JPMorgan Box Office Estimates

Box Office - B. Crockett updates: In this weekly movie projector we introduce bottom-up estimates for 4Q08 industry box office and defend our belief that 4Q08 box can rise y/y, even without the latest Harry Potter movie, which has been moved from Nov. 21, 2008 to July 17, 2009. We also provide our regular weekly box office update for last weekend, where the top 12 movies rose 0.5% y/y to $114.6m, better than our estimate for a 12.4% decline. We are constructive on the movie theaters. Our bottom-up box office model suggests 3Q08 box may come in better than most investor expectations. We also see opportunity longer term, based on attractive valuations, high dividend yields, defensive revenue streams, and improvement from 3-D and digital projectors. We are cautious about video rental due to long-term competition and secular concerns, as well as a relatively weak 3Q08 release slate. https://mm.jpmorgan.com/jsp/email_frame.jsp?fullDocId=GPS-223354-0