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Entertainment Companies Are Hot

FILM hero Indiana Jones will once again roar across thousands of neighborhood movie screens this month. Entertainment specialists say that will likely mean hefty profits for Paramount Pictures and its parent company, Gulf & Western Industries. Nor is the new Indiana Jones film expected to be the only box office bonanza this spring and summer. Given the release of a large number of big-budget films, Wall Street expects the next few months to be particularly auspicious for entertainment companies.

Companies specializing in films and resort or leisure enterprises, such as theme parks, tend to gear their enterprises around two distinct seasons, spring/summer and the year-end Christmas period.

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``Strong seasonal factors, including release of a number of major films, suggests that this could be a very big summer at the box office for a lot of entertainment companies,'' says Christopher Dixon, an analyst with Kidder, Peabody & Co.

Close on the heels of Indiana Jones, Paramount will release a new ``Star Trek'' film. Columbia Pictures will soon distribute a new ``Ghostbusters'' film, as well as ``Karate Kid III.'' Warner Bros., a subsidiary of Warner Communications, will shortly issue ``Batman'' and ``Lethal Weapon II.'' In addition, theme park owners, such as the Walt Disney Company, are adding new rides and tours in anticipation of summer vacation.

Mara Balsbaugh, an analyst with Smith Barney, Harris Upham & Co., is recommending Gulf & Western, Warner Communications, MCA (Universal Pictures), Columbia, and Orion. She likes Gulf & Western not just for its coming box office products but its other entertainment-related businesses, such as the USA Network on cable TV.

``Entertainment companies have had a strong run now since the beginning of the year,'' says Mr. Dixon. ``We're currently recommending the entertainment group based on market-related weakness.''

In other words, Dixon says, investors should consider buying entertainment stocks for purposes of accumulation for long-term appreciation if the market starts to show weakness.

John Tinker, an analyst with Morgan Stanley & Co., believes that one effect of the heavy box office attendance this summer will be a boost for theater operators. In recent years, Mr. Tinker says, theater owners in the United States and Canada have significantly expanded the number of seats available. But, he says, the film industry has not been turning out enough new products to enable theater owners to book major first-run films. Thus, the lack of strong supply has tended to undercut the ability of theater owners to bargain for best possible rental charges.

That situation could change this summer, Tinker says, because of the great number of blockbusters scheduled for release. Theater operators, Tinker says, are in a good position to demand high rental charges. The upshot: Instead of recommending any particular film company, Tinker recommends United Artists Communications.

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The company, which will become United Artists Entertainment shortly, when it acquires a cable TV company this week, is the largest theater chain in the US. ``There's going to be a real capacity problem for theaters this summer,'' Tinker predicts. And that, he argues, will be a plus for United Artists Entertainment.

The entertainment company, as opposed to theater company, that looks the most attractive to Dixon is Disney. But that interest momentarily stems more from the resort-entertainment side of the company than the film side.

Dennis Rosenberg, an analyst with Oppenheimer & Co., agrees: ``I'm recommending Disney based on its superior long-term outlook.'' He notes that the purchase of four-day passes has been ``much higher than expected'' at the new movie studio tour in Florida. Traffic was so heavy that the parking lot was actually closed for a period because it was filled, he says. Q-30-{et

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