Summer Movie Blockbusters Have Lost Their Punch. Is a Rethink in Order?

KeyBank analyst Brandon Nispel says this calls for a course correction. “Can you continue to create content that costs $200 million to produce just for a weak box office?” he asks, adding that every studio will be “taking steps to mitigate and pivot” from money-losing big-budget movies.

There’s pressure on studios to recover from the pandemic and lure audiences from streaming. A new $290 million Mission: Impossible film debuts on July 12. Christopher Nolan’s Oppenheimer and Greta Gerwig’s Barbie—both $100 million films—open on the same weekend later in July. “Mission: Impossible might be pretty telling because if Tom Cruise can’t create a hit at the box office, I’m not sure anybody will be able to,” says Nispel.

Nispel says Disney’s struggles underscore that consumers now “expect to watch this type of content at home.” Disney’s studio has lost money for two years, suggesting it needs to “fundamentally rethink its content creation strategy.” If summer revenue continues to fade, Guggenheim analyst Michael Morris thinks studios will lower expectations for big-budget films. The result: smaller budgets.

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Last Week

Jobs, Hot or Not

In a holiday-shortened Monday session, stocks closed up. Trading, and the year’s second half, resumed on Wednesday. The focus: labor markets, notably new jobs. On Thursday, the ADP June private sector survey came in at a red-hot 497,000. On Friday, federal numbers missed expectations, at 209,000. Stocks fell on Friday. On the week, the

Dow Jones Industrial Average
lost 2% to 33,734.88; the

S&P 500
was down 1.2% to 4398.95; and the

Nasdaq Composite
fell 0.9% to 13,660.72.

Hawks Over Doves

Minutes from the Fed’s June 13-14 meeting suggested that sentiment on the committee was less unanimous than the vote for a pause. While officials accepted the pause, some would have opted for a quarter-point rise in interest rates.

Independence Stats

AAA estimated that 43.2 million people traveled by car over the Fourth of July holiday, 4% above 2019. Gas Buddy said a gallon of unleaded gasoline averaged $3.49, 35% above 2019. The American Farm Bureau estimated a July 4 party of 10—cheeseburgers, pork, sides, dessert—came in at $67.72, up 14% from 2019, but down 3% from last year.

Where’s Prigozhin?

Wagner boss Yevgeny Prigozhin returned to Russia for reasons no one can yet explain. Ukraine and Russia traded charges of sabotage at the Zaporizhzhia nuclear plant. Meanwhile, Treasury Secretary Janet Yellen traveled to China to reduce tensions, even as The Wall Street Journal reported that the Biden administration was considering curbs on Chinese access to U.S. cloud services.

The Corporate Front

At Twitter, Elon Musk slapped limits on how many tweets users could view, and

Meta Platforms

launched a rival “killer app” called Threads on Instagram that signed up 30 million users. Twitter threatened to sue…The Financial Times said

Apple

cut forecasts for its Vision Pro headset due to manufacturing issues…A federal judge ordered the Biden administration to stop pressuring social-media sites on

disinformation…AstraZeneca

shares fell after the company published disappointing Phase 3 results for a new lung cancer drug. The FDA approved

Biogen

and

Eisai
’s
Alzheimer drug, Leqembi…

Bank of America

delayed announcing its dividend as it investigated a discrepancy between Fed stress tests and its own risk analysis. The Fed was more sanguine than BofA’s team…

UPS

stock fell as labor talks with its union collapsed.

Annals of Deal Making

Private-equity firm GTCR agreed to buy 55% of

Fidelity National Information
’s
Worldpay business for $11.7 billion. FNI bought Worldpay in 2019 for $50 billion, including debt. FNI was being pressured by activist investors D.E. Shaw and Jana Partners…The trial over

Microsoft
’s
deal for

Activision Blizzard

wrapped up. A decision from Judge Jacqueline Scott Corley could come any day…

Pfizer

added to earlier deals with

Samsung Biologics

to produce biosimilars, or biological generics. The total deal is worth $897 million.

Write to Robert Teitelman at [email protected]