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The Walt Disney Company (DIS) & Viacom, Inc. (VIAB): How Summer Film Releases May Affect Profits

Time Warner likely to achieve second place

Another media giant that released a notably high-revenue grossing film franchise within recent years was Time Warner Inc. (NYSE:TWX) with its “Harry Potter” film franchise. This year, Time Warner produced Man of Steel, which will likely generate solid ticket receipts.

As for Time Warner Inc. (NYSE:TWX)’s ventures into the digital market, it has been one of the most active participants in the video-on-demand business of late. This initiative was detailed in a prior posting. Overall, the company is primarily a cable television network owner and should see an improvement in both its TV and film segment profits this year. Shares in the company are a good long-term holding.

Man of Steel raked in $118 million in its opening weekend, ranking second behind the Iron Man receipts for 2013. It could well also exceed $300 million in total theater revenues when all is said and done.

It is probable that the superhero film, along with heightened advertising sales in cable television and the company’s video-on-demand initiative will spur heightened profits in its TV and film unit this year. The company ought to remain on pace for a solid share-earnings gain this year as a result.

Conclusion

In a given year, a film can be a tailwind to profitability as box office receipts, home entertainment sales and merchandise sales add to the bottom line. The Walt Disney Company (NYSE:DIS) and Viacom, Inc. (NASDAQ:VIAB)’s latest creations may provide such tailwinds in 2013. Time Warner Inc. (NYSE:TWX) could be included in this mix, too. All told, studios are not the largest revenue-producing category at any of these conglomerates but may boost company profits to a significant extent. Over the long run, the stocks of entertainment firms should increase in price as a result of the companies’ valuable film-related assets.

As I have stated before, those media firms with the resources to invest in newer forms of distribution and content will be the best suited to gain from industry advances. The companies mentioned here are among of those companies.

Damon Churchwell has no position in any stocks mentioned. The Motley Fool recommends The Walt Disney Company (NYSE:DIS). The Motley Fool owns shares of The Walt Disney Company (NYSE:DIS).

The article How Summer Film Releases May Affect Profits originally appeared on Fool.com.

Damon is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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