Handsome profits for Great Gatsby, LEGO Movie

07 April, 2014 by Don Groves

In gross profits The LEGO Movie has racked up $US140 million and The Great Gatsby $US70.5 million from cinemas worldwide.

That’s according to Ord Minnett analyst Nick McGarrigle, who has analysed the B.O. performance of both films which were co-produced by Village Roadshow Pictures (VRP).

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Both estimates exclude the costs of prints and advertising and were calculated before The LEGO Movie launched in Australia last Thursday, when its global B.O. had surpassed $400 million; Gatsby earned $351 million.

McGarrigle estimates the production budgets were $105 million for Baz Luhrmann’s opus and $65 million for the animated family films. Figuring on a P&A spend on The LEGO Movie of $35 million, that leaves $105 million to be split among the producers, plus whatever the film earns in Australia and Germany, where it opens on April 10.

But that does not mean a windfall for Village Roadshow Ltd shareholders. VRL has a 47% stake in the Village Roadshow Entertainment Group (VREG), which consists of VRP and Village Roadshow Pictures Asia.

The way the deal is structured, according to McGarrigle, VRL gets 5% cash as an interest payment on its US$100 million of non-voting redeemable equity and a 9% payment in kind for amortisation annually. The analyst believes VRL may convert that sum into equity in an IP0 for VREG by the end of 2018.

Meanwhile the company has built a substantial asset in the VRP library of 76 films which have posted worldwide B.O. revenues of more than $US12 billion.

McGarrigle has a buy rating on VRL despite recent falls in the stock price and a 6% drop in the Australian B.O. in the first quarter of this year. He has a valuation of $8.27 per share, compared with this morning’s price of $7.10. That does not include his estimate of the value of the VREG stake, which he reckons is worth between 75 cents and $2.27 per VRL share.

 

 

 

 

 

 

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