Hollywood is coming off a strong year at the box office, but the 80th Academy Awards ceremony on Sunday will provide a merciful -- if triumphant -- end to a dreadful awards season.
The 3 ½ month-long Hollywood writers' strike probably hurt the promotional buildup to the Oscars as well as the box office fortunes of some of the nominated films, whether from lower TV ratings or the cancellation or retooling of other award ceremonies leading up to Sunday's main event.
"These award shows are currency for the exploitation of these movies," says John Hanity, founder of Hanity & Associates, an independent producer and financier, who worked for Miramax and Orion. "You can't buy the exposure that you get from these shows. The currency was devalued by the absence of the Golden Globes."
The strike turned the normal three-hour Golden Globes Awards extravaganza and its red carpet companion into a one-hour news conference, severely reducing the number of people who watched on TV -- and thereby in all likelihood reducing ticket sales for Globes-winning films such as "Atonement" and "Sweeney Todd."
Rewards of Awards
Nevertheless, for all the talk of an Oscars box office bump over the years, it's generally hard to quantify and a lot depends on the individual circumstances of any given film.
“A lot is said about that box office bump, but it is not really the case,” says Jeff Bock, an analyst for box office tracker Exhibitor Relations. “You really see it in an ancillary way, such as DVDs. That's the gift that keeps on giving.”
Such was the case with Lions Gate’s"Crash," which surprised almost everyone by winning best picture (along with original screenplay honors) in 2006. The film was re-released and a TV spin-off was created.
The film grossed a modest $45 million at the domestic box office ($98.4 million worldwide), but the two versions of the film posted enormous DVD sales.
“You could point to a spike in the revenue,” says Miller Tabak media analyst David Joyce, who follows Lions Gate.
Big Stars, Big Bucks
Over the years, there's been nothing like the combination of a popular film and a big-name star (and, to a lesser extent, a top director), when it comes to landing the twin achievement of Academy Award winner and box office success.
The 2007 winner for best picture –- "The Departed" -– had no fewer than three big stars: Leonardo DiCaprio, Matt Damon and Jack Nicholson.
During its October-March theater run, the film -- which was nominated for five Oscars and won four, including best picture and best director (Martin Scorsese) -- took in $132.4 million at the box office. The film (a violent and profane one at that) made another $49 million in home video and DVD sales.
"Gladiator" in 2000 netted $187.7 million, as both the film and its leading man Russell Crowe netted Oscars.
This year, however, is notable because of the dearth of big-name actors and previous winners on the nomination list -- absent are Tom Hanks, Denzel Washington, Crowe and Julia Roberts, all of whom made relatively successful films.
Stars aside, there are some films this year that clearly seem to be benefiting from the Oscar connection.
"Juno," a surprise nominee for best picture, which was already enjoying much better-than-expected attendance, saw its domestic box office jump from $87 million to well over $120 million in a very short time.
"Atonement" (distributed by Focus Features, the special films unit of General Electric's NBC Universal division, which is the parent company of this Web site) had sold $32 million at the box office and "seemed to be winding down," says Beck, only to get a healthy Oscar spike.
Timing Is Everything
A movie's original release date and the breadth of a film's opening can be key factors in its success.
Like fellow best-picture nominee "Atonement," "There Will Be Blood," starring Daniel Day Lewis -– who's been nominated for best actor –- was released in a small number of theatres at the very end of the year.
It earned $190,739 its opening weekend of Dec. 26 at two theaters. A month later it opened at 885 theatres. Around the time of the Oscar nominations on Jan. 22, the film placed in the top ten three weeks in a row and by Feb. 10 had taken in almost $27 million.
Though not a contender for best picture, "Sweeney Todd" -- starring best actor nominee Johnny Depp –- won a Golden Globe in that category and has enjoyed a similar, though more pronounced box office bump. Since opening Dec. 21, it has grossed over $52 million.
On the other hand, best-picture nominees released several months ago -- "Michael Clayton" (Oct. 9) and "No Country For Old Men" (Nov. 9) -- were experiencing relatively flat ticket sales at the time of the nominations and have benefited little from them, says Bock. Neither film has yet to break $100 million in worldwide sales.
"People who were going to see it had already seen it," Beck says of the Clooney film.
For independent film companies such as Lions Gate , award nominations and wins, especially Oscars, have a more pronounced financial benefit, as well as "less tangible benefits," according to Natixis Bleichroeder analyst Alan Gould.
For example, Oscar awards can make it easier to deal with theater owners, talent, agents and festivals, as well as ease the selling of syndication packages for broadcast, cable and satellite TV.
The standard ten-to-12 film package “will sell better if there is an Academy Award title, a locomotive [in there]” he explains.
Lions Gate may already be the big clear winner this season. The company won three Golden Globes and earned five Oscar nominations. Lions Gate has 32 Oscar nominations in the past nine years, part of a broader trend of independent film companies having Oscar success.
“Success gives them negotiating power,” says the analyst Joyce. Lions Gate, which is aggressively expanding its movie and TV production, has found it easier to attract producing, acting and director talent, not to mention financing.
Lions Gate may also deserve a nomination for best acquisition. In August 2007, it bought Mandate Pictures, which garnered four Oscar nods for "Juno" (released by Fox Searchlight, a subsidiary of News Corp. ), including best picture, best actress, best director and best original screenplay.
Lions Gate’s stock has not mirrored that seasonal success, however, trading between $9.00 and $9.50 this year.
The stock sold off last summer as the costs of new film and production deals delivered hits to earnings, says Joyce and the “stock has been in the penalty box since then.”
Nevertheless, both Joyce and Gould have "buy" ratings on Lions Gate. Gould has a 12-month price target of $12.50 a share, while Joyce’s sees $13 over a 12-18-month span. (Neither analyst owns shares in the company nor do their firms have an investment banking relationship with the company.)
Gould is expecting a "huge fourth quarter" based on DVD sales of popular recent films.
And The Winner Is….
"Juno" is a long shot to win the best picture award. "No Country For Old Men" (Miramax) is considered something of a frontrunner.
The film is directed and produced by the prolific and popular Coen brothers -- whose only Oscar to date is for their "Fargo" screenplay -- and leads the pack with eight nominations.
“Oscar likes to reward a body of work,” says Bock of Exhibitor Relations. “The Coen brothers are an institution of their own. It feels like it's their time.”