Alvin the Franchise

Avatar: “Avatar”’s $1 billion in ticket sales may garner all the headlines for News Corp’s Fox, which released the science-fiction spectacle. But the Hollywood studio’s other holiday film, “Alvin and the Chipmunks: The Squeakquel”, may be more valuable to shareholders in Rupert Murdoch’s media group in the long run.

While Avatar was packing them in with its 3D tale of humans battling the Na’vi inhabitants of the planet Pandora over minerals, the latest offering from the world’s most popular singing rodent trio surpassed the quarter-billion dollar mark despite poor reviews and heavy competition. Indeed the Chipmunks demonstrate the importance of franchise value to the movie business.

Alvin, Simon and Theodore have been around since 1958, inspiring TV shows, hit songs and two feature films. The first film grossed $361 million at the worldwide box office while the second is already up to $255 million after just 12 days in wide release. Ancillary revenues like DVD and lunchbox sales could add millions more.

For investors, who prefer recurring profits and low risk, this is pay dirt. Like Spider-Man, Harry Potter or Batman, there is a long-term revenue stream attached to the Chipmunks. It’s partly why Disney — with its focus on princesses, pirates and now, with Marvel, superheroes — commands a higher multiple of earnings than many of its rivals.

Of course, “Avatar” doesn’t have to be a one-off. James Cameron told MTV he’s thinking of making it a trilogy. But the 55-year-old director took 15 years to make “Avatar” and hasn’t written a second script. And with the first film such a blockbuster, he may command an even larger ownership stake in any sequels.

So what's “Avatar” worth to Fox? As a one-time event, not much beyond its contribution of $100 million and counting that JPMorgan estimates it will add to News Corp’s $4 billion of operating profits. But multiply by five the $40 million the Squeakquel is expected to squirrel away, to reflect the likelihood the venerable franchise will endure, and three 50-year-old Chipmunks trump Na’vi.