Oscar night is round the corner and it’s time to look at the implications of a win for the studios which have received best picture nominations. A new report released by CMC Markets indicates that movies which pick up the best picture trophy may actually lose immediately after the big win. However, the long-term implications for a winning stock are positive. Further, the boost that a movie’s ticket sales receive right after being nominated is hard to ignore.
Significant “Oscar Bump” for Ticket Sales
The fact that films which secure Best Picture nominations receive an immediate boost in ticket collections is a well-established one. Referred to as an “Oscar bump,” this was very much in evidence last year. Data from Box Office Mojo shows us that last year’s best picture nominees experienced a 69% increase in box office revenues after securing a nomination.
Birdman, last year’s best picture winner, was one of the beneficiaries of this effect. The film witnessed a Array32% surge in weekly ticket sales after being nominated and a near 80% jump after winning the trophy. Selma, another nominee for the best picture, secured 66% of its revenue from ticket sales after being nominated in January.
The Revenant Makes Big Gains
This year’s Golden Globes winner for the best picture, the Leonardo DiCaprio starrer The Revenant experienced large gains following its Oscar nomination. After debuting in a limited number of theaters, the movie began screening at 3,300 additional theaters a week before the announcement of nominations.
This Twenty-First Century Fox, Inc. FOXA production had pulled in $46.9 million of domestic box office revenues at that point. Collections on the domestic front have touched a total of $Array0Array million. Additionally, the studio’s stock gained 4.5% on Jan Array4 following the announcement of Oscar nominations.
The release secured a total of 26 nominations, eclipsing all of its other competitors. With Array5 nominations for Bridge of Spies and the latest Star Wars movie, Disney DIS came in second. Time Warner TWX received Array0 of its ArrayArray nominations for Mad Max: Fury Road alone
Room also witnessed big revenue gains following its nomination. After pulling in only $5.2 million in sales before being nominated for the best picture, its box office collections rose by nearly $Array million over the long weekend that followed.
Examining the “Post-Oscar” Flop Phenomenon
CMC Markets’ latest reports show that studios which won the best picture category suffered a fall in their stocks during March over ArrayArray of the last Array7 years. In comparison, the Dow gained an average Array.Array% during the same month over Array8 of the last 26 years. This is being attributed to a feeling that the studio may not be able to serve up a similar film in the near future.
For instance, shares of Disney rose before the release of the latest Star Wars film on expectations of a record busting performance. However, the stock has lost in excess of 20% since peaking at $Array20 in end November last year.
Long-Term Benefits
With three nominations, Twenty-First Century Fox is best positioned to win the best picture award this year. However, this stock lost Array8.6% last year compared with the Dow’s 4% slide. After the Array2 Years a Slave win in 20Array4, shares of the studio increased by just 4.2%. Meanwhile, of the other three nominees, namely Time Warner, Paramount, owned by Viacom, Inc. VIA, and Disney, only Warner provided gains after winning the Best Picture award.
However, Oscar winners fare better over the long haul. According to CMC Markets, studios picking up the best picture trophy experienced an average increase of Array5.2% over the period spanning the January ahead of and the January after the awards ceremony for 9 of the last Array7 years.
Over the same period, the Dow surged 8.6% for 20 of the last 26 years. Thus it seems that the Oscar night is awaited with bated breath not only by the stars and the studios, but also by the investor community at large.
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