THB #590: 5 Keys To The Future, Pt. 2 - Less Consolidation of Participants
The media and Wall Street love Mergers & Acquisitions.
And occasionally, they work out great. Disney’s acquisition of Pixar ($7.4 billion), then Marvel ($4 billion), then Lucasfilm ($4 billion) have been seen as significant wins for the company.
Disney already had an exclusive relationship with Pixar when Disney set a price in January 2006, paying fully in stock, and then made it official in May 2006, a month before the release of Cars. In the 18 years and 4 months since, Disney’s Pixar has released 23 feature films, grossing over $15 billion in theaters alone. But this is just a part of the value that Pixar has brought to Disney, becoming an integral part of the muscle of merchandising, the parks, Disney+, broadcast and cable, stage productions and more.
Pixar also brought along the now-partially-cancelled John Lasseter, who was at the center of rebuilding the in-house Disney animation business, which had foundered after the exit of Jeff Katzenberg, who had revived it from 1989’s The Little Mermaid to 1994’s The Lion King. Disney made a lot of movies after The Lion King, some good and successful (Mulan, Tarzan, Lilo & Stitch, The Princess & The Frog) , some less of both. But I would say the modern era of Disney Animation start with Tangled in 2010, not really followed-up on until Wreck-it-Ralph in 2012 and the Frozen in 2013. Lasseter was put on leave, leading to his exit just as Coco was being released in 2017.
The Marvel acquisition happened in 2009, a year after the first MCU movie, Iron Man, had been released by Paramount. The film grossed $586 million worldwide, which was an improvement on other recent Marvel movies (The Incredible Hulk, Fantastic Four) but still well behind the Raimi Spider-Man trio, which grossed about $825 million on average. Paramount released Iron Man 2 ($624m), Thor ($449m), and Captain America: The First Avenger ($371m) before Marvel and Disney took over distribution, paying off Paramount, with The Avengers, which broke through with $1.52 billion. Marvel Studios then released 15 films theatrically in 7 years, peaking with Avengers: Endgame, grossing more than $18 billion (not counting the new partnership with Sony on Spider-Man).
Like Pixar, Marvel has become a major revenue driver in other areas - merchandising, the parks, Disney+, broadcast and cable, stage productions - and more.
Lucasfilm was purchased in 2012 and Star Wars: Episode VII landed in theaters at the end of 2015 to a box office welcome of just over $2 billion. But the company has “only” delvered 5 feature films since. Episodes VIII and IX, Rogue One, Solo, and Indiana Jones and the Dial of Destiny. Total gross for all 6 films under Disney is just over $6.3 billion. And of course, all the added revenue streams coming off of Star Wars and Indiana Jones are major revenue drivers.
But one must also account for the very strong Industrial Light & Magic business, which remains one of the very top, cutting edge effects companies and even has animated films, starting with the terrific Rango and continuing to the terrific Transformers One, coming out later this week.
Lucasfilm has been a dominant force in the growth of Disney+, with over a dozen series created and produced for the streamer, led by The Mandalorian. Lucasfilm created the LED-built virtual set now known as The Volume, another giant leap from the LED technology pioneered by Framestore on Gravity in 2013. The Volume has become a new norm in the industry, both for film and television.
So if one was to simplify, Disney’s 3 major acquisitions are a singularity, a hugely successful marriage, and a solid addition that has made and makes money but is not the cash cow the other acquisitions have been, WIN, Win, win!
And then there is Fox.
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