December 13, 2019

Charging a Premium for Movies, at a Cost

“Yes, absolutely,” said Sarah Galvin. “We go twice a month, we’d go every single weekend.”

Ms. Galvin had shown up to see “Captain America: The First Avenger,” in 3-D, at the AMC Santa Monica 7 theater here on Wednesday.

She had a little one in tow, in superhero costume. Adult tickets were $15.75, children’s, $12.75. “It costs so much,” Ms. Galvin said.

After years of grumbling about steadily rising ticket prices, consumers achieved the nearly unthinkable earlier this year: they forced a momentary drop in the average cost of a movie ticket, to $7.86 in the first quarter, down from $8.01 in the fourth quarter of last year, partly by opting out of costly 3-D tickets for movies like “Mars Needs Moms,” and watching films in cheaper 2-D.

But prices started rising again this summer. In a conference call with investors on Thursday, executives of the Regal Entertainment Group, the nation’s largest theater chain, predicted the usual average price increase of 3 percent or more across the industry by year’s end.

If so, it will be the 17th consecutive annual increase in a business whose prices have outpaced the effect of general inflation by more than half since 1999. Theater attendance has fallen by about 10 percent in that period, or even more when measured as a share of the growing population.

Executives from Hollywood’s major studios are generally reluctant to discuss prices. But with domestic box office down 5.55 percent — to $6.42 billion from $6.80 billion — from last year at this time, according to Hollywood.com, even some of the best-compensated players are beginning to wonder whether exhibitors and studios are pushing their luck with consumers.

At the Comic-Con International fantasy convention in San Diego last month, Steven Spielberg and Peter Jackson, two of Hollywood’s most prominent directors, voiced a strong hope that ticket prices for 3-D films would ultimately fall into line with the lower charge for 2-D movies. Consumers are being charged an extra $5 to see a movie only to find out it is “as bad as the one you saw in 2-D,” Mr. Jackson said.

Their plea brought a sharp response last week from Jeffrey Katzenberg, the DreamWorks Animation chief executive, who has been an advocate of 3-D and the increased price that comes with it.

“They’re not getting complaints at the box office about pricing, it’s just not happening,” said Mr. Katzenberg, who spoke by telephone on Thursday. Mr. Katzenberg said his own company’s recent experience with “Kung Fu Panda 2,” which took in about 45 percent of $161 million in domestic ticket sales from the higher priced 3-D tickets, showed that a substantial number of consumers would still pay a premium for good films.

“Whatever Peter and Steven are talking to, maybe they’re following their instincts,” Mr. Katzenberg said of the Spielberg-Jackson pricing critique. “But there’s actually no factual data.”

Asked whether 3-D pricing had been too aggressive, David Passman, the chief executive of Carmike Cinemas, said by e-mail: “Perhaps in some markets, but generally, no.”

Historically, the big theater chains like Regal, AMC Entertainment, Cinemark Theatres and Carmike or their predecessors have been reluctant to raise ticket prices because their profit margins were higher on the sale of popcorn and other concessions than from tickets. Thus, they had an interest in raising the number of attendees, rather than maximizing film revenue that would be shared with studios. (The studios and exhibitors typically split the proceeds from each ticket sale, although the exhibitors alone set the price to consumers.) Patrick Corcoran, the director of media and research for the National Association of Theatre Owners, points out that a ticket purchased for the average price of $1.65 in 1971 would cost $9.20 today — higher than the actual industry average, if adjusted according to the general inflation rate.

Article source: http://feeds.nytimes.com/click.phdo?i=2f1b50586dede3fb41242b6e9cd7a385

DealBook: BSkyB to Hand Out $1.6 Billion to Placate Investors

James R. Murdoch, chairman of British Sky BroadcastingDavid Moir/ReutersJames R. Murdoch won the backing of British Sky Broadcasting’s board on Thursday to retain his role as chairman.

LONDON – British Sky Broadcasting, the satellite television company partly owned by Rupert Murdoch, said on Friday it would buy back some of its own shares and increase the dividend to compensate investors.

BSkyB, as the company is also known, said it planned a share buyback worth £750 million, or $1.2 billion, and would return another £253 million to shareholders through a final dividend of 14.54 pence a share.

BSkyB’s shares dropped more than 15 percent since News Corporation cancelled its bid this month for the 61 percent of BSkyB it does not own because of political opposition following the growing phone hacking scandal at one of News Corporation’s British tabloid newspapers. News Corporation, Rupert Murdoch’s global media empire, would participate in the share buyback, meaning its 39 percent stake in BskyB would not increase.

BSkyB also said its board unanimously voted in favor of keeping James R. Murdoch, Rupert Murdoch’s son and a senior executive at News Corporation, in his job as chairman of BskyB’s board. It was the board’s first meeting since News Corporation was forced to abandon its BSkyB bid.

“It was obviously a very full discussion,” BSkyB’s chief executive, Jeremy Darroch, said on a conference call. “At the end of that, the board was unanimous in its support for James to continue as chairman.”

Pressure on James Murdoch and BSkyB’s board to replace him had mounted ever since the appearance of new allegations of phone hacking at the British tabloid The News of the World, which fell under James Murdoch’s remit at News Corporation.

Mr. Darroch told the BBC in an interview on Friday that James Murdoch “got strong support” at BSkyB. He added that judging by his work at BSkyB, “he always acted with the highest degree of integrity.”

But some shareholders, including large British pension funds, have criticized BSkyB’s choice of chairman in the past, saying they would prefer a chairman who was not directly linked to the company’s largest shareholder, News Corporation.

There were signs that the phone hacking scandal also hurt other parts of the Murdoch media empire beyond The News of the World, which was shuttered.

The Times of London lost some subscribers in the immediate aftermath of the phone hacking scandal, James Harding, editor of the newspaper told the BBC on Wednesday. “We saw small number of people cancelled their digital subscription or print subscription,” Mr. Harding said. “Those have largely come back.”

BSkyB, which owns several satellite channels, said on Friday that operating profit for the full year that ended in June rose 23 percent to £1.07 billion from £872 million a year earlier. That beat the average £1.06 billion in profit analysts surveyed by Thomson Reuters predicted. BSkyB’s shares rose 0.5 percent in London on Friday.

“Recent hysteria may have affected the share price,” Richard Hunter at Hargreaves Lansdown Stockbrokers in London wrote in a note to clients. “But the underlying business remains defiantly strong.”

Article source: http://feeds.nytimes.com/click.phdo?i=d813281065faa0b3086117be7eb553dc

Profit Rises at Wal-Mart, but U.S. Sales Languish

Sales at stores open at least a year fell by 1.1 percent in the quarter, the company said, continuing one of the worst streaks in Wal-Mart’s history.

Over all, earnings beat analyst expectations, helped by sales strength in international stores and at Sam’s Club. The company said profit was $3.4 billion, or 97 cents a share, up from $3.3 billion, or 87 cents a share, a year earlier. Wal-Mart had forecast a profit of 91 to 96 cents a share for the quarter, and analysts expected a 95-cent-a-share profit on average.

Revenue in the period, which ended April 30 and was the first quarter of Wal-Mart’s fiscal year, rose 4.4 percent, to $104.2 billion from $99.9 billion.

Stock in Wal-Mart, which is based in Bentonville, Ark., fell 33 cents, to $55.73 a share in early trading.

In the United States, visits to stores fell, and that pushed the comparable-store sales lower.

Wal-Mart blamed high gas prices and worries about inflation for the decline in traffic and said its customers were still on tight budgets.

“It’s pretty much what we’ve been saying for the last few quarters — our core customer’s still very concerned about gas prices, the cost of living and unemployment,” the chief financial officer, Charles M. Holley Jr., said in a conference call with reporters.

Low prices on groceries during an inflationary period helped sales, Wal-Mart executives said. Same-store sales in grocery were up in the single digits for the quarter in the United States, and Wal-Mart said food prices rose about 1 percent in the quarter as a result of inflation.

Yet Wal-Mart had some trouble getting shoppers into the rest of the store.

In apparel, for instance, “we’re simply not converting enough of our grocery customers to shop apparel,” said William S. Simon, the president and chief executive of Wal-Mart’s United States division, in a conference call with investors.

After flirting with fashion-forward items, Wal-Mart decided to focus on basic clothes, but Mr. Holley said that was not working well yet, and he guessed that Wal-Mart had lost business to competitors over its clothing.

“It’s something that we’ve stumbled with over the last several quarters and we’re not happy with,” he said. “It does start with basics, and for us to be able to sell anything that’s fashionable at all, we really have to get basics down first.”

While “we had a fairly good quarter” with items like T-shirts and underwear, he said, “where we’re still not executing is in the kids’ and the women’s business.”

In other departments, Wal-Mart is piling merchandise in its aisles to signal value, and is stocking items in smaller packages that someone on a budget can afford, in an effort to take market share from dollar stores.

“You see customers that are running out of money at the end of the month going to the smaller pack sizes — they are not necessarily a better value,” Mr. Holley said, but “we have been continuing to work on that, so we have the smaller pack sizes.”

Still, Wal-Mart gave only one example of success with regard to this strategy on Tuesday, and that was in air-fresheners. As of February, Mr. Simon said, “these modular changes focused on bringing back assortment, ensuring opening price points were available in all categories and increased the holding power on the shelf.” As a result, air-freshener sales rose by 8.8 percent at comparable stores from the fourth quarter through the first quarter, he said.

Categories like entertainment, including electronics; hardlines, which are items like hardware and crafts; apparel; and home, comparable sales were all in negative territory.

Wal-Mart said it would continue with its expansion plans in the United States, particularly with smaller stores.

Its grocery-only stores, which are called Neighborhood Markets and are just over one-third the size of a typical Wal-Mart, performed well in the quarter. There, same-store sales were up 4 percent as visits rose. Wal-Mart said that because of those results, it would open another 30 to 40 Neighborhood Markets this year.

The company will also open 15 to 20 Walmart Express stores by the end of the year in urban and rural areas. At about 15,000 square feet, they will sell groceries “along with key general merchandise categories,” Mr. Simon said. They will also function as a depot of sorts for Walmart.com’s items: customers can order something from the extended online inventory, and pick it up at the store.

Analysts noted that at least Wal-Mart’s same-store sales decreases were lessening.

“Top-line results came in somewhat ahead of expectations, reflecting a more moderate decline in U.S. comps,” said Colin McGranahan, an analyst at Sanford C. Bernstein Company, in a note to clients.

Wal-Mart said it expected comparable-store sales to range from down 1 percent to up 1 percent in its second quarter.

Article source: http://feeds.nytimes.com/click.phdo?i=13bc31101e455ec6fcf8da4b086a76b6

NRG Abandons Project for 2 Reactors in Texas

But the project — planned by NRG, a New Jersey-based independent power producer, and its minority partner, Toshiba — was in considerable doubt even before the accident at Fukushima began on March 11. Texas has a surplus of electricity and low prices for natural gas, which sets the price of electricity on the market there.

The project could go forward if circumstances changed, said David Crane, the chief executive of NRG, but he said the prospect of that occurring was “extremely daunting and at this point not particularly likely.”

The plan was for the South Texas Project 3 and 4 reactors, and was identified more than two years ago by the Energy Department as one of the four candidates for loan guarantees that were authorized by the 2005 Energy Act.

It is the second of the four to die; Calvert Cliffs 3, in Maryland, seems unlikely at this point, because Constellation Energy could not reach financial terms with the Energy Department. The department has granted a conditional loan guarantee to one project in Georgia and may give another to a project in South Carolina.

In a conference call with investment analysts on Tuesday evening, Mr. Crane said that to proceed with the project, the federal government would probably have to institute a “clean energy standard” that would create quotas for nuclear power, as states have already done for wind and solar.

He said that Toshiba, which is writing off $150 million for the project, would continue to pay to proceed with a license application with the Nuclear Regulatory Commission for the time being, on the chance that a new investor could be found. But, he said, “we have concluded that financially, this is the end of the line for us.” If the plant goes forward, he said, “it will have to be funded by somebody else’s resources.”

The public’s appetite for nuclear power projects resembles the situation right after the Three Mile Island accident of 1979, said Charles A. Zielinski, a lawyer in Washington who is a former chairman of the New York State Public Service Commission. Companies now factor in the prospect of higher construction costs, mixed with a slack demand.

The South Texas Project “may have been on the fence already, and Fukushima pushed it over,” Mr. Zielinski said.

Tom Smith, an organizer in Austin with Public Citizen and a longtime campaigner against the project, cited higher construction costs and uncertainty after the Fukushima accident.

“The wheels are starting to fall off the nuclear renaissance,” he said.

Article source: http://feeds.nytimes.com/click.phdo?i=c06ff55359021e0278065708e545c077