As a Disney (NYSE: DIS) shareholder, the High School Musical juggernaut is important to me. It means money for the company. It means a point of distinction for Disney that adds value to its content and differentiates it from other media businesses such as News Corp. (NYSE: NWS) and Time Warner (NYSE: TWX). It means that tweens have something realistic to relate to that reflects their own days of breaking out in song while walking through school (okay, that was a joke).

But I was disappointed to hear that a reality show extension of the brand is having a tough time in the ratings. According to this blog post at The Hollywood Reporter, the show, called High School Musical: Get in the Picture, had the worst ratings on Monday night. It's some sort of competition show with a prize related to being in some sort of video in the Musical franchise.

I'm not sure of the specifics, but my main concern is that it couldn't offer any competition to CBS (NYSE: CBS) or General Electric's (NYSE: GE) NBC. Remember, Disney's big model is to take its content and spread it around to enhance the value of the company's other platforms. It's all about the synergy. Unfortunately, it didn't work this time. I honestly thought that ABC would have seen huge numbers from the kids on this one. It makes me wonder if Musical might be getting long in the tooth.

I sure hope not, because the theatrical version will be coming up this October. I want at least one more hot project to be derived from the franchise before it heads for the fad graveyard and becomes just another mention on a VH1 I Love the 00s program. Camp Rock will hopefully pick up the slack as Musical and Hannah Montana start to hit their respective death phases.

I'm not saying that the dismal ratings performance for this reality show means that Musical is done for just yet. All I'm saying is Disney has its hands full in terms of incubating more fads for shareholders.

I own shares of Disney and GE; positions can change at any time.

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• Time Warner -- through its Warner Brothers and DC Comics subsidiaries are profiting most directly.
• Comcast Corporation (NYSE: CMCSA) partnered with Warner Bros. to offer "behind-the-scenes footage, trailers, and mini movies on demand"
• Verizon Communications, Inc. (NYSE: VZ) and Nokia Corporation (NYSE: NOK) collaborated in creating the Nokia6205 The Dark Knight Edition. Seeking Alpha reports that "This batphone targets superfans, with bat wallpaper, voice tones, screensavers, and the film's trailer pre-loaded."

• Mattel, Inc. (NYSE: MAT) has the license to sell toys related to The Dark Knight, and it turns out that both kids and adult collectors buy Batman toys.
• Imax Corporation (NYSE: IMAX): the film is being shown in 94 Imax venues and CNBC reports it had a record $6.2 million weekend.

Is Dark Knight big enough to move the needle in favor of buying stock in these companies? I think it may be too early to tell. I have not seen the movie yet. If you saw it, please comment below on whether you think it will boost the fortunes of these companies. But with stocks in each of these six falling today, I am not sure whether investors were disappointed with the outcome or simply taking profits that they had been anticipating for months.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

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Time Warner (NYSE: TWX) bombed earlier in the summer with a movie called Speed Racer. If you said you didn't see that one, I wouldn't be surprised. However, in the interest of cosmic balance, the media company scored with its new Batman flick, The Dark Knight. And when I say scored, I mean it. The film is estimated to have taken in about $155 million over the past three-day weekend at domestic theaters, according to Boxofficemojo. If this estimate holds, then it represents record business. Spider-Man 3 currently holds the three-day record of $151.1 million.

Mamma Mia!, distributed by General Electric's (NYSE: GE) Universal didn't come close to the Bat. It came in second with around $27 million. Hancock from Sony (NYSE: SNE) was third with $14 million, and it will be crossing the $200 million mark in about a week or so. Time Warner's Journey to the Center of the Earth was fourth, while Universal's Hellboy II: The Golden Army was fifth. That film took a steep 70% drop compared to its debut-weekend performance. I didn't think it would fall that far, but I suppose the Batman juggernaut left it no choice but to step aside. It took in a weak $10 million for the weekend.

I have one criticism for Knight, purely from a financial/shareholder perspective. I see that the run time for the movie is two hours and thirty minutes. Have studios figured out yet that shorter movies yield less risk? Sure they have. Then, the question is, why do they allow it? Films need to be as short as conceivable. It allows more scheduled showings, it reduces budget bloat and it's more attractive to time-strapped patrons.

Obviously, Knight is performing way beyond expectations. In fact, I read that some theaters scheduled extra screenings to keep up with the movie's popularity. Nevertheless, in my opinion, studios such as Disney (NYSE: DIS) and News Corp. (NYSE: NWS), as well as the ones already mentioned, need to focus on films with minimal run times. Although I can't say with scientific certainty, it feels as if the movie industry has been doing this lately anyhow.

However, what happens if you try to tell an auteur like Christopher Nolan (Knight's writer/director) that his project needs to be a certain length? I'm sure all hell breaks loose. When needs for high returns on capital collide with creative artists, studio heads oftentimes cave, proving that there's no shortage of wimps in Hollywood...

Disclosure: I own Disney and GE; positions can change at any time.

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MAJOR PAPERS:

• According to people familiar with the matter, the Wall Street Journal reported that Federal Hole Loan Mortgage Corporation (NYSE: FRE) --Freddie Mac -- is considering raising capital by selling up to $10B in new shares to investors. The sources believe this effort may have the potential to avoid a full-blown government rescue.
• The Wall Street Journal also reported that, amid U.S. investigations into allegations it helped American clients evade taxes, UBS AG (NYSE: UBS) said some Swiss-based private bankers will stop offering American clients Swiss bank accounts and other services.
• Starbucks Corporation (NASDAQ: SBUX) will close store in 44 states plus the District of Columbia, including 88 closures in California, 59 in Florida and 57 in Texas, the Wall Street Journal reported.

• After Cleveland Cliffs Inc (NYSE: CLF) bought Alpha Natural Resources Inc (NYSE: ANR), there may be many more acquisitions in the coal industry, Bloomberg said.
• Reuters noted that, according to a person with knowledge of the plans, Yahoo! Inc (NASDAQ: YHOO) could renew talks over News Corporation's (NYSE: NWS) Web properties if Microsoft Corporation (NASDAQ: MSFT) gets in the way of discussions with Time Warner Inc's (NYSE: TWX) AOL. Yahoo! is in contact with News Corp. about the assets, but the search engine's talks with Time Warner about AOL are more advanced, the source added.
  

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There will be five superheroes competing for the attention of weekend moviegoers come Friday. There's Marvel Entertainment Inc. (NYSE: MVL)'s duo Iron Man and The Incredible Hulk, Sony Corporation (NYSE: SNE)'s Hancock, General Electric Corporation (NYSE: GE)'s Hellboy (distributed by GE's Universal), and Time Warner, Inc (NYSE: TWX)'s Dark Knight. So, who's going to be the ultimate crime fighter?

I'll tell you which one prevails: Time Warner and its new Batman film, The Dark Knight, has the weekend all locked up. This is set in stone. The Hulk and Iron Man are pretty much done, Hellboy isn't a powerful enough brand name, and Hancock didn't deliver the big numbers I thought it was capable of during its debut weekend (since then, however, the movie has held up well, I have to admit). But you can bet that Dark Knight hits $100 million this weekend. Can you feel the buzz surrounding this blockbuster in the wings? I can. Several reviews I've read were full of cinematic worship for this new entry in the franchise, with special praise reserved for the late Heath Ledger and his portrayal of the fiendish nightmare known as The Joker. There's a decent marketing campaign behind the project, including promotion of the availability of IMAX (NASDAQ: IMAX) screenings. If there ever seemed a movie fit for Imax, this is it. Yeah, Dark Knight can't lose, it can only win big.

Of course, what about Time Warner's stock? It could certainly use a superhero right now, as it has been hovering in recent times not above Gotham City (although that would probably be treacherous enough) but above 52-week-low City. I can't say that a big opening weekend definitely won't move the stock a little just due to the excitement factor, but I wouldn't buy the company ahead of the film (I also wouldn't gamble with IMAX either). Time Warner simply is too large to be affected significantly by one movie. If you consider Time Warner at all, it would be for fundamentals and valuation (I think the company is cheap here, although with this market, I'd rather get it cheaper). Enjoy the movie first, think about the stock later...

Disclosure: I own GE and Marvel; positions can change at any time.

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Often the source of a rumor is as important as the rumor itself. Some sources simply have more credibility than others. Reuters has reported that talks to make either Microsoft Corp. (NASDAQ: MSFT) or Yahoo! Inc. (NASDAQ: YHOO) the new owner of Time Warner (NYSE: TWX)'s AOL are heating up.

Now, The Wall Street Journal say that negotiations between Time Warner management and Microsoft brass have become more urgent.

The paper writes, "Microsoft Corp., seeking an alternative to a deal with Yahoo Inc., is planning to meet executives from Time Warner Inc.'s AOL today to advance discussions on a possible tie-up."

Of course, the rumors has the strength of making sense. For Microsoft or Yahoo! to get bigger in display advertising and have more online consumers using their search services, AOL is the only other really large internet property available. And Time Warner management has strongly hinted that it would like to find a home for the portal company.

One thing is certain. Yahoo! will not be AOL's buyer. The likely proposal from Yahoo! would be for it to buy AOL by giving Time Warner a big piece of ownership in the combined company. That would leave TWX with perhaps a third of the public stock in Yahoo. Selling off a stake of that size would be nearly impossible. Time Warner might as well keep AOL under those circumstances. Also, Yahoo! management has been so maladroit at running its own affairs that Time Warner should have very little confidence that the group could run a larger operation.

Time Warner will look at Microsoft as AOL's buyer for two key reasons. First, it has cash; and second, it will not allow AOL to fall into Yahoo!'s hands to give the. No. 2 search company the advantage of improving its position in that part of the online industry.

Douglas A. McIntyre is an editor at 24/7 Wall St.

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Time Warner (NYSE: TWX) is recently up 53 cents to $14.45.

The WSJ reported Microsoft (NASDAQ: MSFT) and TWX's AOL unit are in advance discussions on a possible tie up.

TWX is expected to report Q2 EPS on August 6. On May 21, 2007 TWX declared a one-time dividend of $10.9 billion to its stockholders, payable just prior to separation of Time Warner Cable (NYSE: TWC); TWX will receive $9.25 billion of Time Warner Cable's dividend.

TWX call option volume of 25,158 contracts compares to put volume of 20,636 contracts. TWX August option implied volatility of 43 is above its 26-week average of 35 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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General Electric (NYSE: GE) didn't see a huge reaction to its earnings on Friday. I think the stock closed up by only a couple pennies. But at least its NBC Universal asset scored a hit with Hellboy II: The Golden Army. According to Boxofficemojo, it topped this weekend's domestic box office with a gross of more than $35 million. Sony's (NYSE: SNE) Hancock, however, is close. That film was in second place with a haul of $33 million. By the time final figures are out, Hancock could find itself in first place, but I doubt that's going to happen. This really seemed to be Hellboy's weekend. I have to say, though, that Hancock did much better than I thought it would for its second weekend at bat. The film will easily pull in over $200 million, maybe $250 million, before all is said and done.

Time Warner's (NYSE: TWX) Journey to the Center of the Earth 3D was number three with over $20 million. Not a particularly great debut, I don't expect too much action in the coming weeks from this one. Now, Wall-E is an important project for Disney (NYSE: DIS) shareholders since it is another effort from Pixar. Investors are still trying to figure out if the price paid for Pixar will be ultimately worth it. Wall-E is doing pretty well; it came in fourth over the weekend, and its total box-office take so far is about $162 million. Incidentally, Eddie Murphy failed horribly with his film Meet Dave. The movie, from News Corp. (NYSE: NWS), came in seventh with a little over $5 million. I didn't even know it was in the marketplace.

GE and Universal scored again at the multiplex with Wanted, which came in fifth. Its cumulative gross is now more $110 million. See that? GE can leverage quality content to bring in the revenues. If NBC Universal can synergize better with hits like these, then perhaps there won't be such pressure in terms of dumping the asset. For now, though, NBC Universal is a show-me division, and it better keep the hits coming to placate the board.

Disclosure: I own Disney and GE; positions can change at any time.

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General Electric (NYSE:GE), which reports earnings tomorrow, has indicated that it may spin-off its weakest divisions -- the firm's consumer and industrial units. No one cared, and the stock did not move. The action would not be enough, nearly enough to pull GE away from its multi-year lows.

What investors would really like to see is GE broken into little pieces, the smaller the better. The only growing and hardy business that GE has now is its huge infrastructure operation. It would make a nice stand-alone company.

The unit that investors most want to see GE kick out the door is NBC Universal, a mismatch with all of GE's other businesses. In the last quarter, it had revenue of $3.6 billion and segment operating profits of $712 million. It is profitable, but not growing.

There is speculation that NBC Universal may have a very interested buyer in Time Warner (NYSE:TWX), which is about to get a load of cash from its own spin-off of Time Warner Cable (NYSE:TWC). The New York Post writes that GE CEO Jeff Immelt may be "interested in exploring a merger or spin-off - with Time Warner and Liberty Media mentioned most often as the likely suitors."

A deal which combines a TV network and another studio with Time Warner is not so far-fetched. NBCU has a number of cable channels including the recently acquired cable and online behemoth, The Weather Channel. Time Warner tried to buy that all on its own. The $3.5 billion price was too high. TWX has it own cable powerhouse, the crown jewel of which is CNN.

Time Warner could save a fair amount of money by putting together two studios, which would allow it to increase earnings by tearing costs out of NBCU.

The financial portion of the transaction would be a big pill to swallow for TWX, but it is not beyond the media company's capacity. CBS (NYSE:CBS), which has revenue comparable to NBCU, has a market cap of about $12 billion. That means Time Warner would probably have to pay $15 billion to get GE's entertainment unit.

Shareholders in Time Warner want to see management step up and improve the company's prospects. There are not many big media deals to be had these days.

Sometimes needing something is just as important as whether owning it makes sense.

Douglas A. McIntyre is an editor at 247wallst.com.

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There has been pressure on the shares of Time Warner (NYSE: TWX) for a couple of days now. Today the stock is down nearly 30 cents to $14.09 after losing about 40 cents yesterday. Lehman put out a rough report on media stocks yesterday, which did not help the company's cause.

The real reason that Time Warner shareholders may be sullen is that they are concerned about a possible Yahoo! (NASDAQ: YHOO) buyout of AOL, rumored to be in the works. Analysts think that AOL may be worth $10 billion. Most experts considering such deal figure see Yahoo! giving Time Warner a 30% stake in Yahoo! in exchange for all of the AOL assets.

The deal is a bad one because Yahoo!'s stock is a poor currency. With such a large position, it would be nearly impossible for Time Warner to liquidate its stake. The news of an AOL deal in place of a Microsoft (NASDAQ: MSFT) buyout of Yahoo! at $33 would almost certainly hammer Yahoo! shares and might even push them below $15.

The most significant concern for investors holding Time Warner stock is that Yahoo! has demonstrated that it is badly run and still struggling to significantly improve its revenue growth. Getting a piece of a broken company may get AOL a new home, but what Time Warner shareholders would get in return would probably not be worth much.

Douglas A. McIntyre is an editor at 247wallst.com.

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There's no question that, at this point, Yahoo! (NASDAQ: YHOO) needs to partner up with some company. I didn't see the logic behind the Microsoft (NASDAQ: MSFT) interest in Yahoo! I thought then -- and still think now -- that Microsoft didn't need a big brand in the Internet portal space. It's doing fine with its own MSN.com, its operating-system monopoly and current portfolio of investments.

However, I see the merit in a deal between Yahoo! and Time Warner (NYSE: TWX). The following article discusses the possibility that Time Warner and Yahoo! are talking about a combination. Since Time Warner owns AOL, and since AOL has been transforming its business model over the last few years to capture a more advertising revenue, Time Warner would be wise to at least consider the transaction. Leveraging both brands would generate a lot of clout when it comes to advertisers, who would look at the platform as a must-buy to reach the surfing eyeballs.

There would be many other areas of synergy between the two companies and, of course, the potential to cut redundant costs. Or course, the deal would have to make financial sense and who knows if Yahoo! CEO Jerry Yang will be reasonable.

I think we'll be hearing more about Time Warner and Yahoo! in the coming weeks. However, I don't think anyone should place trades in these stocks based on deal speculation. Buy them for other reasons, but not for purposes of gambling on potential headline news.

Disclosure: I don't own any company mentioned; positions can change at any time.

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APP Pharmaceuticals (NASDAQ:APPX) is up over 30% on a buy-out offer from Fresenius.

Time Warner (NYSE:TWX) is up almost 2% after positive comments in Barron's.

Teva Pharmaceutical (NASDAQ:TEVA) is off 6% on news that one of its drug trials went poorly.

UBS (NYSE:UBS) is down over 5% on concerns that the bank will report large write-offs for the last quarter.

Stocks made trade differently in the pre-market than they do in the regular session.

Douglas A. McIntyre is an editor at 247wallst.com.

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Well, I was wrong about Sony's (NYSE: SNE) Hancock. Sure, I knew it was going to be the number-one movie over the Fourth of July holiday period, but come on, who didn't know that? As of this writing, Boxofficemojo estimates that the Will Smith picture took in $66 million over the three-day timeframe. However, Hancock had opened earlier in the week, and I thought that, by the time all was said and done, the film's cumulative gross by now would have been well over $100 million. Well, the cume now stands at around $107 million. I was thinking more along the lines of $125 million and above for a total tally by this point. Hancock came in a little weaker than expected, considering what seemed to be a very awesome cinematic experience as communicated by the marketing campaign.

Disney's (NYSE: DIS) Wall-E came in second over the weekend with around $33 million. The Pixar cartoon now has about $128 million to its credit. Wanted, distributed by General Electric's (NYSE: GE) Universal, was third with over $20 million. Time Warner's (NYSE: TWX) Get Smart and DreamWorks Animation's (NYSE: DWA) Kung Fu Panda were fourth and fifth, respectively. Here's an interesting note on Get Smart. Even after the holiday weekend, and after having been out in the marketplace for a few weekends, it still has yet to reach a total gross of $100 million. As of now, it has a little over $98 million in the bank. That number may change a bit when final figures are in, but in this day and age, when a summer movie with such star power (it stars Steve Carell) doesn't reach $100 million by the second weekend or sooner, it can't be considered super blockbuster material.

Well, it wasn't a terribly exciting box-office weekend. Frankly, I thought there would be more fireworks for the Fourth from these films. And as for all the stocks mentioned here, the bear market will probably keep them weak. The most direct play on the movie business is obviously DreamWorks Animation, and I would wait for that one to come in more before thinking about buying.

Disclosure: I own Disney and GE; positions can change at any time.

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