With holdings in television, radio and the Internet, CBS Corp. said it is looking into a new medium — the movie business.
"We are exploring it ... We're not looking to do Superman," Chief executive Les Moonves said at a Pricewaterhouse Coopers media event in New York.
Moonves did not hint as to how CBS would pursue this venture. But he did say he wanted to start off small by doing maybe six to eight movies a year on small budgets of up to $30 million per film. That certainly makes sense. For media companies, making a film these days is as much about its earnings potential as the content of the movie. Remember the movie "Waterworld" starring Kevin Costner? Released in 1995, Waterworld cost $175 million to make — the most expensive movie at the time — but only grossed $88 million at the U.S. box office. But on the flip side, a hit can bring in big profits. For example, Paramont Pictures spent over $240 million on "Titanic," which ended up becoming the highest grossing film of all time (unadjusted for inflation, a concept Hollywood fails to grasp) taking in $1.8 billion in worldwide box-office tickets.
So, how will CBS decide to make its movies? The New York media company could simply build its movie production business through an acquisition, partner with a movie studio or simply just build one from the ground up. If it went the acquisition route, CBS has $1.2 billion of cash on hand and since it went public earlier this year it could throw in its stock in a deal as well. Recent movie studio deals have varied in size and scale. Lions Gate sold its North Vancouver, British Columbia, studio to in-town competitor Bosa Development Corp. for C$41.6 million ($37.2 million) earlier this year. Lions Gate was also involved in the purchase of Artisan Entertainment — a company best known for the release of "The Blair Witch Project" — for cash and debt in a deal valued at $220 million in 2003. On a grander scale, Disney acquired animation studio Pixar for $7.4 billion earlier this year.
Whatever CBS does to enter the movie business, look for the media company to do so slowly. As the saying goes in Hollywood, success does not come overnight.— Gerald Magpily
See Reuters story via Houston Chronicle
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