Paramount Studios is betting on the star power of Tom Cruise to revive its fortunes.
The trailer for “Top Gun: Maverick,” the remake of the hit “Top Gun” which came out in 1986, has dropped and fans are pouring their hearts out with praise on Twitter, reminiscing about how the 80’s hit made them want to wear aviator Ray-Bans and grow up to be fighter pilots. Tom Cruise’s tweet telling fans “See you in the sky” has generated at least 2.8 million views.
Paramount is a subsidiary of the newly merged ViacomCBS (VIAC) and is under pressure to perform as management, shareholders, analysts, and competitors are paying close attention to every move the company makes. CEO Bob Bakish, who leads the $25 billion company, recently said at a conference that ViacomCBS’s shares are “categorically undervalued.” No pressure, Paramount.
Is Tom Cruise a good bet?
Paramount Studios has had a rough couple of years, compounded by a string of flops at the box office, generating multimillion-dollar losses – including “Ben-Hur” (another remake released in 2016), “Star Trek Beyond” and “Zoolander 2.” Under Bakish’s leadership, the studio has started to reverse its fortunes. In its final earnings report prior to merging with CBS, the film unit posted its first full fiscal-year profit of $78 million after three years of losses.
As the studio tries to build on this momentum, hitching its wagon to Tom Cruise might seem like a much-needed safe bet for the company. His role as Pete “Maverick” Mitchell is one of Cruise’s most iconic roles, and the first “Top Gun” was an undisputed smash hit. It generated over $175 million domestically and over $300 million worldwide. The studio hopes its biggest star will be able to generate an even bigger splash when “Top Gun: Maverick” is released on June 25, 2020.
A studio is more than a star, though, as Gabelli & Co. analyst Brett Harris says. “The movie looks fantastic,” he says. “As a child of the 80’s I get goosebumps every time I see the trailer. From a financial perspective it’s going to be definitely good for them but it doesn’t change the narrative around Paramount.”
“It’s in the midst of a turnaround, for years it underperformed,” Harris says. “That being said, having a couple Tom Cruise movies wouldn’t hurt.”
Shares of ViacomCBS (VIAC) are down about 11% year to date.
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