Hollywood Not Making Money This Year

Mars may need moms, but theaters need viewers. Hollywood box office receipts for the first quarter are on track to be down more than 20 percent to $1.9 billion, according to Janney Capital Markets, paced by Disney’s "Mars Needs Moms," which is pacing a whopping $63 million under expectations.

Along with "Mars", Sony’s "Battle: Los Angeles," Time Warner’s "Red Riding Hood" and the other key studio films — so-called Tent Poles – are underperforming their projections by $33 million, on average, according to Janney.

"The caliber of films were just not that great and the bad weather didn’t help either," said Tony Wible, Janney Entertainment and Digital Media analyst. "The irony is that after no good movies in the first quarter, starting in April there will be almost one potential blockbuster released every week."

It was expected to be a down quarter, with receipts falling 12 percent, according to Janney, but no one was expecting this big a miss, the analyst said. The weak start to the year puts that much more pressure on the upcoming slate to deliver.

Every weekend of the key movie season will see a potential $100 million-to-$200 million-plus film released. Among the highlights are Dimension Films’ "Scream 4," opening mid-April, the next "Pirates" from Disney and Dreamworks’ "Kung Fu Panda 2" hitting theaters in May and News Corp.’s "X-Men: First Class" and "Cars2" coming in June.

However, studios may have shot themselves in the foot by overloading the summer slate this year, leaving many quality movies unable to reach their potential as movie-goers move on to the next big thing, Wible said. The onus may end up being on smaller films to exceed expectations in order for studios to meet their numbers, he said.

And then, of course, there’s the quality of the films. "Mars Needs Moms," "Red Riding Hood" and "Battle Los Angles" all got less than 40 percent positive reviews, according to web site RottenTomatoes.com, which aggregates professional reviews to calculate a standard numerical ranking of films. Below 60 percent positive reviews, makes the movie "rotten," according to the site.

Barclays defended Disney after the "Moms" flop in a bullish note Wednesday. "The animated movie has underperformed expectations and cost an estimated $175 million to produce and market," wrote Anthony DiClemente, Internet and media analyst. "However, the outlook for the remainder of the year is more favorable as comparisons ease. We are also encouraged by the release of "Pirates of the Caribbean 4" and "Cars 2" in theatres and by the release of "Tangled" and "Tron: Legacy" on DVD."

If Disney is any barometer for the industry, critics and viewers better have a taste for sequels if studios are going to rebound from this dismal start to the year.

Interestingly enough, they better have a healthy appetite for popcorn as well, for the theater companies to make their numbers. Towards the end of their note, the folks at Janney point out that corn and sugar prices are up 85 percent and 55 percent over last year respectively. They warn that could put a dent in concession margins for Cinemark (CNK) and Regal Entertainment Group (RGC). For the last decade, those margins have run at an eye-popping 85 percent.

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John Melloy is the Executive Producer of Fast Money. Before joining CNBC, he was an editor for Bloomberg News, overseeing the U.S. Stock Market coverage team.