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David Poland

By David Poland poland@moviecitynews.com

The Disney Math

I’m going to do this as simply as I can.

This is Iger’s legacy… at least it is the current one, after he failed with Rich Ross to turn the company into a distribution-driven studio with little internal production. So now, it’s that Disney will become the first an All-Franchise, All-The-Time studio, owning EVERYTHING they put out. So…

7 or 8 releases a year.

1 Pixar
2 Marvel
2 Disney Animation
1 LucasFilm
1 Bruckheimer
1 Other Disney Franchise Film

I don’t expect DreamWorks to be there at this time next year.

So that’s about $200m, $325m, $160m, $125m, $200m, $90m in production each year… total: $1.1 billion.

Marketing for all these franchises would have to be about $1.2 billion.

So the annual nut of Disney 7.0 will be about $2.3 billion each year.

They’ll gross about $3 billion worldwide this year with 5 new films and two 3D re-releases in distirbution. That’s about $1.65 billion in rentals coming back to the studio. They should hit black ink, but there won’t be a lot of profit.

They did about $3.1 billion last year and $4.7 billion in 2010, with 14 films in release each of those years.

The studio has had at least one billion-dollar movie in each of these years, two in 2011.

And that’s what they will have to count on to make this work. If you have one John Carter for every Avengers, it doesn’t work. If you don’t have at least one billion-dollar movie, it probably doesn’t work.

The theory is that this group of brands will consistently deliver and that they won’t have any big losers because there is a base audience for all of this material.

However…

Marvel still hasn’t delivered a sure-fire franchise internally that doesn’t involve Iron Man. Things have gotten better with Thor and Captain America, but $450m and $370m are triples, not home runs. They are profitable, but not sure hits. All but one of the other film film produced by Marvel directly has grossed under $300m worldwide. You could argue that the catalog is on the ascension. But it’s risky.

Pixar is stable. Disney Animation is pretty stable, but tends to be on the lower end of the formula.

This brings us to LucasFilm. The dream is that future Star Wars films will be a billion-dollar-a-shot cash machine.

So the fantasy is that you get a billion-dollar hit, alternating between Marvel and Star Wars, every year. Until they can get Star Wars back on its feet, the slot is filled by Bruckheimer… perhaps after, if he can get Depp to two another couple Pirates movies. So a billion every year hit is the foundation. You have a solid success with your one Pixar film and the other Marvel film each year. You hope between the two Disney Animation films, you have one that is bigger and one that is just slightly profitable. And then, the 6th film or 7th and 8th films are wild cards, aiming high, and capable of turning a good year into a great year.

So is there any room for the flops?

Not so much. If you have your billion-dollar-plus film, you can take the hit. If you don’t, there starts to be some real trouble. And if you have two major flops out of eight, the only reason your studio isn’t bankrupt is ESPN.

This all reminds me of Peter Guber’s story about The Japanese not understanding why he didn’t just make all the hit movies and not make the flops.

And then there is the $4 billion price tag. Maybe it pays off in time.

It’s been six years since Disney bought Pixar and the deal still isn’t close to being profitable for the studio… but the run has continued, so it now looks like this deal will be a net positive for Disney and actually be paid off by sometime around 2020.

Marvel isn’t even close. But The Avengers has everyone feeling good about the deal. And though Spider-Man and X-Men are unlikely to be coming home anytime soon, they are still nice profit centers for Disney.

And when Star Wars puts $6 billion or so in movie revenues in Disney’s pockets, that deal will be looking good.

But it’s a long way to muthaf***ing Tipperary, man. A long, long way.

The last Iger move was gutsy too… and was dismantled in 2 years, in spite of the studios having had their 2nd – 5th billion dollar grossers in its history during that time. It wasn’t enough.

Scary-high tightrope Iger is walking. No joke.

76 Responses to “The Disney Math”

  1. JoJo says:

    Any discussion of this deal that only focuses on the movies themselves while ignoring ancillary revenues seems incredibly pointless.

  2. PcChongor says:

    Do you not consider merchandising as a part of the studio’s take? Assuming manufacturing was outsourced somewhere on the cheap, toy sales from “Toy Story 3″ and “Cars 2″ should have been more than enough to break even on the Pixar deal, and I would assume the same to be true with the LucasArts buy, which has an even wider ancillary net with strong preexisting television, video game, and just-about-everything-else presences. Long term, I’d say this was one HELL OF a deal for Disney that was more than likely brought on by Lucas’ geek outcry fatigue.

    The ultimate irony will be when the aforementioned geeks will be BEGGING for Jar Jar’s sweet jigaboo nothings after they see what a trial-by-committee “Star Wars” from Horn and co. is like.

    As a side note:

    Do you think that the preemptive 2015 date for “Star Wars 7″ might have anything to do with Iger’s impending retirement? And with Horn’s at best 2016 exit, is there room for another huge shift in Disney’s fundamental strategy if the Marvel 2.0′s and beyond go bust?

  3. Rashad says:

    Why are you only looking at movies? In 2010, with no movies to speak of or blu ray release, Star Wars sold $510 million in toy sales. In 2011, it was still one of the top in toy sales.

    Cars has passed 10 billion in global retail sales, and that was before Cars 2 was released. Toy Story 3, alone, brought in 2.4 billion in merchandise sales.

    They’ll more than make their money.

  4. PcChongor says:

    Side, side note:

    Hopefully this deal will speak less about Iger’s legacy, than it will for Lucas’. Now that he’s completely unburdened by “Star Wars” baggage and $4 billion richer, he FINALLY better be parking that jiggly ass mother fuckin’ gullet of his into that deep, dark garage where his supposed filmic experiments are going to be taking place. If any of what he ends up doing next has either a number, or the word “Duck” at the end of it, his entire career will have been for naught.

    Ball’s in your court, George.

  5. David Poland says:

    Oy. Of course merchandising and parks and everything else is part of the equation. Otherwise, there would never be black ink.

  6. cadavra says:

    I hear Episode 7 will be set on Pluto.

  7. Lost In Poland says:

    Your assumption is that Alan Horn is not making any other films at all. This simply isn’t true. Further David Poland analysis based on facts not in evidence.

  8. samguy says:

    I’m guessing at this point, that Oscar bait is a non-starter. “Leave that to the Weinsteins!”

  9. berg says:

    thx 1138 … 9 … 4.0

  10. LtotheG says:

    Is it gonna be a cartoon or a real movie?

  11. Ryan says:

    So, ‘merchandising and parks’ are part of the discussion, and we’re worried about the possibility of one John Carter?

    The deal looks especially good because it reaches an entirely new generation of Star Wars fans.

  12. BoulderKid says:

    The first new Star Wars film is going to be one of the most important of all time from a business stand point. Imagine if J.J. Abrams or whoever directs lays a giant turd and the film struggles to get to around 500m worldwide.

  13. Bennett says:

    on a side note, it is amazing how Disney has done a 180…from low priced/high profit 1980′s comedies, to the price pinching memo, to now this acquistion company.

    I am guessing that “other Disney Franchise” would include the Muppet franchise..that I beleieve Disney could do more with…

  14. JoJo says:

    David, your “oy” response is patronizing. If it’s so obvious, then why didn’t you discuss it? Re-read your piece (which reads like it was churned out in about 10 minutes while you were eating dinner or something). What point are you trying to make with it? The entire premise of the piece seems to be that theatrical revenues are all that matters.

  15. hcat says:

    Besides the toys you are also discounting the eventual flood of DTV titles of Ewoks and the like.

    And I still think that the price Disney paid for Pixar was worth it not just because of the profitability of their films, but the simple fact that they were not in a position to compete with them. When the deal was made Disney’s traditional animated division was on the ropes after misfires like Atlantis, Treasure Planet, and Chicken Little, if Pixar moved over to say Universal, there would be no way that Disney could compete against both them and Dreamworks (with Blue Sky on the way). And the family films drive the entire engine, if Disney was perceived as past their prime, having lost their magic, the theme parks, merchandising, cruises etc.. all take a hit.

  16. Proman says:

    Why are we talking numbers here? Who cares? Anyone actually wants to see Disney (or anyone else) to continue to monopolyze and cannibalize more studios/intelleactual properties?

    Especially now that Disney is making it clear that the only thing that they believe in are not filmmakers, stars or even studios but Intellectual properties. Stupid nerds care more about a character then any real person behind it. Put them all in the bundle and you’ve got the closest thing to a real success. That’s what the model is. And they may be right, which is the saddest part of it all.

    There’s probably someone out there getting giddy over all the potential crossovers and the thought of being greeted by a Star Wars character in a Disney park. It’ll be just like being in a Wallmart. And it will be more commercialized than ever before. Pop culture is truly eating itself.

    This entire deal is sad for so many different reasons.

    It’s dehumanizing. To directors, wrires, actors, audiences and everyone in between. It was one thing to have a single franshise like Bond where the character was the star and different actors played different variations of that character. Now nothing is build to last anymore.

    Star Wars or Indiana Jones are inherently not like that. Even if the original actors make any sort of appearances, the whole thing is likely to feel like a reboot and will, ultimately lead to one.

    I am not even that invested with Star Wars but this whole model is upsetting. And it is sad and ironic that Star Wars is going to follow in the steps of new Star Trek films.

    I am both upset and relived that Kathleen Kennedy plays a role in this. I hope she doesn’t let anyone do a CGI Indiana Jones film.

    Lucas delievered what a was a truly great Star Wars film in Episode 3. He still got ragged on. And all the people wanting to see the teh genius filmmakers of their choice take over and “improve” the franchise make me sad (I use that word a lot, I know). This is not the attitude to approach something like this with, especially if it’s shared by a fillmaker. didn’t build this. There shouldn’t be any sense of entitlement just respect.

  17. hcat says:

    “Now nothing is build to last anymore”

    Quite the opposite, now everything lasts forever and ever and ever and ever. Bond, Batman, Mickey Mouse and now Star Wars will never die off and go away.

    Which we will all complain about until we get a Casino Royale or a Rise of the Planet of the Apes and then we cheer about the fact that we get to revisit these charecters or universes.

  18. Mike says:

    I kind of like the idea of Star Wars being opened up to new filmmakers. As long as they’re not rebooting the Skywalker stories, there’s a whole galaxy to explore.

    Kind of like what Marvel is doing. They’re creating certain franchises, but also opening it up to explore other avenues (Antman, Guardians of the Galaxy and a SHIELD tv show). Some are going to suck, most are going to be mediocre, and a few are going to be great.

    I think that’s better than leaving it in the hands of a guy who is tired of it.

    Creatively and financially, it’s an interesting model for Disney to explore with future Star Wars movies, tv shows, comics, toys, games, etc.

  19. PcChongor says:

    Proman’s right. The possibilities of exploring the other sides of the Star Wars mythos from a fresh perspective are incredibly exciting, but as long as Disney continues to treat their films as loss leaders for the television and merchandising departments, those possibilities will never be fully realized.

  20. Think says:

    Merchandise already paid off the Pixar purchase. You’re leaving a big element out. CARS has been a major yearly earner, even ignoring the other Pixar movies.

  21. movielocke says:

    If Ford got 50 mil for Indiana Jones and the Crystal Skull, his agent is going to ask for 100 million for Star wars 7 (with a guarantee of another 100 million each for star wars 8 and 9).

    This has to be the scariest fucking directing job for anyone in the industry to possibly take–I expect a lot of applicants. It’s equivalent to gunning for the presidency. Your entire career will be defined and revolve around how well you perform on Star Wars 7 (later Star Wars films will be much lower risk for directors to take after the cherry is popped on #7). That means Spielberg is out, Nolan is out, Whedon is out (but he might agree to fix the screenplay for them), Bay will probably apply but not be hired, Cameron would laugh at them, Abrams probably has a non-compete clause, Jackson doesn’t want the hell, del Toro is probably too much of a hassle for producers (too much vision), Cuaron is a decent possibility as is Verbinski.

    My guess is that Disney hires Brad Bird. I bet they can get him for less than 25 mil as well. Bird is also ideal because they’ll be shooting ala Dark Knight and Mission in Imax equivalent cameras, and probably in 3D

    Hammil and Fisher will probably both ask for 50 million.

    So just paying your actor and director fees is going to put the movie over 200 million, imo. Even if the movie is only 1/3 about Luke/Han/Leia and 2/3 about their jedi students/children.

    And the real money here is in all the ancillary media. The movies keep that merch machine going and going and going.

    As for the Parks, imagine StarWars Land diagonally opposite from Cars Land in California Adventure, this time they’d use the amazing forced-perspective painting and construction of Cars Land to have a Death Star, Tatooine, Coruscant etc landscape. that’s the first step, tear down the Soarin-Over California install and start with a Star Wars install in California Adventure–they could even conceivably have it open by 2015-16. Yes, ten people will cry that Soarin went away, but boohoo.

    And in the interim spend the time working on the Florida Star Wars theme park ala Harry Potter Land.

    Anyone else notice this:

    2012: 3D Phantom Menace
    2013: 3D Attack of the Clones
    2014: 3D Revenge of the Sith
    2015: Episode 7

    They were never planning on doing the original trilogy 3D, were they?

  22. Don R. Lewis says:

    Agree with everyone above; the ancillary market pays this off NO problem. I even think an entire Star Wars theme park could be huge.

    My guess for Episode 7′s director is Jon Favreau based on absolutely nothing but a guess!

  23. Triple Option says:

    I realize they didn’t own the rights before but how did this get away from Fox? Was Disney just very aggressive? Did Fox not want to match?

    I want to ask some a dumb/conspiracy theory type question. How long do you think this was in the works? Due diligence/negotiations would be maybe 2-3 months? I realize this is a stretch but if Fox already knew that Lucas was shopping Star Wars elsewhere, could that have had led Fox to showing Rothman the door? Who would’ve had final say on such a deal?

  24. Bennett says:

    I hope that Ford does not return to the series. The way he has slept through his last performances is heartbreaking. I am still annoyed with Crystal Skull. Why do they even need the old stars? Does anyone know the premise of the new trilogy?

    I hope that they just do a whole new star wars series based on the same universe, without being tied down to the Vader/Skywalker storyline.

  25. storymark says:

    “Anyone else notice this:

    2012: 3D Phantom Menace
    2013: 3D Attack of the Clones
    2014: 3D Revenge of the Sith
    2015: Episode 7″

    You’ve got the timetable wrong. This summer (right about the time they company internally committed to 7-9) they bumped up Revenge of the Sith – it and Clones both come out next year. All three original trilogy films will be released throughout 2014 – leading them right into 7 in 2015.

    So, it’ll be:
    2012 – Ep 1
    2013 – Eps 2&3
    2014 – Eps 4-6
    2015 – Ep 7

    And don’t hold your breath on Ford coming back. He loved Indy – and has always disliked Han.

  26. Ray Pride says:

    Iger’s hint about television suggests Disney can and will go in so many more directions, not limited to the characters/plotlines of the six films. Or maybe there’ll just be more plotlines about unfair taxation…

  27. Jason says:

    While “you’re just a blogger” is a popular snarkism among commenters on the Internet (that I don’t always enjoy)…this post is honestly and truly an example of a corporation full of talented, smart, educated, financially savvy, risk-taking and mammothly solid executives doing something that changes the media landscape…versus a guy who has no idea what he is talking about writing a quickie reactionary blog post.

    If you weren’t in the deal rooms and have not seen the balance sheets…then you’re just a dude at a party talking on and on by the cocktail meatballs. And yes, JoJo is right — you can’t write a giant post illustrating your intelligence…and then when someone brings another totally valid and smart and good and sound point — especially about something you missed completely — you just say, “Oy.” That’s just lame.

    So I’ll trust Bob Iger and George Lucas inherently. They get the benefit of the doubt. Seems most of their decisions have been stratospherically successful.

  28. Don R. Lewis says:

    Isn’t the first film coming out summer after next? It’s gotta be written or at least outlined.

  29. movielocke says:

    “I realize they didn’t own the rights before but how did this get away from Fox? Was Disney just very aggressive? Did Fox not want to match?

    I want to ask some a dumb/conspiracy theory type question. How long do you think this was in the works? Due diligence/negotiations would be maybe 2-3 months? I realize this is a stretch but if Fox already knew that Lucas was shopping Star Wars elsewhere, could that have had led Fox to showing Rothman the door? Who would’ve had final say on such a deal?”

    I’d say about twenty lawyers from each side working together on due diligence for around six months, Lucasfilm has what 25-30 years of paperwork to go through, as well as all the original agreements with Fox in 75-77, and every element, sideline and avenue had to be airtight before they announced.

    I think he always wanted to go with Disney because they’ll caretake the merchandising, won’t go too dark/unfriendly and will sustain the brand with the parks the way they’ve been able to sustain the Mickey brand. No other company in the world has sustained a brand like Disney has sustained Mickey for almost ninety years. Even without a movie every three years, the Star Wars brand would live on under Disney’s management for decades.

  30. David Poland says:

    Fox doesn’t own Star Wars because when Lucas made the first one, he got it back in the end, as back then, there was no afterlife for movies. Huge win for Lucas. Big loss for Fox. The last 3 releases were paid for by Lucas 100% and Fox just distributed.

  31. David Poland says:

    Trust who you like, Jason.

    But “just a blogger” is idiotic. I have been covering this almost as long as anyone covering the movie business and I know the numbers better than any reporter out there.

    I was, immodestly, dead on about the failure of the last Iger conceit… and may I note that the first four Disney movies to ever crack $1b worldwide were all greenlit by people he fired… mot of whose successors have been fired.

    I haven’t been keeping up with this thread, but as I noted, this piece takes all post-theatrical and non-theatrical into account… though there is no math for figuring the value of in-park franchises. Marvel has been in parks before and not been a game changer. But perhaps more for Disney. Meanwhile, Star Wars has been a part of the Disney parks and merchandising business for decades… so they will be looking to wring MORE out of it. It’s not brand new turf.

    If you have a real reason for discounting the math, be my guest. And if you have a hunch, fine too. Just know that I have a tom more info than you do on all of this because I have lived through all the history, even if I am not in accounting at Disney. These are broad strokes… but this is a broad strokes business. 1% is not the difference between happy days and suicide.

    Or maybe you want to fight with me about Netflix too.

  32. David Poland says:

    Hi Don (aka Lost in Poland) –

    Yes, I have written before that Horn is expected to make movies. On the other hand, the strategy that Disney outlined yesterday allowed for – as I noted and suggested in the piece – 1 or 2 a year, max.

    So do you think he’s going to be looking for another Harry Potter or another People Like Us?

    Thanks again for making a whole piece about one thing you think is wrong. I am apparently 95% in your eyes then.

  33. storymark says:

    Come on, David. You wrote your entire entry as if theatrical was the ONLY thing that mattered, and then act as if its a given when others point out your completely ignoring the merch – when in reality, it throws off your entire analysis.

  34. Dr Wally Rises says:

    Movielocke, Brad Bird is committed to that San Fracisco earthquake project which will occupy him for the next two years. He won’t be the new Star Wars director. I think Bryan Singer would be a decent shout but, fairly or no, many seem to hold his previous revival of a beloved ’70′s movie franchise against him. So who is the new man? My guess – who has experience of modern-day big FX productions, IMAX, 3D, has worked for Disney, is of the generation that grew up with the original Star Wars trilogy? Who is still young enough that Lucas could have had him in mind when he talked of ‘passing Star Wars onto a new generation of film-makers’ (Brad Bird is in his late fifties). Dot, dot,dot… it’s Joseph Kosinski. Note that Disney recently quietly scuttled his Black Hole reboot too. 2+2=4.

  35. David Poland says:

    Storymark… no, it doesn’t.

    You assume I was writing it that way because, I guess, you wildly overvalue the merchandising side.

    At some point – maybe it was actually Sat Wars’ fault – people started screaming “merchandising” every time a movie looked like it would lose money.

    Merchandising as more than a single-digit piece of the revenue profile for these films is very, very rare these days.

    Same issue with Home Entertainment. I guess because some journos have now caught up to three years ago and write about DVD dying that people can accept that Home Ent isn’t the savior anymore. But it’s much worse than that. What was 60% of the revenue stream has been cut by 2/3rds for most of the big movies.

    Ironic that there has been discussion elsewhere – overstated ranting, in my opinion – about movies in our culture. This is not 1977 or 1987 or 1997. How much Ted merchandise do you think moved? And that’s a frickin’ teddy bear to start with! New Spider-Man business? Batman? Are you seeing Hulk hands everywhere or hammers going under Christmas trees?

    Lucas is the Mark Cuban of movie merchandising. He made an unbelievable fortune, everyone followed, but he had already moved on after sucked most of the money out of the idea before people started getting burned badly by trying to follow his lead.

    There is money in merchandising… for the right things. But it’s not the kind of money that will add, say, $1 billion in value to the Lucas acquisition. Those days are history.

    I wrote about theatrical because that is the driver and the start of all revenue streams. If you look at the math as just theatrical, there would be no change of having a profitable year, much less consistent years, even with 2 billion $ movies every year.

  36. christian says:

    “There is money in merchandising… for the right things. But it’s not the kind of money that will add, say, $1 billion in value to the Lucas acquisition. Those days are history.”

    I gotta hand it to you, when you dig a hole you jump right in.

    STAR WARS merch will make one billion easy with new releases. That’s not even debatable.

    “I wrote about theatrical because that is the driver and the start of all revenue streams.”

    Except history shows us that Lucas made a chunk of his empire from the merchandise – wonder why studios controlled that particular avenue stream later? The cash all goes to the same bank.

    Now do I care that Disney is going to whore SW like an Amsterdam hooker? Yes. At lease Lucas was a genuine creator-owner. But Disney got a great deal.

    Didn’t you say the Marvel deal wasn’t worth much too?

  37. David Poland says:

    Christian –

    1. You’re wrong about Star Wars merch…. or the price would have been billions higher.

    2. I said that Marvel was an overpay. Yes. And it still hasn’t proven otherwise. They have the one giant movie. They need a lot more and a lot of consistency to turn that corner.

  38. Right now Disney Channel is more profitable worldwide than the movie studio. I believe, Dave, that you have to take that in account when you analyze the Lucasfilm adquisition.

  39. LYT says:

    David – I’m hearing that Fox owns the home video/DVD rights to the first Star Wars (Ep IV) in perpetuity, and the other five through 2020.

    Does that jibe with what you know? Because owning Star Wars as a property without ever owning home distribution rights to the most-beloved movie in the series seems like one hell of a snag.

  40. JoJo says:

    No, Gonzalo, David just takes into account whatever he wants, and then tells us that he knows more than us if he’s questioned, without actually explaining anything. Get it straight, pal!

  41. christian says:

    DP’s base point over and over is “X overpaid for Y because of Zzzzzzz”

  42. storymark says:

    “Merchandising as more than a single-digit piece of the revenue profile for these films is very, very rare these days.”

    Have you, like, been in a store in the last decade? It may be rare – but damn, if there’s any franchise where it does work, it’s friggin Star Wars.

  43. christian says:

    Between years of no STAR WARS films, somebody is still buying this shit.

  44. David Poland says:

    Gonzalo… I haven’t written that the entire Disney corporation will be dragged down if the studio fails. The studio is about a quarter of the company. ABC, ESPN, Disney Channel, Parks, etc.

    This is why none of the major studios can be knocked out of business by one movie anymore. Too much diversification.

    Some of you guys are being oddly anal about what you think this piece is meant to be. It isn’t a 20 page dissection of the entire company… and 20 pages would be minimal.

    This is a piece about a new strategy by Bob Iger that could be even more destructive to Disney as a film studio than the last failed idea (which some of you surely told me I was dead wrong to doubt) because it’s much higher risk.

    I did think Pixar was overpriced at the time and that it was sold to Disney because there was a sense that it was the top price the company would ever get, plus it was a good merger of styles. It looks a lot better from here, though it’s still not paid for.

    Marvel is not a sure win, even with Avengers. Their cost per movie is so high that it is very high risk… but it could pay off. Avengers is the only reason to believe that it may turn out to have been a reasonable deal at this point.

    So now, having failed with a mixed strategy is going “mega-hits” only with all the risk associated with it… and not a high percentage shot at consistently delivering the higher end numbers. But if they can find one or two franchises other than Iron Man and Avengers (with Iron Man), they will win. They took a small step up with Captain America and a slightly bigger one again with Thor. But we’ll see how sticky they are.

    It’s bizarre how bullish some of you are about Star Wars’ future. Good on ya. But if you are right, Lucas sold for 25% or less of LucasFilm’s value. He may be a lot of things, but he’s been a remarkably solid businessman. No?

  45. David Poland says:

    JoJo… I get that you are upset. But as I have now written a few times, you are complaining that I didn’t analyze the tree when I was analyzing the forest.

    I’m sorry the piece seems to you like I am saying that theatrical is all that matters. It isn’t. But it keys all the other numbers, as a rule.

  46. Yancy Berns says:

    My concern here is only that Disney will cheapen the brand. At this point, I truly love the six SW movies – at least as much as a 39-year-old can enjoy space fantasy for adolescents (which turns out to be a lot)… I know the knucklehead fanboy nation long ago decided that the prequels were objectively bad (although I recall Dave Poland quite liking them, too) and that the property belongs to them. My fear is that they know not of what they speak. They credit Kirshner with EMPIRE 100%, which is solidly ridiculous. Lucas ran that show like God. So what will a Star Wars movie without Lucas be? Will it feel anything like Star Wars? Nobody else has ever been able to do it. (Although Disney did a creditable job of keeping the “Disney” brand relatively honest after Walt died…)

    Knowing Lucas is at least on-board as creative consultant (and that he handed over his outlines for eps 7-9) gives me a little hope. But one every two years? The best thing about the movies was always how fussed-over they were. Does anyone wanna see cheapjack SW movies every other year? Even the schmucks who think Chris Nolan or some other ill-suited director will darken it up?

  47. cadavra says:

    The ideal director would be Joe Dante, who’s a proven master of genre films and can make movies that appeal to both kids and their parents.

  48. Uh says:

    Disney bought Industrial Light and Magic, too. Poland, you don’t even understand 5% of this deal.

  49. Conspiracy says:

    $4B for the entirety of the Lucas Holdings is a steal.

    Forget Star Wars…which is itself a proven multi-generational cash printing machine…take it out of the equation entirely and this is STILL an exceptional sweetheart of a deal.

    You have the Film, TV, and Merch rights for every single thing Lucas ever created (except Indiana Jones FILM rights which paramount still has for the time being). You have Lucas Arts, Skywalker Sound, and ILM which is still a money making powerhouse.

    Do you realize there could be Indiana Jones Serialized TV shows for ABC…Theme Park attractions…Animated products for Disney TV.

    At $4B Lucas damned near gave it away, in fact lots of people are saying he DID give it away, that another $4B on top of his already estimated $2B empire didnt really matter at this point, he just wanted out. Trust me…this is going to be a money maker across Disney divisions for decades.

  50. JoJo says:

    “you are complaining that I didn’t analyze the tree when I was analyzing the forest.”

    …and I would argue that you’re doing the exact opposite.

  51. Conspiracy says:

    DISNEY will not Cheapen anything..if anything they will revive a tired product. There are a lot of people at Disney that have their legacies and Ego’s riding this and their other recent purchases. Do you think Bob Iger or Horn are going to cut corners when it comes to putting out a film that will in essence define their tenure at the Mouse House? That Kathleen K. will do anything to tarnish her incredible reputation?

  52. Ryan says:

    http://money.cnn.com/2005/05/13/news/newsmakers/starwars/index.htm

    Star Wars” films collectively have taken in some $12.4 billion in movie tickets and merchandise sales. Of that total, $3.4 billion has come from the worldwide box office and $9 billion from sales of “Battlefront” video games, Clone Trooper costumes, Obi-Wan Kenobi toy action figures and other sundry gizmos, according to Lucasfilm

    Seems like you add three movies and mercandising revenues for an entire new generation of Star Wars fans (books, tv, games, etc) and this deal more than pays for itself.

  53. Triple Option says:

    Yes, I know Fox from the gitgo gave up sequel rights and merch. What I’m wondering is why now, in 2012, did Fox not step up w/an offer? Did Disney come to Lucas or the other way around?

    Over a decade ago, I worked at an investment bank that did such things as film library valuations. The turnaround on numbers would have to be done in a few weeks. Six months I think would be too long or word would get out. Was this at all rumored to be in the works? At a certain point, it becomes a decision whether or not to swim in the water. Working out the specifics of the how may come down the line. Yay or nay, do we jump into Marvel sweepstakes? Do we go for World Cup broadcast rights? Do we make a play on the Olympics?

    If word got out that Lucas was talking to Disney, why wouldn’t Warners take a swing? They could over pay for rights just like they did for the Lakers just to build a new network. Why Disney and not the highest bidder? Did Disney step in early w/guarantees? Did Lucas have an affinity for Disney? How is Fox not the first one to get that call? Or were they?? What I was kinda getting at was…was Rothman like the GM who gets the boot after the team’s all-star free agent opts out of his option year and signs w/another team? Besides whatever niceties are bandied around in these days in the press, I was wondering if there wasn’t any insight as to why Disney and why now?

  54. Eric says:

    My guesses:

    1. Lucas was inclined toward Disney because they have a proven track record of sustaining beloved brands over the course of decades. I don’t think any other studio can compete in the same way.

    2. Lucas was motivated to sell because capital gains tax rates are set to go up on January 1. Even if the topline number isn’t quite as high as he could have negotiated for, he’ll still make more money by getting the deal done ASAP.

  55. martin s says:

    I’m with Yancy and ‘Locke. How the F Fox got blindsided by this, makes little sense.

    Unless Lucas hashed it out with Spielberg, and we’re eventually going to see some merger of Dreamworks and Lucasfilm.

    That could put Spielberg behind the lens for SW7

    Other than him, Disney would normally hand it to Verbinksi. What does he have lined up? Bioshock, still? C’mon. But Lone Ranger might have soured everything.

    I don’t see how all of this IP stays separate. At some point, it has to be streamlined. It feels like Disney is viewing Marvel as a limited theatrical player and are gearing the majority of properties to cable/streaming.

    I mean, you’re on the hook now for three SW films, so you still going forward with Ant-Man? And expect IM returns, because he’ll spin out of Avengers2?

    If Lone Ranger turns into John Carter 2, which is possible after Dark Shadows no-show, wtf happens then?

    I get they want the brand security. I get the ancillary payoffs. But it feels as if Iger did this because he couldn’t pass up the legacy opportunity, not because it was sound for Disney. The whole point of buying Marvel was to fill-in the missing boys age demo. Now he just doubled-down. That’s a six billion hole, no matter what the accountants say.

  56. martin s says:

    Ryan – the 12 Bil is interesting, but that’s a maturity number. We’re talking about a product that’s been pimped hard since 1976.

    It’s 2012. We’re near four decades, meaning it’s core group is entering middle-age. So to get our kids hooked on it – because Disney didn’t drop 4Bil to garner the 40ish audience – in a growing media diversification field, they’re going to have to invest in new revenue streams.

    Which Lucas has tried with SW and only had modest success.

    Before Marvel, it would have made perfect sense. After Marvel, something else is at work.

    IMO, it’s actually a better fit than Marvel.

  57. Matt P. says:

    Give me Brad Bird for the first movie.

  58. David Poland says:

    Uh… uh… yes, I know. Ran through those numbers yesterday. Disney’s already been pretty clear that they don’t expect to put much internal focus on that business. Ms. Kennedy will run it as she sees fit.

    Did any of you notice that nothing I write suggested that if the next 3 Star Wars films are like the first 3 Star Wars films, this is a great deal for Disney?

    Do some of you really believe it’s as simple as turning a switch? Because you seem to feel that way.

    if it were really that easy, Disney could have done it without buying LucasFilm.

    Let’s chat about it again in 5 years. Maybe I will be proven wrong by then. Maybe I won’t.

  59. lazarus says:

    Not sure why people keep throwing around Disney stable names like Verbinski and Bird.

    Correct me if I’m wrong, but doesn’t Kathleen Kennedy have final say on director and cast here (with Lucas behind her approving everything)? Aren’t they being made internally within Lucasfilm to an extent?

    Personally, I think Lucas will want to maintain some kind of aesthetic integrity with the previous films by having a traditionalist at the helm. And the only other big one I can think of who knows Ford and Kurosawa as well as Lucas is Spielberg. Steven has nothing to lose, really. Lucas signed off on what many people thought was a lame idea for Indy IV, and Spielberg made it anyway. Spielberg was asked by Lucas to do The Phantom Menace before the former convinced the latter to direct himself again. So knowing that there’s no way Lucas is doing it this time, I don’t see why he wouldn’t take the opportunity, and his own brand will survive whatever happens/

    And while I’m not a big fan of Spielberg, it’s not like he’s going to fuck Star Wars up. And considering how well the prequels did financially, it doesn’t matter if people think they’re good enough or not.

  60. Lane Myers says:

    DP, when every single poster “misunderstands” what you have posted, you may want to consider that your original post is not what you intended.

    Two questions: 1) how much is Cars worth annually in merch & licensing?

    2) Weren’t you the one who under predicted the global box office success of The Avengers by $900million? Hint: answer is “yes”

    I suggest you reread your original post because it honestly reads like an article that YOU would spend 8 paragraphs railing on for it’s lack of understanding of how companies make money. Again, maybe that wasn’t your intent, but that is how everyone misinterpreting it. I’m a teacher, and if everyone of my students fail one of my exams, then I have to look at myself — rather than saying “oy” nobody gets it.

  61. cadavra says:

    I can’t believe nobody said boo about my Pluto joke. Genius, I tells ya! :-(

  62. David Poland says:

    Every single poster? Really?

  63. christian says:

    “if it were really that easy, Disney could have done it without buying LucasFilm.”

    Uh – yes, they could have scooped up any number of iconic film properties with a potential for never-ending revenue in the billions. There’s so many to choose from!

  64. anghus says:

    It’s such a no braoner. This is the kind of move you make that pays Dividends for decades. Disney has acquired properties and companies that give them iconic brands which will thrive no matter what delivery method becomes the norm. Plus the ancillary revenue from merchandising…

    What blows my mind is that no one had a line on this prior to the announcement. How did this big a deal get missed by everyone? It goes to show you what a terrible state entertainment journalism is in. If its not a tweet or a studio released item, 99.9% of the sites dont report it. Inbox journalism. Sad.

  65. Ryan says:

    I guess I don’t understand the “To get our kids hooked on this” line of argument. I think the video game and toy sales speak for themselves, and they have the potential to attract a whole new generation of fans.

    As for LucasFilm overall:

    “Lucasfilm will generate 25 percent of its revenue this year from its film library and a slightly higher percentage from consumer-product licensing, Jay Rasulo, Disney’s chief financial officer, said on the conference call. The balance comes from the company’s video games, effects and sound businesses.”

    ILM was the big grab here, and boost the bottom line for decades if it remains on the cutting edge.

  66. Mike says:

    I thought I had read somewhere that video games rake in a lot more profit than movies. Or is that only an illusion because of their higher prices? Either way, there’s a lot of money right there. I think it’s a good deal for Disney and a fair deal for Lucas, especially as he’s leaving his hand-picked successor in Kathleen Kennedy in place.

  67. DreamIsOver says:

    Stars Wars merchandising makes a ton of money, no doubt. But there is a big difference between gross sales and the net profit.

  68. Michael says:

    Couple thoughts:
    1) Lucasfilm is a 1,700 employee company that consistently earns over a billion in annual revenue without releasing any movies (over $1.4 billion for the last six years). ILM, Skywalker Sound, etc are incredible assets. Disney considers this a bonus.
    2) Disney also gets the Indy rights (with a couple Paramount issues). Disney also just considers this a bonus.
    3) Disney gets some quality executives (just like with Pixar and to a lesser extent Marvel). Iger is grooming CEO successors. Kennedy is now part of the discussion. Still just a bonus to Disney’s valuation of Lucasfilm.
    4) Disney bought Lucasfilm for the Star Wars IP. Every penny of the $4 billion was for the franchise. However, it’s not about the movies. Episodes 7-9 will generate some profits, but this is about shelf space at Target far more than screens at theaters. Disney knows it can do FAR better than the current $215 million in SW licensing & merchandising (in part by controlling the supply chain and fixing the terrible overseas margins). This is exactly what they did with Marvel. As impressive as The Avengers box office was, Disney’s real success has been in maximizing the value of the Marvel universe as a brand. I’ll wager that Cars (not a Box Office sensation) brings in as much money for Disney as most studios spend on a year’s production slate. That’s why 1 Cars or 1 Avengers is worth 20 John Carters. That’s why with Disney, the math is different.

  69. storymark says:

    “Do some of you really believe it’s as simple as turning a switch? Because you seem to feel that way.

    if it were really that easy, Disney could have done it without buying LucasFilm.

    Right. If you leave out that one little key component of friggin STAR WARS!

  70. sanj says:

    people who make star wars parodies might be in trouble –

    “Additionally, the multitude of celebrated Star Wars parodies ushered by the likes of Seth MacFarlane (who has so far devoted three extended episodes of Family Guy to the Star Wars series) and Seth Green (who has created parodied Star Wars repeatedly on his Adult Swim cartoon Robot Chicken, several times dedicating full episodes to the material, and has developing an original animated series Star Wars Detours) are in danger. As reported by The New York Times, MacFarlane himself tweeted the following on Wednesday, addressing a fan’s concern that his Fox series will no longer be able to crank out Lucas-based parodies”

  71. christian says:

    You can file this DP Fail under PHANTOM OF THE OPERA will be nominated for Best Picture among others…

  72. Kirk says:

    Dave, honest question: how much does ILM and Skywalker Sound charge? I’d assume Skywalker is closer to a flat fee, but how much are we talking about for a CGI extravaganza, say Pirates or Transformers in ILM’s case? What about other movies with less obvious effects, say, Munich or There Will Be Blood?

  73. Christian says:

    Its clear this was a rash decision by Disney.

  74. palmtree says:

    Well, it’s not entirely unprecedented where a seemingly invincible property is pissed away. Superman comes to mind. For all its rabid fanbase, Star Trek couldn’t land a box office hit for years until JJ came along.

    But I still find it difficult to imagine a world where they could piss away Star Wars. Maybe if John Williams isn’t able to stick around (knock on wood!)?

  75. anghus says:

    Business wise it’s such a great decision for Disney, who is stockpiling iconic characters and franchises. While everyone else is trying to figure out where media is going… what distribution model… the decline of the theatrical experience… Disney is taking ownership of the creative licenses that will thrive no matter how people watch movies. It’s brilliant on a level that is overlooked in a day and age where people cry out that the creative mindset doesn’t exist in Hollywood. In fact, you have a company that realizes what people want: superheroes, science fiction, action and adventure. In the span of the last decade, Disney has become the most geek friendly studio on the planet. Simmer on that for a moment. Disney, a studio that was the most known for staging princess stories that were predominantly geared towards little girls has become the home of luke skywalker and captain america. There’s brilliance in these moves. As for the properties themselves, Lucas did his best to murder the integrity of the original trilogy. And if we’re being honest, the original trilogy contains one and a half good movies. The prequels were hyperactive garbage. There’s been some fun had in the comic books and video games, but Star Wars is at best tarnished goods. There can be no more harm brought to it by Disney. Lucas created this monster, then he destroyed. Maybe it will find new creative life and have a rebirth of sorts. The money will be there. We’ll all line up for 7.8. and 9 just like we did for 1, 2, and 3 even though they were terrible. Disney for the win.

  76. Mike says:

    Anghus, adding to what you’re saying, Disney is also smart because the properties they’re buying and developing are not actor-specific. You can keep the Marvel characters going for decades, the same way they’ve done their animated characters. The same with the droids and Yoda and Chewy and even Darth Vader. They can cross over to CGI to hand-drawn animation to comics to video games and back to live action again.

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