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From Times staff writer Josh Friedman, who covers the movie biz:
Where is the love for "Wall-E"?
The animated, futuristic adventure about a lonely, love-struck robot opened to rave reviews and topped the weekend box office with $63.1 million in domestic ticket sales -- the ninth straight No. 1 launch for Walt Disney Co.’s Pixar studio.
But stock market investors gave Disney shares the cold shoulder Monday, bidding them down 37 cents, or 1.2%, to $31.20.
Part of the problem is that "Wall-E," which 97% of critics endorsed, according to RottenTomatoes.com, "was successful but wasn’t ‘Nemo’-like" in its opening, said Richard Greenfield, an analyst at Pali Research. "Finding Nemo" and "The Incredibles," Pixar’s two biggest hit movies, both opened to slightly above $70 million.
 What’s more, Disney got off to a slow start this summer at the box office when its highly anticipated sequel "The Chronicles of Narnia: Prince Caspian" fell short of lofty expectations. The first film in the series from Disney and Walden Media, November 2005’s "The Chronicles of Narnia: The Lion, the Witch and the Wardrobe," grossed $292 million domestically, but "Prince Caspian" has only hauled in about $138 million since its May 16 release.
"And in case you haven’t noticed, the entire media sector is melting down," added the ever-cheerful Greenfield, referring to the stocks. The Bloomberg-Hollywood Reporter index of 39 media issues dipped today to a fresh five-year low. Disney has held up better than many of its peers; the stock is off 3.3% year to date, compared with a 30% plunge in Viacom Inc. shares and a 10.4% drop in Time Warner Inc.
While shares of Disney’s highest-profile rival in the animated film genre, DreamWorks Animation SKG Inc., often are affected by its two feature releases each year, even a Pixar movie is unlikely to move the revenue needle much at a diversified media conglomerate like Disney.
Studio entertainment generates only about 15% of the company’s operating income, while Disney’s theme parks and TV networks, including ESPN, generate significantly larger portions, notes analyst David W. Miller at SMH Capital.
"The broader concern for Disney shareholders is how well are the theme parks going to hold up in this economy," Miller said.
Photo: Wall-E. Disney/Pixar
Much of the pulp TV programming that RHI Entertainment Inc. churns out is a lampooner’s dream. "Killer Wave." "Blood Monkey." "Black Swarm." You get the picture.
That didn’t stop investors from handing the New York-based production company $189 million in its initial public stock offering on Wednesday.
But by the end of the stock’s first session of trading, the people who bought in may have been feeling like one of the hapless victims in RHI’s horror fare: "What was I thinking opening that door?"
The deal was priced at $14 a share late Tuesday, well below the $16-to-$18 range RHI hoped to get. But even $14 turned out to be too high: The stock immediately fell as trading began Wednesday, dropped as low as $13 and closed at $13.50. An instant discount is never a good sign for a new offering.
RHI is the production vehicle of the Halmi family -- Robert Halmi Jr., 51, and his father Robert Sr., 84. Their niches are made-for-TV movies and TV miniseries, some of which have been critical successes (the Western "Lonesome Dove" in 1989, for one). RHI’s 2007 science fiction series "Tin Man," a reimagining of "The Wizard of Oz," was the biggest ratings hit in the Sci Fi channel’s history.
A lot of what the Halmis have produced over the last 30 years, however, has just filled content space on the networks and cable. Critics be damned, the Halmis love to put their own stamp on remakes of the classics: "Moby Dick," for instance, and "Gulliver’s Travels."
Nothing wrong with that. Except that RHI, in its current incarnation, is bleeding red ink. It needed the IPO to help pay off crushing debt, not to directly fund a new era of Halmi productions. . . .
Read on »
No Emmy for this deal: TV-miniseries kingpin RHI Entertainment Inc. priced its initial public stock offering late Tuesday at $14 a share, below the $16-to-$18 range the company had hoped to get.
RHI, based in New York, is the production house of the Halmi family -- legendary producer Robert Halmi Sr. and son Robert Jr.
RHI was a public firm in the early 1990s until it was bought out by Hallmark Cards in 1994. The Halmis stayed on board under Hallmark’s wing, producing a slew of content for the Hallmark Channel and for other outlets.
They and other investors then bought the firm back from Hallmark in a leveraged buyout in January 2006, with Robert Jr. running the newly independent business. The buyout set the scene for the stock IPO: The Halmis needed capital to pare back the debt from the LBO.
But debt-reduction IPOs often fail to get investors excited. RHI had to settle for less than it wanted.
The company had hoped to raise as much as $225 million by selling 12.5 million shares at $18. Instead, the underwriters of the deal (led by JPMorgan Securities) had to cut the price to $14, although the number of shares sold was boosted to 13.5 million. Gross proceeds: $189 million.
This is no Oscar mill, but RHI claimed nearly half the market for TV miniseries from 2000 to 2007, including "Arabian Nights," "Dinotopia" and last year’s "Tin Man" on the Sci-Fi channel. Its made-for-TV flicks have included "Moby Dick" and "Killer Wave."
The stock is expected to begin trading on Nasdaq on Wednesday under the ticker symbol RHIE.
A relative rarity was expected on Wall Street this afternoon: an initial public stock offering from a movie producer.
RHI Entertainment Inc., a well-known name in made-for-TV movies and miniseries, was hoping to price an offering of 12.5 million shares between $16 and $18 apiece.
RHI, based in New York, is the vehicle for the Halmi family -- legendary producer Robert Halmi Sr. and son Robert Jr. RHI was a public firm in the early 1990s until it was bought out by Hallmark Cards in 1994. In January 2006 Robert Halmi Jr. and other investors bought the company back from Hallmark. Robert Jr. now heads the business.
RHI, with the Halmis still in charge while under Hallmark's wing, claimed nearly half the market for TV miniseries from 2000 to 2007, including "Arabian Nights," "Dinotopia" and last year’s "Tin Man" on the Sci-Fi channel. Its made-for-TV flicks have included "Moby Dick" and "Killer Wave."
The company’s basic pitch to investors is that it can make movies for relatively low price tags and reap a long-term profit stream from its expanding content library.
But the Halmis’ greatest need at the moment is to cut the debt load incurred in buying the firm back from Hallmark. That’s where most of the money raised in the IPO would go: debt reduction. And that usually doesn’t make for a thrilling pitch to potential stock investors.
JPMorgan Securities and Banc of America Securities are managing the IPO.
From Times staff writer Martin Zimmerman:
Never being much of a comic book guy, I always thought the best thing about Iron Man was that cool Black Sabbath song from back in the early '70s -- the one where Ozzy Osbourne proclaims the titular hero's arrival with a cross between a shout and a gurgle.
Wall Street, it seems, begs to differ.
The cinematic version of the Marvel Comics superhero destroyed all comers over the weekend, amassing more than $200 million in worldwide ticket sales. It was second only to the original "Spider-Man" in terms of opening weekend sales for a non-sequel.
That helped extend the recent rally in shares of Marvel Entertainment, which rose almost 8% today to $32.60 and are up more than 13% since last Wednesday’s close.
"It just knocked our socks off," said Dave Miller, an analyst with SMH Capital in Los Angeles, who went to the "Iron Man" premiere Wednesday night.
"I could tell when the credits started to roll that this thing was going to be a hit," said Miller, who has had a "buy" rating on Marvel (ticker: MVL) since January 2007 and today upped his 12-month price target for the stock to $40 a share from $34.
The initial success of "Iron Man" is especially crucial to Marvel. Although about 15 Marvel-themed films have been made -- including "Spider-Man" -- this is the company's first venture into self-production.
The economics of Hollywood are notoriously murky, especially when they concern a movie that cost an estimated $150 million to make and an additional $120 million to market. But given the opening weekend grosses and the typical arc of a hit action movie, Miller is already projecting that "Iron Man" will mean huge profit for Marvel, even after Viacom gets its cut for handling the movie’s marketing and distribution.
But it won’t be a slam dunk, for either Marvel or its metal-clad superhero. "Iron Man" faces tough competition in the coming weeks from "Speed Racer," the next chapter of the "Chronicles of Narnia" saga and the return of Indiana Jones to the big screen.
Marvel, meanwhile, is gearing up to release "The Incredible Hulk" in six weeks. The film, a remake that comes five years after a previous version failed at the box office, has raised concerns among analysts who see ominous signs in the movie’s heretofore low visibility and troubled pedigree.
Although Miller notes that not every movie featuring a Marvel superhero has conquered the box office -- "Elektra," anyone? -- he believes that the worries about "Hulk" are overblown. There was some negative buzz on "Iron Man" too, he says.
Speaking of "too," Marvel, while releasing better-than-expected first-quarter earnings today, surprised absolutely no one by announcing plans for an "Iron Man" sequel.
Somewhere, Ozzy must be smiling. Money & Co. blogger Tom Petruno is on vacation this week. He returns May 12.
Photo: AP Photo/ Marvel Entertainment
Digital Domain Inc., the Hollywood special-effects studio that had planned its initial public stock offering for this week, looks like it’s having trouble closing the deal -- at least at the price it wants.
The firm’s underwriter, San Francisco investment bank Thomas Weisel Partners, says this morning that pricing of the deal is "day to day." That usually means the underwriter still is trying to drum up enough investor interest to get the offering done.
Digital had hoped to sell 6 million shares at $12 to $14 apiece. But the company has been losing money since 2005, and some investors apparently aren’t sure of the payoff from the firm’s plan to develop its own feature films and to push into video-game development and production. More on the deal here and here.
Digital could cut the price of the deal if it wants to sell itself cheap. Another option would be to go the private-equity route to raise capital.
Posted April 24, 2008
The Bank of Canada isn’t buying the "decoupling" talk -- the idea that the global economy is so healthy it can roll along despite the U.S. economy’s woes.
The BOC today slashed its benchmark short-term interest rate to 3% from 3.5%, citing expectations for "a deeper and more protracted slowdown in the U.S. economy."
 As the U.S.’s largest trading partner, Canada knew it wouldn’t escape the effects of trouble south of the border. Even so, the BOC is betting that Canada will avoid outright recession, helped by relatively strong employment levels and high prices for many of the raw materials they dig out of the ground up there. The bank is projecting Canadian economic growth of 1.4% this year.
At 3%, the BOC’s key rate still is three-quarters of a percentage point above the Federal Reserve’s benchmark rate of 2.25%. And the Fed is widely expected to cut its rate to 2% when Bernanke and crew meet next week.
One casualty of the Canadian economy’s slowdown has been the nation’s dollar, or loonie. After soaring to a 30-year high against the U.S. dollar last fall -- a great source of pride for Canucks -- the loonie has backtracked. The U.S. dollar bought just 92 Canadian cents at the loonie’s peak in November. Now a greenback buys about $1 Canadian.
Even so, Canada is way more expensive for Americans, including Hollywood film producers, than it used to be. Three years ago the U.S. dollar bought $1.25 Canadian; five years ago it bought $1.50. So filming on location up north still is far from the bargain it once was, which should be good news for industry workers in L.A.
Posted April 22, 2008
Digital Domain, one of Hollywood’s best-known special-effects studios, expects to price its initial public stock offering on Tuesday or Wednesday.
 But in terms of IPO-market buzz this week, the Venice-based FX firm's work on such films as "Titanic" and "Transformers" can’t compete with the allure of a company at the far, far opposite end of the technology spectrum: Denver-based fertilizer producer Intrepid Potash.
Intrepid’s underwriters priced its 30-million-share offering this afternoon at $32 a piece, well above the expected range of $27 to $29. And that range had risen from $24-$26 last week.
In a hungry world, anything related to agribusiness is a hot investment idea these days. It has helped Intrepid that a major rival -- Potash Corp. of Canada -- has been one of Wall Street’s biggest winners of the last five years, and closed today at yet another record high of $208.79 a share. Intrepid will begin trading Tuesday on the New York Stock Exchange under the ticker IPI.
As for Digital Domain, it’s still hoping to sell 6 million shares at $12 to $14 each. But IPO-market analysts say the deal hasn’t generated a lot of hype on Wall Street since the terms were announced on April 7.
The company, which has been racking up operating losses since 2005, wants to develop its own feature films and also push into video-game development and production.
The stock (which will trade under the ticker DTWO) could pop a bit if underwriter Thomas Weisel Partners has done a decent marketing job, and if the stock market overall trades higher. But no one is expecting investors to step up the way they did for Pixar Animation's IPO in 1995. Pixar, fresh off the success of "Toy Story," soared from $22 at the offering to $39 on its first trading day. The company was bought by Walt Disney Co. in 2006.
Photo: A Transformer. DreamWorks LLC/Paramount
Posted April 21, 2008
Digital Domain, one of Hollywood's top special-effects shops, is ramping up its plans to go public.
The Venice-based company, which created special effects for films including "Titanic," "Pirates of the Caribbean: At World’s End" and "Transformers," hopes to sell 6 million shares at $12 to $14  each, according to the updated prospectus the firm filed today with the Securities and Exchange Commission.
Read the filing here.
The company, whose roots go back 15 years, was purchased in May 2006 for a reported $35 million by an investment group that included director Michael Bay. The group first announced plans for a stock sale in December, but many new offerings were sidelined in the first few months of this year by Wall Street’s upheaval.
Digital Domain is well known for its work in feature films and TV advertising. Yet the business has been bleeding red ink: The company lost $20 million last year on revenue of $78 million.
"Since 2004 we have been unable to generate revenues sufficient to be profitable," the firm warns in the prospectus.
Times staff writer Richard Verrier wrote in a profile of the company in May 2007 that "differences among the former owners" -- who included director James Cameron -- "and a lack of investment capital hampered the company in recent years. That allowed rivals such as Sony Pictures ImageWorks, Rhythm & Hues and Peter Jackson's Weta to cut into Digital Domain's core effects business."
"Compounding matters, Digital Domain and other U.S. visual-effects houses have been squeezed by rising labor costs and competition from rivals in Europe and Asia that are able to produce effects at a fraction of the cost," Verrier wrote.
In one good sign for potential investors, none of Digital Domain’s existing shareholders is selling stock in the deal. All 6 million shares would be sold by the company, raising $70 million (after expenses) if the stock is sold at $13 a piece, Digital Domain estimates.
The company says it expects to use $25 million to pay off debt and the rest to expand the business -- including a push into video-game development and production.
The stock would trade under the ticker symbol DTWO. San Francisco-based brokerage Thomas Weisel Partners is leading the underwriting group.
Photo: ParamountPictures/20th Century Fox
Posted April 7, 2008
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Tom Petruno
Tom Petruno has been chronicling financial markets' highs and lows since 1979, and has been the Times' financial columnist since 1990. He writes on markets, corporate finance and the economy, and how it all ties in to individual investors' portfolios.
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