Question from a reader:”With the summer months coming, I am looking at movie studios stocks to invest in. The super hero movies are popular and there has to be some payback in either the current business quarter or down the line, right?”
My answer is that isn’t always the case. The business model for making movies is that generally even in the best possible world, if you are doing a slate of say 25 films you are lucky if you can get 1 or maybe 3 of them tops to be large enough hits to make your money back for all the other 21 or so films that didn’t make money.
Studio debt restructuring is also about trying to make money at the back end through dvd or cable movie sales. There is extra income at times with cross promotions where companies pay for product placement (Wolverine underoos, things like that). In cases of movie companies like Marvel, they are a comic book company that is making money through licensing their characters. They have hit their stride but it took them decades to get the formula right. Take a look at all the early attempts of Captain America movies and you can see that they didn’t get it right the first few times.
In the case of companies like Marvel, I am not sure how much more upside there is though I think the Wolverine movie will probably go through the roof for them financially. Will that be enough to cover other debt though? I will ask that you go through their balance sheets and you decide yourself since I am not a qualified investment person (though I may have some great ideas now and then as well as lousy ones 
).
There is also the chance that one of these days, like Warner Bros discovered, you will make a mega blockbuster like Watchmen and spend millions and not make them back. Something like that can sting the balance sheet for a company for years and nobody honestly likes to show losses.
In the case of Marvel, they may have a few more super hero movies in them that will be hits but there is always the potential statistically for more flops than hits. Eventually, people’s tastes change. There are also production issues that are independent of the content of the film itself that may impact things – say if your star is not available for the movie for another three years. In companies like Warner Brothers, the DC superheroes have a lot of life in them and they actually have a better track record of television production of their heroes though how that impacts their bottom line with all their movies, etc, or even if they are all under the same holding company is beyond my paygrade of understanding at this point. You will need to look into this stuff yourself as well – these are just springboard ideas for you .
People who are playing for short term pops should just watch it because a lot of “blockbuster” income is factored in with the price of the stock and generally the turnaround these days to make their money back and cash has to be within a week or two, especially in the summer where the other blockbusters are fighting for screen time and everybody’s summer dollar.
May 02 2009
If you are looking for a day job, part time work, suggestions for saving money or investing, please check out my book, Practical Money Making, that is listed right after his paragraph in this very post. There are some great suggestions and ways to survive the Depression we are in.
Interested in any of my books? You may want to make a stop over here. Please click through to purchase my books and some other interesting items that actually ARE on sale.
Have you read my book, “Bad Tax Idea, Good Tax Idea“? Please order it today. The tips inside can save you hundreds if not thousands of dollars! Tax planning should be done year round and not just two weeks into January or later.
Part of all the proceeds from the sales of that book go to Rett Syndrome research. One girl is born with Rett Syndrome worldwide every fifteen minutes. My daughter Arianna has Rett Syndrome and we are working to do all we can to make her life easier and find a cure in her lifetime. Boys born with the Rett gene generally die at birth.
Kim Isaac Greenblatt
Motion Picture Companies Investment Idea
[...] answer is even though Marvel movies are hot, some of their comic books are definitely not. The foil cover marketing deal that hit comic [...]