The film industry's annual ritual of patting itself on the back began in earnest January 10 with the announcement of the 2013 Academy Award nominations. Movie critics began the arduous task of handicapping the winners in each category, the most important being best picture. Getting nominated can be a boon to films; winning can bring the studios untold millions in additional box office and ancillary revenues. It's a big deal, and just as critics handicap the winners, those of us in the financial media tend to do the same with the studios.
So which studio benefits the most from this year's Oscars?
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The most natural place to start when assessing who wins financially is to focus on the studios with the most nominations. This year that nod goes to 20th Century Fox, a division of News Corp (Nasdaq:NWSA), with a total of 31. The next-biggest winner was Sony Pictures Entertainment, part of Sony (NYSE:SNE), with 24 nominations including five for "Skyfall," the latest installment of James Bond. Third-most went to the Weinstein Co. (privately held) with 16. The combination of being nominated and winning can be a huge financial windfall.
According to the president of Hollywood.com's box office division, "For the right film at the right time, Oscar nominations - and most importantly a best picture nomination - can do wonders for a nominated film's cachet, profile and 'must see' factor." Last year's Oscar season saw Weinstein's film "The Artist" generate 71% of its North American box office receipts after it was nominated for and subsequently won best picture.
The real moneymakers at Oscar time, in addition to best picture, include best director, best screenplay (original and adapted), best actor and best actress, in that order. Capturing nominations in those categories and going on to win them, however, isn't always financial gold. The last film to sweep the "Big 5" was "Silence of the Lambs" in 1992. Released more than a year earlier, it had been out of the theaters for four months when it ran the table at the Oscars. Producing the thriller was Orion Pictures, the same studio that made best picture winners "Dances with Wolves," "Platoon" and "Amadeus".
Normally, you'd expect a film to get some kind of financial bump from this kind of accomplishment. In 1984, "Amadeus" got a 33% bump at the box office from its best picture win. With Orion on the verge of bankruptcy by 1992, it obviously couldn't buy a break.
Box Office Bump
Between 2006 and 2010, according to U.S. research house IBISWorld, the average best picture winner saw a 22.2% increase at the box office after being nominated and another 15.3% nudge upon winning the Oscar. "The King's Speech," which won in 2011, picked up 58% of its receipts after its nomination and subsequent triumph. This year's nominees, for the most part, have generated good box office receipts leading up to the big night February 24. Of the nine nominees, six have earned more than $35 million domestically with "Lincoln" bringing in the most at $146 million. Distributed by Buena Vista, a subsidiary of Walt Disney (NYSE:DIS), it likely will benefit from winning best picture, which appears to be its to lose.
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The Bottom Line
Of all the films nominated for best picture, I think the movie that stands to gain the most from a win in February is "Zero Dark Thirty" (Sony Pictures), the fictionalized account of Osama Bin Laden's demise. Opening in only five theaters December 19, it went into wide distribution January 11 with almost 3,000 theaters showing the film. Snubbed for a best director nomination, Kathryn Bigelow would enjoy nothing more than pulling off one of the biggest upsets since the Oscars were first given out in 1929. More importantly, Sony could really use some good news. Its stock has lost 69% of its value over the last two years and hasn't traded this low since 1987.
At the time of writing, Will Ashworth did not own shares in any company mentioned in this article.