The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK ( Trefis ) -- Warner Brothers, Time Warner's (TWX) movie entertainment arm, is going to launch part 2 of Harry Potter and the Deathly Hollows in 3D during 2011. We take this opportunity to estimate the value of such movies from Time Warner's perspective. Time Warner competes with Viacom (VIA), News Corp (NWS), CBS (CBS) and Disney (DIS) in the media and entertainment business.
Our price estimate for Time Warner's stock stands at $35.51, in line with market price.
Success of Part 1Harry Potter and the Deathly Hollows Part 1 earned global box office revenues of close to $950 million, with 31% coming from the U.S. box office and the remaining 69% coming from the international box office. This suggests that this movie alone accounted for a good portion of Time Warner's annual box office revenues. We should note that, since the movie launched in late 2010 and remained in theaters into 2011, the revenues cited above are spread across both years.
Looking Ahead to Part 2With the expected launch of part 2 in 2011, the year is shaping up nicely for Time Warner's movie arm. Since 3D movies often have ticket prices about $3 higher than regular movies, the company get an added boost to revenues. With a successful theater run for part 2, Time Warner can gain both domestic and global box office market share. We estimate that Warner Brothers is the most important division for Time Warner, representing about 35% of the company's stock value. We include the company's box office business within this arm, and estimate that box office operations single-handedly generate 12% of Time Warner's stock value. While a slight uptick in box office market share for 2011 alone is immaterial, the company's stock value could see real upside if these market share gains can be sustained over the long-term. You can drag the trend line in the interactive charts above to see how changes to Time Warner's box office market share outlook can affect the company's stock value. See our
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV