Movie critics may be tired of superheroes, sequels and remakes. But Hollywood and the nation’s movie theaters are finding out what a lack of spandex, capes and other hallmarks of billion-dollar action means for the box office.
It’s not pretty.
With only one superhero film on the schedule (Marvel Studios’ “Deadpool & Wolverine”) — and few other major franchise pictures to compensate — the summer box office is expected to generate $3 billion in ticket sales from the U.S. and Canada.
The key popcorn movie season, which starts the first weekend of May and ends Labor Day, is crucial for studios and multiplexes, traditionally accounting for about 40% of annual domestic sales.
A $3-billion haul would be an ugly result, thanks in part to production delays caused by the writers’ and actors’ strikes, as well as budget-conscious pullbacks at the studios. Last year’s miraculous “Barbenheimer”-fueled summer topped $4 billion. In the pre-COVID-19 times, a summer tally over $4 billion came to be expected practically as a matter of course every year.
The last time the season’s box office was as low as $3 billion (not counting the pandemic-afflicted years of 2020 and 2021) was in 2000, when movie tickets were cheaper than they are now.
In a highly unusual circumstance, this year’s summer box office kicked off without a superhero movie, and it showed. Universal’s “The Fall Guy,” starring Ryan Gosling and Emily Blunt, opened with a disappointing $27.7 million, despite solid reviews and popular lead actors. (The production budget was high, at a reported $130 million, not counting marketing costs.) The weekend’s top 10 movies grossed just $68 million, down 56% year-over-year, according to Roth MKM analyst Eric Handler.
“Right now, cinema operators are in need of a significant content infusion,” Handler wrote in a note to clients. “Not only is the volume of content down in [the second quarter], but it also lacks sizzle.”
The numbers are just the latest indication of how the movie industry’s six-month production pause has hampered a business that was already struggling to recover from the pandemic and swimming upstream against changing audience habits and preferences.
The poor results were long forecast, but that doesn’t make them any easier to overcome for an industry that seems to be in a bit of psychological malaise as it waits for yet another major studio, Paramount, to be sold or merged.
April was particularly stark. David A. Gross, who runs a movie consultancy, wrote in his FranchiseRe newsletter that last month’s domestic box office was down nearly 48% compared with the three-year pre-pandemic average. Revenue generated from January through April was down 43% compared with pre-COVID levels. There’s just no sugarcoating those figures. Even mid-April’s CinemaCon, the theater owners’ annual Las Vegas pep rally, was more subdued than usual.
While this summer is likely to be a slow burn overall, there are some films that could stand out.
This weekend Disney will release “Kingdom of the Planet of the Apes,” which is tracking for an opening of $55 million to $60 million in the U.S. and Canada, according to analysts. Later this month, Warner Bros.’ “Furiosa: A Mad Max Saga” and Sony’s “Garfield” debut on the same day. June looks slim, with Sony’s “Bad Boys: Ride or Die” and Pixar’s “Inside Out 2” as the biggest titles. July should get a huge boost from Illumination’s “Despicable Me 4.”
But the biggest issue is that there just aren’t enough big movies to fill the schedule, says David Herrin, founder and chief executive of tracking firm the Quorum. That leaves some spans where there aren’t any major studio films opening, such as the week after Memorial Day and the weekend of June 21 (when Focus Features’ “The Bikeriders” is the lone new wide-release entry of significance).
“We have so many vacant weekends this summer, which is just kind of unheard of,” Herrin said. “Maybe it’s the strikes, maybe it’s movies getting pushed, maybe it’s the studios just not making as many movies as they used to, but you’ve got these pockets where there just isn’t anything that’s going to move the needle in terms of the box office. That’s good for the holdovers, but it’s bad for exhibition and it’s bad for the industry.”
Getting beyond the big picture, Herrin expects several subplots to play out over the summer.
One could be a return to form for Disney, with franchise titles “Deadpool & Wolverine” and “Inside Out 2” — both of which are safe bets on beloved intellectual property — likely to do serious business. That should help the company overcome some of the negative press it received in recent months as it released multiple flops, including “The Marvels” and “Haunted Mansion.” “If those don’t work, then there’s some real problems with Disney,” Herrin said.
Other studios have serious gambles on their slates, including Warner Bros.’ “Horizon: An American Saga,” a two-part Kevin Costner western epic. The season also will see the release of several prequels: “Furiosa,” “A Quiet Place: Day One” and “The Strangers: Chapter 1.” Herrin is closely watching the prerelease audience data for each of them to see if there’s as much of an appetite for prequels as the studios seem to think there is.
Meanwhile, horror movies — which until recently were the studios’ one sure bet — are suffering from oversaturation. Will a well-marketed scary movie, such as Neon’s “Longlegs,” stand out from the crowd after numerous mediocre efforts in the genre?
A couple of originals will try to find an audience, such as “Fly Me to the Moon,” an Apple-produced comedy/romance starring Scarlett Johansson and Channing Tatum, and M. Night Shyamalan’s latest thriller, “Trap.” “These are movies that we should be watching closely with the hope that they succeed, because if they succeed, that speaks to a healthy theatrical market,” Herrin said.
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Over the last several months, the prospect that Paramount Global would be sold, merged or broken up has seemed like a near certainty. On Friday, the company’s 30-day window to negotiate exclusively with David Ellison’s Skydance Media ended without an agreement.
Paramount’s board is now considering the $26-billion all-cash offer put forth by Sony Pictures Entertainment and private equity firm Apollo Global Management. This is the scenario that many vocal nonvoting investors would prefer, believing that the Ellison proposal to buy out Shari Redstone’s controlling shares would leave them holding the bag.
Either way, it has seemed that Redstone would ultimately cede control of her family heirloom sooner rather than later.
But what if a deal doesn’t happen at all?
It would then be left up to a trio of executives to make good on their promise to come up with a long-term plan for the struggling company. Last week, Paramount appointed Paramount Pictures CEO Brian Robbins, CBS CEO George Cheeks and Showtime/MTV Entertainment Studios chief Chris McCarthy to an “office of the CEO,” replacing ousted leader Bob Bakish. Bakish is known to have opposed the Skydance transaction.
The “three amigos” scenario has been viewed with much skepticism. When the triumvirate was announced, analysts naturally assumed it was a temporary measure that would hold the media empire together until the long-foretold ownership change. Co-CEO leadership structures rarely work (Netflix being an exception), so having a three-headed beast seems all the more ominous.
What a weird time to be running Paramount. The assumption of an “office of the CEO” is that it’s a stopgap solution, but if you’re part of the trio, you pretty much have to operate under the notion that it’s at least semipermanent because deal talks sometimes collapse. So if neither Sony/Apollo nor the Ellison group winds up owning Paramount, this would be the plan, at least until there’s another one put in place.
There are several reasons why events may turn out with no deal.
An Ellison transaction probably would trigger shareholder lawsuits, despite Skydance’s efforts to quell the brewing rebellion by sweetening the deal with a $3-billion cash infusion and by earmarking money for nonvoting stockholders, which would lower Redstone’s take. For what it’s worth, filmmaker James Cameron and Endeavor chief Ari Emanuel both came out in favor of Ellison over the weekend in a Financial Times article, citing the tech scion’s movie business bona fides.
Meanwhile, the Sony/Apollo deal, while cleaner financially, would face heavy regulatory scrutiny.
Combining Sony and Paramount would result in heavy layoffs and reduce the number of major movie studios from five to four. There are also federal rules governing foreign ownership of television stations, and Culver City-based Sony Pictures is of course owned by Tokyo’s Sony Corp. Apollo also already has ownership of TV stations. LightShed analyst Rich Greenfield, in a blog post for clients, estimated that a full regulatory review could take at least a year.
“The lengthy regulatory approval process is the critical issue driving our view that Paramount will instead decide to go it alone under new management,” Greenfield wrote. “A long and uncertain regulatory approval process would prevent Paramount from implementing the strategic shifts they are preparing to make under new management.”
And such shifts are badly needed, considering how quickly the linear television network business is deteriorating, in addition to deep uncertainty in the film industry and continued losses in streaming. Warren Buffett, meanwhile, revealed that his firm, Berkshire Hathaway, had sold its big Paramount stake at a loss. Shareholders are losing patience. Paramount has no time to waste.
Yes, production in Los Angeles is still down from last year. But even more striking is how big the numbers were in 2022.
Huge congrats to former Los Angeles Times film critic Justin Chang, who was awarded a Pulitzer Prize for criticism on Monday.
Additionally, The Times’ staff was selected as a Pulitzer finalist for breaking news for its coverage of the January 2023 mass shooting at the Star Ballroom Dance Studio in Monterey Park that left nearly a dozen people dead.
This newsletter was created to the sludge metal riffs of High on Fire. The Oakland band’s new album, “Cometh the Storm,” totally rips.
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Ryan Faughnder is a senior editor with the Los Angeles Times’ Company Town team, which covers the business of entertainment. He also hosts the entertainment industry newsletter The Wide Shot. A San Diego native, he earned a master’s degree in journalism from USC and a bachelor’s in English from UC Santa Barbara. Before joining The Times in 2013, he wrote for the Los Angeles Business Journal and Bloomberg News.
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