The mid-teens were not a good time to be a Disney skeptic. The company had a very good run and to be honest, I might have been a little less eager to repost this under the heading "Five years ago at the blog." For a while there it looked like they really could let their budgets increase without apparent limit, safe in the knowledge that no matter how much they spent, the box office and the merchandising would more than keep up. Now, though, we're getting some indication that there still are upper bounds. (Except, possibly, for James Cameron.)
Disney’s Harsh New Reality: Costly Film Flops, Creative Struggles and a Shrinking Global Box Office
Monday, July 15, 2013
Call me suspicious...
Disney is a huge company, but even there the old saying applies -- "a billion here... a billion there... pretty soon you're talking about real money." Not enough to threaten the company but worth taking into account when thinking about stock price. Fortunately for Disney, this terrible news was balanced out by quite a bit of good (enough to bump the price up a bit). Credit Suisse analyst Michael Senno estimated a global take of $1.2 billion for Star Wars Episode VII and Motley Fool* ran a string of positive stories arguing that Disney was adding value to Marvel and that "Buena Vista Pictures is earning as much as ever." That second claim was supported with a year over year comparison:
Disney won't be as fortunate with The Lone Ranger, which is why so many are comparing this flop-in-the-making to John Carter, last year's $250 million box office bomb that effectively ended the Disney career of former studio chief Rich Ross.
If only he knew then what we know now. John Carter, for as big a disaster as it was, did nothing to diminish the House of Mouse's theatrical prowess. Here's a closer look at the year-over-year numbers from Jan. 1 through June 30:
Buena Vista Year-Over-Year Comparison
YTD 2013 YTD 2012 Change
Number of films 10 12** (2)
Total U.S. box office $886.8 million $949.8 million (6.6%)
Per-film average $88.7 million $79.2 million 11.9%
Source: Box Office Mojo.
** Includes a 3D rerelease of The Lion King.
After achieving $800 million in domestic box office receipts only once since 2000 (in 2010), Disney has done at least that in both 2012 and this year. Impressive may be too timid a word for how well Buena Vista is doing right now.Notice anything missing? How about budgets, marketing costs, performance of comparable films from other studios? Keep in mind that in absolute numbers, John Carter did pretty well:
John Carter earned $73,078,100 in North America and $209,700,000 in other countries, for a worldwide total as of June 28, 2012 of $282,778,100.In relative terms, not so much:
Paul Dergarabedian, president of Hollywood.com noted, "John Carter’s bloated budget would have required it to generate worldwide tickets sales of more than $600 million to break even...a height reached by only 63 films in the history of moviemaking"(According to the New York Times, the Lone Ranger would have to hit $800 million to break even.)
How about Disney adding value to Marvel? The only real example I saw in the article was the willingness to cough up extra money to hold on to talent like Whedon and Downey. Probably a good investment but old news and a case of maintaining, not adding, value.
And that incredible prediction for the Star Wars reboot? Not credible about covers it.
Perhaps I'm too cynical, but given the low quality but excellent timing of these analyses, I have to believe that some folks at Disney have really been working the phones.
* I'm going by the Motley Fool posts and not the videos that accompany them. If anyone out there wants to take one for the team and watch them, let me know if anything of value is said.
Thanks