"Rise of the Guardians" is projected to lose $50 million for the studio; may expose cracks in film slates that are overly reliant on animated fare
Updated, 4:33 p.m. EST
"Rise of the Guardians" is projected to lose $50 million for DreamWorks Animation, an executive with knowledge of the movie's projections told TheWrap.
The company's stock hit a 52-week low on Monday, but closed Tuesday up slightly at $16.52.
A spokeswoman for DreamWorks Animation declined to comment on the projected loss for "Rise of the Guardians."
The CG-animated film's failure will be another blow to a company that has struggled to find its footing on Wall Street and may expose cracks in film schedules that are overly reliant on animated fare.
Produced for a reported $145 million and featuring the voices of Hugh Jackman and Chris Pine, "Guardians" has underachieved at the box office despite getting strong reviews.
Since opening over the Thanksgiving holiday weekend, the film has grossed $48.8 million domestically and another $57 million at the foreign box office, according to Box Office Mojo.
In a note to investors Monday, Stifel Nicolaus analyst Ben Mogil changed his rating on DreamWorks Animation's stock from a "hold" to a "sell," citing what he called a "somewhat weak" international opening for the film. Mogil estimated that the film will lose $50 million even after the company reduces its global publicity and advertising budget to $150 million.
Mogil also argued that the lackluster box-office returns for "Guardians" could spell trouble for DreamWorks Animation's upcoming slate of three CG-animated titles — "The Croods" (opening March 22, 2013), "Turbo" (July 19, 2013) and "Mr. Peabody & Sherman" (Nov. 1, 2013).
"What we take from this 'Guardians' experience is that where once there was an implied domestic box-office floor on a movie from the company, particularly in the 3D era, of $150 million, that is no longer the case," he wrote. "Also clearly no longer the case is the mantra that the lack of competing animated titles will automatically grant a movie clear box office sailing."
There is, of course, hope that "Guardians" will pick up steam from the upcoming Christmas holidays, taking advantage of a relatively paltry set of offerings for moviegoers with young children.
Aside from the 3D re-release of "Monsters, Inc.," there is little to appeal to families over the coming holiday period. And with a holiday-themed plot that features Santa Claus in a prominent role, the movie may be one of the rare films that has legs beyond its opening weekend.
"I can't see anything they can do to try to really tweak the performance of the film, but I also think it would be a little premature of them to announce a write-off," Marla Backer, an analyst with Research Associates, told TheWrap. "Let's see how it plays over the holidays."
Even a late surge, though, may not be enough to pull the picture out of the red ink. "Guardians" had a modest decline of 44 percent during its second weekend of release, managing only to rack up $13.4 million domestically.
Moreover, as the weeks tick by and a film sticks around in theaters, the box-office split between exhibitors and studios changes dramatically. During an opening weekend on major releases, studios can receive as much as 90 percent of a film's box office at certain theaters, exhibitors have privately told TheWrap.
That breakdown gradually shifts in the theater owners' favor. In the end, studios typically receive 55 percent of a film's receipts. The means, however, that if "Guardians" bucks the odds and attracts holiday crowds, exhibitors who kept the film in theaters could be the big winners.
"Guardians" is the final film that DreamWorks Animation released through its distribution deal with Paramount Pictures. Paramount will receive 8 percent of receipts as a distribution fee.
Meanwhile, DreamWorks Animation kicks off a new distribution agreement with 20th Century Fox with "The Croods," an animated film set in the prehistoric era. As part of that deal, Fox will receive the same 8 percent distribution fee but will get a lower fee on digital business than Paramount did.