The Magic Lives On: Harry Potter's 'Fantastic Beasts' Expected To Open At $85 Million

With the release of the screenplay adaptation of the book titled "Fantastic Beasts and Where to Find Them" written by J.K. Rowling under the pen name Newt Scamander in 2001 around the corner, Loop Capital Markets previewed the release and its ramification on Time Warner Inc (NYSE: TWX), the parent of Warner Brothers, which releases the movie.

The Grand Opening

Based on discussions with sources at each of its covered exhibitor names and the screen count, Loop Capital Markets said in note released on Wednesday that it expects the film to have a $85 million opening. The firm models domestic cumulative audience, or cume, of $250 million and global cume of $550 million.

Neither Sequel Nor Prequel

Though referred to as Harry Potter 9 by Wall Street, analyst David Miller said "Fantastic Beasts and Where to Find Them" is neither a sequel or prequel to the Harry Potter film series but is set in the world of Harry Potter and is dated 70 years before the Harry Potter story starts.

Potter Mania On

The firm noted strong Harry Potter mania, going by attendance figures released by Comcast Corporation (NASDAQ: CMCSA) for the Harry Potter theme park on both U.S. coasts. In the U.K. too, Harry Potter mania has reached feverish pitch, going by the enormous public response for the two-part stage play, Harry Potter and the Cursed Child, the firm noted.

Skepticism Rules Over Deal

Loop Capital Markets highlighted investor skepticism over Time Warner's deal to be acquired by AT&T Inc. (NYSE: T), as the shares of the former still trade around in the mid-to-high-$80s, off the deal price of $107.50.

The firm also noted abounding skepticism over the deal clearing the regulatory hurdle, especially the FCC and the Department of Justice. That said, given the lack of precedence for rejection of a vertical merger in the media space and that the deal is not eliminating competition, the firm is of the view that the thick arbitration spread for the vertical merger is unprecedented.

Time Warner Stands Out Among Peers

The firm noted that Time Warner is the only large-cap bellwether media name providing visibility to core earnings through 2018. This visibility, according to the firm, differentiates the company versus its peers despite the many cross-currents in the markets.

As such, Loop Capital Markets retained its Buy rating and a $107.50 price target on Time Warner, in line with the deal price.

At the time of writing, shares of Time Warner were up 0.02 percent at $88.69.

Image Credit: "Ukrainian Ironbelly at Diagon Alley" By osseous from Oakland Park, U.S.A. (October 25, 2014) [CC BY 2.0], via Wikimedia Commons