily in the media as the best way to fully experience the world of Avatar and this comes as no surprise since the screen and sound systems are amongst the biggest and most powerful in the world. In a technological age in which Hollywood tries every gimmick to get the movie-goer to pay up for the experience it is these event films, these Concorde moments in cinema, the Avatars of film-dom that make the proposition worthwhile. Avatar in this sense is the real deal for Fox and News Corp. and from a business sense, with IMAX 3D commanding between 2-3x the admission price for a regular cinema screen, IMAX is the real deal as well.

Disclosure: Author holds no position in NWS, IMAX

Weekend Market Notes 7/27

It's finally happened for Sirius (SIRI) and XM (XMSR)! The FCC has approved their merger to create a single unified Satellite Radio company. The two firms have to pay a $20Million fine for breaking their FCC promise of never merging, but that's small potatoes when you consider how much these two were paying for exclusive rights to various programming.

Those bidding wars can now end, cost cutting and synergy can begin. For Sirius, there will be share dilution but long term holders should stay positive on the company as this big hurdle has been finally climbed. For XM, holders should be looking at some short term gains as the price of Sirius determines the finaly buyout offer for its counterpart.

Amgen (AMGN) made headlines late friday after test results of an osteoporosis drug met its trial goals. The stock shot up 14% on the news after-hours. It'll be interesting to see if the company can extend its climb or will experience a profit-taking pullback as its earnings are also on tap.

In the Entertainment world, The Dark Knight keeps breaking records and playing to sold out showings in traditional cinemas and IMAX (IMAX) screens. After an estimated $75Million grossing weekend, Batman's haul stands at over $314Million domestically, putting it on tap to be a very profittable film for Time Warner (TWX). With a 10 day trek to reach $300Million some analysts are already eyeing the next $300Million, putting the film on pace to near Titanic's record domestic gross.

Disclosure: Author holds no position in the above mentioned companies

Bright Nights for IMAX and The Dark Knight

While it's true the movie summer session has already produced incredible box office successes with Iron Man and Indiana Jones, the epitome of cinema-fare is yet to come, in the shape of the cape and cowl. By all early accounts Christopher Nolan's The Dark Knight (the sequel to the excellent Batman Begins film) is surpassing even its most lofty cinematic expectations.

Oscar talk for a comic book movie? This genre of film-dom typically rates from the very good (X-Men 2, Spider Man 2, Begins, Iron Man...) to the downright awful (Elektra, Daredevil, Spiderman 3...), but for a movie about a man dressed in a bat costume fighting a villain based on a playing card, to be compared with the greatest sequels in film history. That is something else, and for it to be spoken with realistic ambitions of a Best Picture Oscar nod is not only chilling, but deserves the general movie goer's full attention. From early reviews and viewings, Nolan created a masterpiece with this Batman film, and Heath Ledger's Joker portrayal will be talked about for a generation and then some. Sadly the actor will be unable to reap the praises bestowed upon him as his death months ago from an accidental overdose shocked the entertainment community.

Box Office predictions are enormous for this movie, even more so than Indiana Jones, and with the latter now crossing the $300Million mark domestically and nearing $800Million worldwide, The Dark Knight seems as sure of a thing as there is in this world for a bona-fide hit movie.

The trade here however, is not Time Warner (TWX), the parent of Warner Bros., the studio producing the movie. The trade is IMAX (IMAX). The company whose theater screens fill entire rooms and have sound systems that come as close as any to the ever-lustful "ultimate experience". IMAX is a much smaller company, compared to the giant TWX, $115Million in Revenue in 2007, and therefore can be pushed significantly higher by the success of a single movie.

And yes, studios have released movies on IMAX screens before, why is this different? What makes The Dark Knight bigger and better than any other blockbuster brought to IMAX?
First, it is different because IMAX has more screens now than ever before, and the company, after a rough patch, involving some restatements, seems to be back on track to profitability.
Secondly, The Dark Knight was the first major studio blockbuster to have entire sequences shot with IMAX cameras! Reviews and praise for the film thus far revolve around a few common threads. One, is the sheer film-making achievement that is delivered with this movie. Two, is the incredible performance of Ledger as The Joker. Three, You have to see this film in IMAX!

If that's not enough to drive additional incremental business to IMAX, I'm not sure what is. Shooting movies with IMAX cameras has thus far been reserved to documentary, or special nature-based ilk, as the film is a different size, costs more to use and can only be processed by a specialist laboratory. The final product however, is nothing short of spectacular.

Judging by initial critical praise and the overwhelming response to the IMAX version of the film, it is likely that Dark Knight in IMAX showings will be sold out for several weeks. Shooting a movie of this size, with such a public following in IMAX film with IMAX cameras is not simply an anomaly but is trailblazing and trend-setting. For IMAX shareholders, they can only hope that The Dark Knight's successes with the IMAX experience will foster movie studios to try the format in more feature films, driving an unheard of growth cycle for the company. For now though, it all hinges on Batman, and by all accounts his cape will shroud the entire domestic box office starting July 18th.

With markets sputtering, and catalysts few and far between, IMAX has an enormous catalyst, a beacon of hope for short term gains, as Batman's epic clash with The Joker unfolds on screen, within the IMAX experience.

Disclosure: Author owns IMAX

IMAX: Can Big Screens lead to Big Dreams?

Even if you've never seen a movie in IMAX (IMAX) and I suggest you do, I'm sure you've heard of their place amongst the entertainment and movie going crowd. They are the boys that bring you the 3-storey screens and ear-drum ripping sound systems that make effects-laden movies feel like the real thing. If you want a true movie going experience forget the 50 inch HD you just bought at Best Buy and see something revolutionary in an IMAX theatre.

The company has had its stumbles of late as the stock reached a bottom of $3.30. Since then the company has gone though phases of trying to sell itself, then trying to grow itself, being delinquent in filings and back again. The company has to restate everything going back to 2002! Now that's a lot of extra work, and a mistake the company will not make again. Still with a market cap of $189Million and revenue growth reported 17% higher year-over-year in their latest report maybe the picture is becoming clearer and pardon the pun, bigger.

While some traditionalist movie-goers may find the IMAX experience over-kill, there is a growing contingent that embrace the sheer volume of picture and sound that only this kind of experience can offer. In fact major theatre operators like AMC and Regal Entertainment (RGC) are introducing more screens and plans for more screens revenue at IMAX should continue to grow. How long can these theatre chains wait before it makes sense to snap up this company.

Now, the picture is only starting to clear up, there is still plenty of work to do for the company if it wants to become profitable, it currently posted a loss of $0.12/share this quarter, however this was better than the expected loss of $0.14/share.

Continued success of big movies like Spider Man 3, 300 and the current IMAX opening record holder Harry Potter, really give a chance for the speculative investor to take a closer look at the company and gauge just what the possibilities could be. If IMAX is truly past its internal problems and looking to turn the corner towards profitability then whether it expands the screen base on their own or through a buyout revenue growth is available. Going the buyout route would ultimately yield big gains shorter term as a company would have to pay a healthy premium for this name and growth prospects. So one thing screams out about this entertainment play, there's plenty of upside for the speculator.

Disclosure: Author holds no position in IMAX