Studios may need to rethink the summer blockbuster. Disappointing debuts plagued many of Hollywood’s most expensive films in June. Movies with $200 million budgets, such as
Walt Disney’s
Elemental and Warner Bros.’ The Flash, saw abysmal opening weekends and have since failed to break $100 million in domestic revenue. Disney’s $295 million Indiana Jones and the Dial of Destiny—one of costliest films ever—reported just $60 million in revenue in its first three days.
KeyBank analyst Brandon Nispel says this calls for a course correction. “Can you continue to create content that costs $200 million to produce just for a weak box office?” he asks, adding that every studio will be “taking steps to mitigate and pivot” from money-losing big-budget movies.
There’s pressure on studios to recover from the pandemic and lure audiences from streaming. A new $290 million Mission: Impossible film debuts on July 12. Christopher Nolan’s Oppenheimer and Greta Gerwig’s Barbie—both $100 million films—open on the same weekend later in July. “Mission: Impossible might be pretty telling because if Tom Cruise can’t create a hit at the box office, I’m not sure anybody will be able to,” says Nispel.
Nispel says Disney’s struggles underscore that consumers now “expect to watch this type of content at home.” Disney’s studio has lost money for two years, suggesting it needs to “fundamentally rethink its content creation strategy.” If summer revenue continues to fade, Guggenheim analyst Michael Morris thinks studios will lower expectations for big-budget films. The result: smaller budgets.
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Last Week
Jobs, Hot or Not
In a holiday-shortened Monday session, stocks closed up. Trading, and the year’s second half, resumed on Wednesday. The focus: labor markets, notably new jobs. On Thursday, the ADP June private sector survey came in at a red-hot 497,000. On Friday, federal numbers missed expectations, at 209,000. Stocks fell on Friday. On the week, the
Dow Jones Industrial Average
lost 2% to 33,734.88; the
S&P 500
was down 1.2% to 4398.95; and the
Nasdaq Composite
fell 0.9% to 13,660.72.
Hawks Over Doves
Minutes from the Fed’s June 13-14 meeting suggested that sentiment on the committee was less unanimous than the vote for a pause. While officials accepted the pause, some would have opted for a quarter-point rise in interest rates.
Independence Stats
AAA estimated that 43.2 million people traveled by car over the Fourth of July holiday, 4% above 2019. Gas Buddy said a gallon of unleaded gasoline averaged $3.49, 35% above 2019. The American Farm Bureau estimated a July 4 party of 10—cheeseburgers, pork, sides, dessert—came in at $67.72, up 14% from 2019, but down 3% from last year.
Where’s Prigozhin?
Wagner boss Yevgeny Prigozhin returned to Russia for reasons no one can yet explain. Ukraine and Russia traded charges of sabotage at the Zaporizhzhia nuclear plant. Meanwhile, Treasury Secretary Janet Yellen traveled to China to reduce tensions, even as The Wall Street Journal reported that the Biden administration was considering curbs on Chinese access to U.S. cloud services.
The Corporate Front
At Twitter, Elon Musk slapped limits on how many tweets users could view, and
Meta Platforms
launched a rival “killer app” called Threads on Instagram that signed up 30 million users. Twitter threatened to sue…The Financial Times said
Apple
cut forecasts for its Vision Pro headset due to manufacturing issues…A federal judge ordered the Biden administration to stop pressuring social-media sites on
disinformation…AstraZeneca
shares fell after the company published disappointing Phase 3 results for a new lung cancer drug. The FDA approved
Biogen
and
Eisai’s
Alzheimer drug, Leqembi…
Bank of America
delayed announcing its dividend as it investigated a discrepancy between Fed stress tests and its own risk analysis. The Fed was more sanguine than BofA’s team…
UPS
stock fell as labor talks with its union collapsed.
Annals of Deal Making
Private-equity firm GTCR agreed to buy 55% of
Fidelity National Information’s
Worldpay business for $11.7 billion. FNI bought Worldpay in 2019 for $50 billion, including debt. FNI was being pressured by activist investors D.E. Shaw and Jana Partners…The trial over
Microsoft’s
deal for
Activision Blizzard
wrapped up. A decision from Judge Jacqueline Scott Corley could come any day…
Pfizer
added to earlier deals with
Samsung Biologics
to produce biosimilars, or biological generics. The total deal is worth $897 million.
Write to Robert Teitelman at [email protected]
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