Media Money with Julia Boorstin

"Transformers:" Will Movie Transform Viacom's Paramount Studios?


I attended the "Transformers" premiere Wednesday night--and my first star spotting epitomized the importance of the film for its parent company. It was Sumner Redstone (he qualifies as a star for the CNBC set) and he was slowly retreating from the hubbub of the red carpet and (surrounded by bodyguards) slipping into a black car.

Paramount's fates started turning around with "Dreamgirls" and the critical success of "Babel," but the studio did not have a great 2006, and with all the management changes (Gail Berman leaving etc.), the studio needs to settle into a new groove. And "Transformers" performance is probably the biggest unknown in Viacom's upcoming stock performance--hence Redstone's appearance on the red carpet.

Opening Tuesday July 3, over its first six days of release, it's expected to do some $60 million in revenue--though Media by Numbers Paul Dergarabedian told me he's expecting it to do a good $20 million more than that. So what will it take for "Transformers" to satisfy Wall Street? Lehman Bros. Anthony DiClemente says that it'll need to earn more than $250 million in domestic box office gross--which is within reach considering the performance of "Spider-Man" and "Pirates."

But here's the tough part. He also thinks that it would need to earn more than $120 million over that super long first July 4 weekend, because it's box office is going to drop off after the first weekend. I actually think the drop off won't be so bad, because unlike the movies at the beginning of the summer movie season--Spidey, Pirates and Shrek--there won't be so much immediate competition other than "Live Free or Die Hard," and July 4th provides a movie going boost.

And talk about ancillary revenue--the product placement is huge--all the cars, trucks, and "Transformers" in the film are from General Motors --the kind of exposure they clearly paid millions for, plus what I'd guess is another million in vehicles. And of course the movie wouldn't have happened without Hasbro -- which actually gets a big producer credit --and now Hasbro is also going to cash in big time on all those toys.

And when it comes to the movie, I was surprised. Though I'm certainly not the target demographic (13-35 year old male) I found it totally entertaining, with a sense of humor about itself. There were some cheesy romantic moments, but it was varied enough to keep me interested over the two hours and twenty minutes. So I have a feeling the boys who grew up playing with transformers will be pretty happy. And if they are, Viacom will be as well.

Questions?  Comments?