Recession fears grip Hollywood: Can the movie biz survive a downturn?

The stock market is tanking, debt levels are rising, China is locked in a trade war with the United States and economics sage Alan Greenspan recently warned investors to run for cover. No wonder people fear there’s a recession coming.

“When you see all this market volatility, it’s a sign that a lot of people who think very hard about these things and have a lot of money on the line are worried that things are slowing down,” said Charles Ballard, professor of economics at Michigan State University.

If investors’ fears are justified, then the decade of economic growth the world has been enjoying could soon come to an end, leading to significant job losses, a capital crunch and a whole lot of pain.

RELATED: 25 top-earning Christmas movies of all time

25 top-earning Christmas movies of all time
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25 top-earning Christmas movies of all time

25. ‘A Christmas Story’: $20.61 Million

One of the most beloved movies of the modern era, “A Christmas Story” is believed to have been produced on a budget of $4.4 million. It pulled in a respectable $20.6 million when it was released in 1983. Its impact, however, is priceless.

“A Christmas Story” follows 9-year-old Ralphie Parker’s (played by Peter Billingsley) quest for an impossible Christmas gift — an official Red Ryder Carbine-Action 200-Shot Range Model BB gun. According to Vanity Fair, the movie “forever changed the cozy, sentimental holiday-movie genre.” According to the publication, it made previous generations of holiday classics look archaic and campy in the process.

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24. ‘Almost Christmas’: $42.07 Million

In 2016, “Almost Christmas” earned back its $17 million production budget with plenty to spare. The movie, which follows the drama of a fractured family together for the first time since losing the family matriarch, stars Danny Glover, Monique and Gabrielle Union. More than one dollar in three that the movie grossed was earned on opening weekend, when “Almost Christmas” peaked at No. 4.

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23. ‘Krampus’: $42.73 Million

Rotten Tomatoes refers to 2015’s “Krampus” as “gory good fun for fans of non-traditional holiday horror.” Based on the tale of a boy who responds to continuous Christmas letdowns by conjuring up a terrifying holiday-themed demon, “Krampus” frightened audiences enough to reach No. 2 on opening weekend.

When you count the 30.6 percent of its worldwide gross that came from foreign theaters, “Krampus” earned more than $61.5 million on a budget of just $15 million.

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22. ‘The Night Before’: $43.05 Million

In 2015, Joseph Gordon-Levitt and Seth Rogen — a familiar and successful comedy duo — waded into the holiday genre when they played two guys on a relentless search for the ultimate New York City Christmas party in “The Night Before.”

Written by Evan Goldberg and Jonathan Levine, the movie earned nearly $53 million — but only after you include worldwide earnings. “The Night Before” holds a respectable 65 percent on Rotten Tomatoes. It didn’t win any Oscars, but it was honored with a Golden Schmoes Awards nomination.


21. ‘Arthur Christmas’: $46.46 Million

Although its domestic haul lands 2011’s “Arthur Christmas” on the bottom five of this list, its worldwide box office earnings are impressive to say the least. The movie earned 68.5 percent of its earnings — more than $100 million — at foreign theaters for a worldwide gross of $147.42 million.

The movie stars James McAvoy as the voice of Arthur, the clumsy son of Father Christmas. Its commercial success was backed up by critical acclaim — the movie was nominated for a Golden Globe. But, did it make the list of the top-grossing animated movies of all time?

(©Sony Animations/Kobal/REX/Shutte)

20. ‘The Preacher’s Wife’: $48.1 Million

In 1996, powerhouse actor Denzel Washington teamed up with Whitney Houston for “The Preacher’s Wife,” which tells the tale of a minister whose marriage to a church choir singer begins to unravel thanks to his hectic schedule and the pressures of their underprivileged neighborhood.

After peaking at No. 4 on opening weekend, the movie went on to earn just over than $48 million. It’s unclear how much it cost to produce the movie.

(©David Lee/Touchstone/Kobal/REX/S)

19. ‘This Christmas’: $49.12 Million

2007’s “This Christmas” was produced on a budget of just $13 million, yet it went on to earn just shy of $50 million when you count worldwide box office gross.

Based on the drama that surrounds a family’s first holiday reunion in several years, “This Christmas” stars Regina King, Columbus Short and Chris Brown. The movie, which was nominated for a BET Award, debuted at No. 2 on opening weekend.

(©Suzanne Tenner/Facilitator/Rainf)

18. ‘Tyler Perry’s A Madea Christmas’: $52.54 Million

Although it’s unclear how much it cost to make “Tyler Perry’s a Madea Christmas,” the movie debuted at No. 3 when it was released in 2013. The multi-talented Tyler Perry wrote, directed, produced and starred in the movie, which maintains a dismal 18 percent on Rotten Tomatoes.

Tyler Perry’s performance won a Razzie (Worst Actress) — an award that filmmakers generally want to avoid — and was nominated for five more, including Worst Picture. Even still, it is the first film on this list to break the $50 million mark.

(©The Tyler Perry Company/Tyler Pe)

17. ‘Office Christmas Party’: $54.77 Million

Although “Office Christmas Party” never broke the $55 million mark in the U.S., the movie took in most of its earnings — nearly $60 million — in foreign theaters for a worldwide total of almost $115 million.

The 2016 flick stars Jason Bateman and Olivia Munn as banker siblings whose rivalry leads to a massive Christmas party gone awry. The movie was the product of six writers and two directors.


16. ‘Bad Santa’: $60.06 Million

Many actors have taken on the hefty role of Santa Claus, but none quite like Billy Bob Thornton in 2003’s “Bad Santa.” Thornton plays a degenerate con artist who doubles as a mall Santa who, along with his criminal elf sidekick, plan to use their jobs as cover for a department store robbery. Add Bernie Mac and an adorable kid, and you’ve got one of history’s raunchiest Christmas movies.

Foreign audiences added more than $16 million to the film’s domestic gross, which more than tripled its $23 million budget when you count receipts from the global box office.

(©Tracy Bennett/Dimension/Kobal/REO)

15. ‘Scrooged’: $60.33 Million

In 1988, “Scrooged” put a modern twist on the timeless Charles Dickens classic, “A Christmas Carol.” Beloved comedy heavyweight Bill Murray takes on the role of a heartless and cynical television executive who follows three ghosts through a journey of personal redemption.

“Scrooged” earned roughly $60.33 million at the domestic box office, and $13.03 million of that haul came on opening weekend alone. It was also nominated for an Academy Award for Best Makeup and also won a BMI Film and TV Award.


14. ‘Jingle All the Way’: $60.6 Million

In 1996, comedians Phil Hartman and Sinbad joined Hollywood action hero Arnold Schwarzenegger in “Jingle All the Way.” The movie pits Schwarzenegger against a mob of shoppers as he scrambles to get his son the year’s hot Christmas toy.

“Jingle All the Way” barely earned back its $60 million production budget with a little shy of a $60.6 million haul at domestic theaters. Its worldwide gross, however, more than doubled its returns. The movie earned $69.24 million internationally for a worldwide total of nearly $129.83 million. It took in $12.11 million on opening weekend alone.

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(©20th Century Fox/Kobal/REX/Shutt)

13. ‘The Best Man Holiday’: $70.53 Million

In 2013’s “The Best Man Holiday,” old college friends reunite for the holidays 15 years after graduating, and old drama — and crushes — are rekindled. Starring Monica Calhoun and Morris Chestnut, the movie became one of the few Christmas flicks ever to gross more than $70 million.

Produced on a budget of just $17 million, “The Best Man Holiday” peaked at No. 2 on opening weekend and went on to gross nearly $73 million worldwide.

(©Universal/Blackmaled Prods./Sean)

12. ‘Christmas Vacation’: $71.32 Million

Chevy Chase returned to the “National Lampoon” franchise as Clark Griswold in 1989’s “Christmas Vacation.” What should be a pleasant Christmas celebration turns into a catastrophe on every level.

The John Hughes film earned nearly $71.3 million at the domestic box office. It ranked No. 2 on opening weekend when it earned $11.7 million. It is the second highest-grossing movie in the “National Lampoon” franchise — only “Animal House” earned more at the box office.

(©Warner Bros/Kobal/REX/Shutterstock)

11. ‘Fred Claus’: $72 Million

Vince Vaughn plays Fred Claus in the namesake movie, which tells the story of Santa’s bitter older brother who is forced to move to the North Pole. The powerhouse cast also includes Kathy Bates and Paul Giamatti.

The movie earned more than $72 million at the domestic box office when it was released in 2007. It took in another $25.83 million at foreign theaters for a worldwide haul of nearly $98 million.

(©Jaap Buitendijk/Warner Bros./Kob)

10. ‘Christmas With the Kranks’: $73.78 Million

Tim Allen, Jamie Lee Curtis and Dan Aykroyd starred in 2004’s “Christmas With the Kranks.” The movie earned nearly $74 million on a production budget of $60 million.

Written by Chris Columbus and based on a novel by John Grisham, the film portrays a raucous, last-minute Christmas celebration. The movie peaked at No. 3 on opening weekend when it earned $21.57 million in theaters. In all, “Christmas With the Kranks” grossed more than $96.57 million worldwide.

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(©Zade Rosenthal/Columbia/Revolution)

9. ‘The Nightmare Before Christmas’: $75.09 Million

Tim Burton’s “The Nightmare before Christmas” earned just over $50 million when it was first released in 1993, but five subsequent releases in the 2000s pushed the movie’s total earnings beyond $75 million.

The movie is animated in the creepy claymation that’s unique to Burton’s trademark style. It follows the culture clash that ensues when the King of Halloween Town discovers Christmas Town. The movie features Catherine O’Hara and Chris Sarandon. It was nominated for an Oscar for Best Effects.


8. ‘Die Hard’: $83.01 Million

Bruce Willis and Alan Rickman put a new spin on Christmas films with “Die Hard” in 1988. The movie earned more than $83 million dollars at the domestic box office and nearly $141 million worldwide. One of the most celebrated action movies of all time, “Die Hard” was nominated for four Oscars.

With the Christmas season as the movie’s backdrop, the film follows the exploits of NYPD Officer John McClane — a reluctant hero trapped in a Los Angeles skyscraper under siege by diabolical terrorists. After killing a terrorist and upgrading his weaponry, McClane delivers the bad guy’s body — complete with a Santa hat — to the surviving terrorists with the written message: “Now I have a machine gun: Ho, Ho, Ho.” It’s been an ironic Christmas classic ever since.

(©20th Century Fox/Kobal/REX/Shutterstock)

7. ‘Four Christmases’: $120.15 Million

“Four Christmases,” starring Vince Vaughn and Reese Witherspoon, was released in 2008. It follows a couple as they make separate visits to all their divorced parents on Christmas.

The movie took in more than $120 million at the U.S. box office. When factoring in worldwide ticket sales, it earned more than $163.73 million. Witherspoon was nominated for a Kids’ Choice Award for the film, and the movie also won a BMI Film & TV Award.

(©New Line/Kobal/REX/Shutterstock)

6. ‘A Christmas Carol’ (2009): $137.86 million

Filmmakers released their own versions of the Charles Dickens classic “A Christmas Carol” in 1938 and 1951, but it wasn’t until 2009 that the tale struck box office gold.

The animated version starring Jim Carrey earned almost $138 million at the domestic box office that year and more than $325 million worldwide. “A Christmas Carol” earned more than $30 million on opening weekend alone. The movie, a classic tale of self-redemption, debuted at No. 1 in 3,683 theaters.

Those numbers might sound phenomenal — until you realize that the movie cost $200 million to produce. It stands out as being one of the biggest holiday films of all time, and also one of the biggest price-to-earnings flops.


5. ‘The Santa Clause’: $144.83 Million

In 1994, Tim Allen and Judge Reinhold teamed up in a story about a man who has to take on the role of Santa Claus after accidentally killing the real St. Nick. It would go on to become the No. 5 highest-grossing Christmas movie of all time when you don’t include sequels — which really boosted Tim Allen’s Hollywood star power.

“The Santa Clause,” which earned more than $144.83 million domestically and combined for nearly $190 million worldwide, cost just $22 million to make. It did better than any other PG-rated movie that year, and was the fourth highest-grossing movie of the year behind “Forrest Gump,” “The Lion King” and “True Lies.” It earned $19.32 million just on opening weekend.

(©Attila Dory/Walt Disney/Kobal/RE)

4. ‘Elf’: $173.4 Million

In 2003, Will Ferrell portrayed a human-sized elf whose penchant for inadvertent mayhem resulted in his exile from the North Pole to find his long-lost and grumpy father, played by James Caan.

The movie earned more than $173 million at the domestic box office and another $47.04 million in foreign theaters for a worldwide total of $220.44 million. It was the seventh highest-grossing movie of 2003 and that year’s No. 1 PG movie. It earned $31.11 million on opening weekend alone.

This modern classic is “Certified Fresh” on Rotten Tomatoes with a score of 84 percent, with one reviewer summing it up as “a spirited, good-natured family comedy.”

(©Alan Markfield/New Line Prods./K)

3. ‘The Polar Express’: $185.62 Million

“The Polar Express” grossed $162.78 million when it was first released in 2004, but it pulled in another $20 million-plus after a dozen re-releases. It earned another $124.14 million in foreign theaters for a worldwide total of $309.76 million.

Silver screen veteran Tom Hanks performed voice work for six characters in this animated Warner Brothers holiday film, which follows a young boy on a fantastic adventure to the North Pole. It was the highest-grossing G-rated movie of 2004. And, it was nominated for three Oscars: Sound, Sound Editing and Best Original Song.

(©Castle Rock/Shangri-La/Kobal/REX)

2. ‘How the Grinch Stole Christmas’: $260.04 Million

Director Ron Howard’s interpretation of “How the Grinch Stole Christmas” took in more than $260 million in 2000 — $345.14 million worldwide. Jim Carrey assumed the role of the Grinch, a conniving anti-Christmas menace bent on ruining the holiday for the Whos in Dr. Seuss’ Whoville.

The movie earned more than doubled its production budget of $123 million and earned more than any other Dr. Seuss movie in history. It won an Oscar for Best Makeup and was nominated for two others. It ranks No. 98 on the list of the highest-grossing movies at the domestic box office.

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(©Melinda Sue Gordon/Imagine Ent/K)

1. ‘Home Alone’: $285.8 Million

When it comes to Christmas blockbusters, there’s “Home Alone” and there’s everything else. The biggest Christmas movie of all time, it grossed more than $285 million at the domestic box office and nearly $476.7 million worldwide. Adjusted for inflation, the movie earned nearly $605 million in the U.S. alone, earning the holiday classic the No. 40 spot on the list of history’s most successful movies. It was the highest-grossing movie of 1990, beating out “Ghost,” “Pretty Woman” and “Dances With Wolves” — all on a production budget of $18 million.

The movie, which launched the career of child star Macaulay Culkin,follows the exploits of young Kevin McCallister who learns to be careful what he wishes for when his family unwittingly leaves him behind when they embark on a family Christmas trip to Paris. Joe Pesci and Daniel Stern play a duo of hapless burglars that terrorize Kevin, who then returns the favor with a series of elaborate and effective boobie traps.

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But what does that mean for the media and entertainment sector, a business that has historically endured financial downturns better than other industries?

Though the movie business has been able to largely weather tough economic times, given that going to local multiplexes is still a relatively cheap form of entertainment, media companies that make and distribute content have become so conglomerated that it’s difficult for them to be totally immune to a financial downturn.

Nearly every major movie studio exists as a small cog in a much larger enterprise, residing alongside television studios, cable businesses or phone companies. These sectors are more likely to feel the impact of a major slump.

For one thing, advertising often takes a hit during a recession as companies look for ways to cut costs. That’s bad news for both the broadcast and cable businesses, which depend on advertising to boost their bottom lines. In 2009, for instance, with the country mired in a downturn, companies cut way back on their print and television spots, pushing total U.S. ad sales down more than 15%. A similar decline could be in store during the next slowdown, causing problems for media giants.

“The media industry is not insulated from broader economic trends,” said media analyst Hal Vogel, head of Vogel Capital Management. “If companies are running on empty, they can’t pay millions for a 30-second spot on the Super Bowl or the Oscars.”

There are other causes for concern that suggest a downturn could be even more damaging to Hollywood. Cord cutting, the industry term for consumers’ abandonment of cable in favor of lower-cost streaming services, has been a major issue for the Disneys and WarnerMedias of the world — companies that have grown rich on retransmission fees. The number of people who canceled pay-TV subscriptions in 2018 grew 32.8%, to 33 million adults, according to research firm eMarketer. That trend could accelerate as disposable income grows tighter and Disney and WarnerMedia launch streaming services that could siphon off bargain hunters tired of writing big checks to Time Warner Cable and Comcast.

“Generally, we are an industry that’s recession proof. If there are good movies, people will want to see them.”
Jeff Goldstein, head of domestic distribution, Warner Bros.

The last financial disaster was precipitated by a housing bubble and a shadow banking system that enabled a subprime mortgage crisis to take root. The next one will almost inevitably have different triggers. Economists are worried about the amount of debt that companies have been taking on, and media and telecom giants such as Comcast, Disney, Netflix and AT&T are no strangers to using other people’s money to fuel their growth. Some of this borrowing has reached dizzying heights. Comcast’s acquisition of European pay-TV behemoth Sky has pushed its net debt to an estimated $108 billion, while AT&T’s purchase of DirecTV and Time Warner has left it with a net debt of $177 billion, according to CreditSights.

Disney has made some strides toward reducing its debt, selling regional sports networks to pay for its acquisition of Fox, but it still will be more heavily leveraged once the deal closes. And Netflix keeps returning to the debt markets as it buys more content and produces more and more “Brights” and “Romas.” In September, the company reported that its long-term debt had climbed 71% to $8.34 billion. A month later, the streaming giant was back at it, raising an additional $2 billion in financing through debt securities. That leaves these media titans in hock up to their eyeballs at a time when they may not be able to afford it.

“It may be that all these companies that kept adding more and more debt  will wake up to find that they’re no longer getting much bang for the buck,” Vogel noted.

That said, the media and entertainment business fared much better during the Great Recession of 2009 than other industries did. Over the course of the downturn, the U.S. economy shrank by 4%, with some of the most severe losses coming in the durable goods and manufacturing sectors, which fell 35%, and construction, which dropped by more than 20%. In contrast, the motion picture sector was relatively unscathed, growing by 8.6%, while the broadcasting and telecommunications business fell by less than 2%.

The sector that has historically survived best is the film business.

“The movie industry has been resilient in tough economic times, and that’s because where else in America can you get two hours of great entertainment for $9?” said Adam Aron, CEO of AMC, the largest theater chain in the world.

The data suggests that Aron is right. Since the Great Depression, people have sought refuge from their troubles by visiting the cinema — a comparatively affordable entertainment option when money is scarce. Box office revenues increased during five of the last eight recessions and even set domestic records in 2001 and 2009 as the economy sputtered.

“Generally we are an industry that’s recession proof,” said Jeff Goldstein, head of domestic distribution at Warner Bros. “If there are good movies, [people] will want to see them.”

“I’m scared that movies in many places are very expensive,” said Chris Aronson, head of distribution at 20th Century Fox. “Price was never a barrier for moviegoing before, but now it is.”But moviegoing may not be the cheaper entertainment option that it used to be. Ticket prices have been rising steadily in recent years, fueled by the exhibition industry’s push into providing recliner seats, alcoholic beverages, 3D, Imax and other trappings of a premium experience that enable exhibitors to charge more for admission. Prices hit a record high of $9.38 during the second quarter of 2018, roughly the cost of a monthly subscription to Netflix or other streaming services. In cities such as New York and Los Angeles, going to the movies can cost $20 or more.

There is a palpable fear among those working in entertainment about the potential negative effects of a serious economic downturn. Warren Buffett, the legendary investment oracle, has a colorful way of describing the consequences of a recession. It has a tendency, he noted, to separate the best-run and most visionary companies from the ones that took heedless risks.

“You only find out who is swimming naked when the tide goes out,” he quipped. If an economic crisis comes, we may discover which media giants were wearing bathing suits. 

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