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Hollywood's hot summer?
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May 27, 1998: 4:07 p.m. ET
'Godzilla' may have crushed optimism but outlook still bright at some studios
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NEW YORK (CNNfn) - With monsters and meteors dominating this summer's marketing blitz, it's easy to see why Hollywood would have high hopes for the box office this year.
But even with the success of "Titanic" still fresh in the minds on Wall Street, jubilance on the East Coast over the prospects for this summer's box office may have been crushed by Sony Pictures Entertainment's "Godzilla."
Despite ending up with the year's biggest weekend opener, its $55.5 million trailed the $90.2 million of last year's "Lost World: Jurassic Park" and the $57 million for "Mission: Impossible" in 1996.
"It means we're going to be off to a pretty slow start compared with last year," said Dennis McAlpine, media analyst at Josephthal Lyon & Ross.
Yet many industry participants were quick to point out that Sony's performance came on the heels of a strong showing by other studios in May.
"Three weeks ago, you had a surprisingly strong performance by 'Deep Impact.' Next week, 'The Horse Whisperer.' A year ago, 'The Lost World' didn't have competition," said Arthur Rockwell, film analyst at Drake Capital Securities in Los Angeles.
"Does it make the Street nervous? Sure it makes the Street nervous. But having said that, Sony is not going to lose money," Rockwell said.
In fact, some analysts cited the studios with disappointing 1997 results as the ones with the brighter prospects this summer.
News Corp.'s 20th Century Fox -- which last year suffered with disappointing releases like "Volcano" and "Speed 2" -- has "The X-Files" and the remake of "Doctor Doolittle," both releasing in June.
"They look like they are going to have a good summer," Rockwell said.
And the newest kid in town, Dreamworks SKG, will increase its output from one, "Peacemaker," in 1997 to three this summer. In addition to the international distribution rights to "Deep Impact," Dreamworks will release "Saving Private Ryan" and "Small Soldiers" in July.
"In terms of the studios, it's the first summer for Dreamworks," McAlpine said.
Winners and Losers
But perhaps the biggest risk confronts Walt Disney Co., which spent an estimated $90 million on its animated full-length feature "Mulan" and another $140 million on producing "Armageddon."
Both "Armageddon" and "Deep Impact" tell similar stories about an asteroid on a collision course with Earth, posing the threat of cannibalized box office receipts.
And as Fox learned last summer when its own volcano movie was cannibalized by Universal Pictures' "Dante's Peak," Disney's science-fiction thriller faces a historic dilemma.
"Being second to the box office is not a winning formula," said Stuart Rossmiller, media analyst at Deutsche Morgan Grenfell. "Generally, the first one does okay and the second one suffers."
But all isn't lost, analysts say. Disney still can recoup its costs (which include an estimated $40 million to $50 million to market the film) by differentiating "Armageddon" from "Deep Impact."
"They have to position it not as a sci-fi but an old fashion, action-adventure film. That's what they're doing, and that marketing approach should work," Drake's Rockwell said.
"My guess is 'Armageddon' is going to be a big picture for the summer," said David Londoner, media analyst at Schroder & Co. "My gut reaction is your big studios will be Disney and Viacom."
After "Deep Impact," Viacom Inc.'s Paramount Studios in early June will release "The Truman Show," which stars $20-million-man Jim Carrey. But the studio was able to negotiate Carrey's salary down to $12 million, according to Entertainment Weekly. In addition, Paramount will release smaller low-budget pictures later in the summer.
"Paramount could make the most money out of this. They've got a couple of cheap movies," Josephthal's McAlpine said.
Among the major studios with the bleakest prospects, analysts agree, is Time Warner Inc.'s Warner Brothers studios, which faces tougher comparisons based on last summer's "Batman & Robin" release.
"Time Warner has to show they still have their expertise," McAlpine said.
Warner Brothers this summer is set in July to unveil "Lethal Weapon 4," which was estimated to cost between $120 million and $140 million. In August, the studio will release "The Avengers," a screen adaptation of the 1960s television show.
Time Warner also owns CNN.
"These actioners go big budget blowing up stuff as you go along," Rockwell said.
Still Rockwell, who is based in Los Angeles, said that his East Coast counterparts historically have been more critical of Hollywood and, in general, that characterization isn't fair.
"The problem with Wall Street is this business has been so good but you will never hear a positive comment out of Wall Street," he said.
"They'll pick on the movie business as being high risk and in the meantime all of the major players are making money...So where is the horror of this business? It's a high risk business but it's not as risky as it seems." 
-- by staff writer Robert Liu
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