Star Wars Has Made Disney $13 Billion?!?!?

Star Wars Has Made Disney $13 Billion?!?!?

That pitch to Disney shareholders has been a barrel of laughs.

Bob Iger has to be feeling like he is standing in Michael Eisner’s shoes twenty years ago. Just about every one of Eisner’s fatal problems has an analog today.

ABC Capital Cities was assimilated by the Mickey-Borg in 1996. Part of the reason that Murphy and Burke decided to let Michael Eisner buy the company was because they had promised Bob Iger that he would become CEO of ABC Capital Cities when Burke retired, they had since had serious second thoughts about the matter. They basically would have had to have demanded Iger’s resignation to get out of it and they didn’t want to do that.

That was far from the only reason they sold out, but it was part of the equation. By 1996 changes to the TV industry were unavoidable. Cable was starting to take serious bites out of the market share and it was only going to get worse. The smartest thing ABC had done was buy ESPN when it was in diapers because it was now the crown jewel.

Iger came aboard a ship that had already hit the iceberg. The triumvirate of Eisner, Wells, and Katzenberg was down to just Eisner. I think Frank Wells’s primary function in making that teamwork was to shield Michael Eisner from his own worst impulses as a corporate leader. Eisner was given to promising great rewards to his executives in moments of excitement and then deeply regretting it when he calmed down again. Often pitting other executives against the one he had promised vast riches to. Eisener had told Katzenberg, ‘When Frank leaves you’re going to take his place.’ Then Frank Wells died!

Katzenberg expected a big promotion and Eisner, after vacilating for months refused to give him anything. Sitting him down immediately and saying, “Look Jeff, I know what I promised you but I was expecting Frank to retire in seven years. Right now you’re 44, you’re just too green to be President and COO of a company as big as Disney. I’ll give you Frank’s seat on the board, make you COO and bring in somebody who is older than God to be president, with the very big understanding that when that old fart goes then you’ll have Frank’s job.” 

Instead, Eisener alienated his most important executive. When Jeffery Katzenberg stormed out of the company… This is the important part…

He. Took. The. Animation. Department. With. Him.

Iger was there for that, yet he did the same thing with John Lassetter and got the same result. The ridiculous part is that this was the third time it’s happened at Disney. When Card Walker finally made Don Bluth storm out, Bluth took the animation department with him too. The thing was back then there was still the Cal Arts incubator program, hell that was where Lassetter came out from. Now it’s gone.

Mind you Iger didn’t repeat Eisner’s mistakes.

Just Eisner’s results. The stock is in the toilet. Animation is dead. The parks are falling apart. Live action is even worse than animation. Drastic over commitment to a failed technology, and if it wasn’t for ESPN the company might be facing bankruptcy.

I’ll be covering this in greater detail in my forthcoming book on the decline and fall of Disney.

But tonight I’m going to be taking another look at the packet of “information” Disney put online for their investors.

This… I guess I’ll have to call it a chart, has clearly been created for investors who are bad at math. Given that these are Disney Investors this is actually a fairly safe assumption. 

Frozen is reasonably accurate. They had a surprise hit that took down $1.2 billion against a budget of $150 million. Even including marketing expenses, this is probably accurate.

Toy Story, same notation. The franchise has delivered a lot for comparatively little. And since its creator would probably rather cut his throat than return to Disney, they are unlikely to repeat it with a Pixar franchise.

With Avengers, however, they are straying into fairly sunny and optimistic interpretations of the data set. I am willing to grant that Disney has strictly on the performance of Avengers (which this chart is alleged to be measuring) has grossed somewhere over three times the first film’s budget. Although, the franchise is now hopelessly wrecked and the chart lists two movies that haven’t even been made yet.

But Star Wars? Are you kidding? Disney paid $4.5 billion for Star Wars. In no universe has Cancer Rat made back its money on this disaster. Granted Force Awakens and Rouge One did well against their budgets. But Last Jedi barely made a profit, Rise of Skywalker was allegedly too expensive to make a profit. Solo was an outright bomb, the rest of these “moneymakers” are Disney Plus shows which means that Disney is counting money that it paid itself for these series as income. It’s like that old Benny Hill sketch, where Benny transfers a fiver from his right pocket to join the fiver in his left and declares he’s made ten Pounds. They aren’t even mentioning the Star Wars Galactic Cruiser which is alleged to have cost close to a billion dollars all told. Then there is this thing called opportunity costs which were probably in the neighborhood of $16 billion. Star Wars has been a complete money loser for Disney. And this doesn’t even include Willow and Indiana Jones.


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