'The Equalizer' Exacts Rare Box Office Vengeance for Sony

San Sebastian, Euskadi, Spain. 19th Sep, 2014. Denzel Washington attend 'The Equalizer' Photocallduring the 62st San Sebastian I
ZUMA Press/AlamyDenzel Washington has plenty to smile about. 'The Equalizer' is doing far better than most movie adaptations of TV shows.

Remakes and adaptations are classic fare for Hollywood executives who want a stream of reliable hits. From novels to video games to theme park rides to comic books, studios will go anywhere to find a bankable idea. Even television, despite its mixed history as a source for box office hits.

According to Box Office Mojo, TV adaptations account for exactly zero of the top 50 domestic and global box office performances. "Star Trek" (77th, $257.7 million domestic) and "Mission: Impossible -- Ghost Protocol" (69th, $694.7 million worldwide) get closest.

So when "The Equalizer" -- based on the 1980s TV drama of the same name -- banked the fourth-best September opening in U.S. box office history last weekend, it amounted to an uncommon -- and badly needed -- victory for Sony's (SNE) Columbia Pictures.

Box Office Vengeance

Starring Denzel Washington as an ex-CIA officer trying to atone for his sins, "The Equalizer" earned $34.1 million to top last weekend's U.S. box office haul -- the fourth-best September opening on record, Box Office Mojo reports.

%VIRTUAL-WSSCourseInline-799%Audiences polled on opening night gave the film an A- CinemaScore. At Rotten Tomatoes, 60 percent of critics and 82 percent of viewers rated "The Equalizer" fresh. In each case, the stats suggest positive word of mouth that could drive the film to $100 million or more in U.S. box office receipts and much more overseas. That's good news for Sony, which is distributing the film.

What's a distributor do? In general, film distributors spend to market a movie via posters, TV ads, print, social media, and the like. They also pay for the "prints" to bring physical copies of the film to the theaters signed to show it. In exchange, they typically get a percentage of the gross and rights to distribute in multiple territories and some or even all home video.

BoxOffice.com pegs marketing and distribution for "The Equalizer" at $35 million. A longer than expected run in theaters could help Sony recapture those funds while it waits for home video to earn profits. If the original distribution agreement includes the right to also distribute sequels, Sony may find itself with another much-needed franchise.

Tuning Into an Opportunity?

In fiscal 2014, movies accounted for about 51 percent of Sony Pictures' revenue -- down 10 percentage points from the prior year and 9 points from fiscal 2012's share. Television made up most of the difference, jumping from 22 percent to 30 percent of revenue. Strong programming deserves at least some of the credit.

Consider "Breaking Bad." The Emmy-winning show closed its five-season run earning a huge premium on ad sales, leading to a 2015 spinoff called "Better Call Saul." AMC Networks (AMCX) has already ordered two seasons. Other Sony shows with long-tail potential include the NBC drama "The Blacklist," FX's "Justified," and the movie-to-TV adaptation "Hannibal."

New Platforms Rising

Meanwhile, Sony is only now beginning to explore what it means to have a direct-to-consumer distribution mechanism in the PlayStation console and the new PlayStation TV network. Plans for original TV programming include "Powers," a live-action adaptation of the acclaimed comic book series from writer Brian Michael Bendis and artist Michael Avon Oeming.

Every new series is an experiment. But as the owner of its own network, Sony can also limit downside while enhancing the chances of securing another "Equalizer"-like hit derived from previously tested content. Think of direct-to-PlayStation short movies with high ratings developed as big-screen sequels. PlayStation TV allows for that sort of flexibility while also connecting tens of millions of players to 700-some video games, movie rentals, and common streaming services such as Hulu.

Sony Still Needs Saving

But that's the future. In the here and now, Sony Pictures has become increasingly dependent on TV and TV adaptations. In June, it was "22 Jump Street." Last weekend, "The Equalizer." Both have done well.

Sony isn't alone, of course. Viacom's (VIAB) Paramount Pictures has earned hundreds of millions from new adaptations of "Star Trek" and "Mission: Impossible."

By contrast, Disney (DIS) and Time Warner (TWX) haven't done as much with TV adaptations because they don't have to. Each studio has plenty of in-house franchise fodder from Marvel and DC Comics.
Sony doesn't have the same luxury. Lackluster box office performance in recent years -- including sharp declines in grosses for the various "Spider-Man" adaptations -- has put pressure on executives to find new franchises, fast. TV is as convenient a source as any.

Did you see "The Equalizer"? Which Sony shows do you believe have the greatest chance to reach the big screen? Leave your thoughts below.

Motley Fool contributor Tim Beyers owned shares of Time Warner and Walt Disney at the time of publication. Find him on Twitter as @milehighfool. The Motley Fool recommends AMC Networks and Walt Disney and owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.

Originally published