Comcast’s (NASDAQ:CMCSA) Universal Pictures’ release of Fast and Furious 6, the sixth sequel to the racing cars and action series by Justin Lin, grossed an impressive $98.5 million in the U.S. and $158 million abroad in the first three days of opening, making it the biggest ever worldwide debut for the company. While Fast 5 grossed $626 million in 2011, it will be interesting to see how much Furious 6 can add to the studio’s revenue going forward.
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The Battle Of Sequels
Universal Pictures has some critically acclaimed and popular franchises to its portfolio, including Jurassic Park, Fast and Furious, Bourne and The Transformers. On the other hand, Time Warner (NYSE:TWX) has Harry Potter, Batman and Superman to its credit while Disney’s (NYSE:DIS) popular series includes Pirates of the Caribbean, Star Wars, Toy Story and Indiana Jones.
- Comcast Q4 Earnings: Best Pay-TV Subscriber Performance In Last Nine Years, NBCUniversal And High-Speed Internet Continue To Grow
- Comcast’s High-Speed Internet Business: Subscriber Base, ARPU Growth Likely
- Comcast Q3 Earnings: NBCUniversal, High Speed Internet Drive Growth
- Comcast Q3 Earnings Preview: NBCUniversal, Subscriber Trends In Focus
- Comcast’s Pay-TV Business: Our Long-Term Projections Suggest Growth In ARPU Will Offset Declining Subscriber Base
- Comcast Q2 Earnings: High Speed Internet Segment And NBCUniversal Lead Revenue Growth
The studios have been busy making sequels to the popular titles due to the demand for such content. It is interesting to see how Universal Pictures with Fast Five, transitioned the Fast and Furious series from street-racing action into a series of heist action with car chases. ((‘Fast Five’ Will Transition Franchise From Street Racing To Future Full Of Heist Action, Deadline, Apr 25, 2013)) This strategy was aimed at capturing a wider audience and it appears to have been working out well for the studio. Movie critics credited the success of Furious 6 to its appeal on ethnically diverse audience.  The company announced the next sequel in the series, which may be released in July 2014. It will be interesting to see how far can the studio push a decade old series.
Universal Pictures and Comcast
Earlier this year, Comcast acquired remaining 49% stake in NBCUniversal from GE for $16.7 billion.  Universal Pictures saw a 2% increase in its revenue driven by higher theatrical revenue from the strong performance of Les Miserables, Identity Thief and Mama in the quarter ended March 31, 2013.  We estimate close to $5.4 billion in revenue being generated by the movie business of Comcast in 2013.
Does the movie business matter materially for Comcast? Maybe not. However, in the light of Warner Bros. popular release of Hangover III during the same period, the response Furious 6 has received from viewers is quite convincing for Universal Pictures. It is hard to predict the success of any movie in advance, but given the numbers Fast and Furious 6 has generated in the first three days, it is fair to assume that overall revenue for the movie will be more than its previous sequel.
Our price estimate for Comcast stands at $46, implying a premium of over 10% to the market price.Notes:
- $317M Record-Breaking Memorial Weekend! #1 ‘Fast & Furious 6′ $317M Global For Franchise Biggest; ‘Hangover III’ $82.2M; ‘Epic’ $86.6M, Yahoo Movies, May 27, 2013 [↩]
- Comcast’s SEC Filings [↩]
- ref:3 [↩]