Disney’s movie business is again playing a starring role
LOS ANGELES — The Magic Kingdom finally seems to be getting the hang of Hollywood magic.
Once upon a time, Disney just couldn’t get a handle on the movie business. For every few “Iron Man”-style blockbusters, the studio had to dig itself out of the crater left by at least one “Lone Ranger” bomb.
But it brought in new studio management in 2012, pared its misfires — it hasn’t declared a film write-down in three years — and revved up its multibillion-dollar acquisitions Pixar, Marvel and Lucasfilm.
Just eight years ago, it was dead last in box office receipts among the six major Hollywood studios; this year, it’s on pace for a record-breaking No. 1 spot. It’s expected to get big assists from movies like “Captain America: Civil War,” which kicked off the summer season last weekend, and “Rogue One,” a second installment in its reinvigorated “Star Wars” series due this winter.
Disney’s studio profits neared $2 billion last year. Some expect the studio to post nearly $3 billion in profit this year.
The momentum was evident Tuesday, when The Walt Disney Co. reported $2.1 billion in net profit, boosted by a 27 percent gain in studio profits to $542 million. Although the results fell short of analyst expectations, partly on poor performance of its soon-to-be-shuttered Infinity video game line, CEO Bob Iger touted “our studio’s unprecedented winning streak at the box office.”
Cord-cutting: The movie business has long gotten the cold shoulder on Wall Street because its frequent ups and downs make it tough to value. The pay TV business has been a much bigger and steadier source of profits, underpinning the stock price of entertainment companies from Time Warner Inc. to 21st Century Fox.
Cord-cutting, however, has media investors wary, particularly when it comes to Disney’s ESPN sports empire , which has lost millions of pay TV subscribers. Those industrywide fears over consumers abandoning traditional TV for online video makes Disney’s movie success even more important.
“It helps theme parks, it helps consumer products,” said Jeffrey Logsdon, managing director of research firm JBL Advisors.
Cycle: But while Disney’s studio may be on a roll — even somewhat doubtful movies like “Jungle Book” and “Zootopia” have made a killing — the creative cycle can be cruel.
Box Office Mojo’s box office editor, Brad Brevet, points out the “worst to first” cycle for studios mimics the typical five-to-eight-year span of an economic cycle. And where there’s boom, there’s bust.
Universal was dead last in 2010 before surging to first last year on the heels of “Jurassic World” and “Furious 7.” This year it’s running fifth — one possible reason it decided to purchase smaller animation studio DreamWorks Animation SKG Inc. last month.
Fox took seven years to climb out of the gutter in 2007 to beat all comers in 2014 with movies like “X-Men: Days of Future Past” and “Dawn of the Planet of the Apes.” Last year, it came fourth.
Meanwhile, Viacom Inc.’s laggard Paramount, whose profitability has trailed other big Hollywood studios for three years running, is looking to take on new investors.
Record: Brevet says Disney is on track to set a record for any studio in domestic ticket sales this year; it’s already commanding a 29 percent share of the market, which no studio has ever attained for a full year, according to Box Office Mojo records going back to 2000.
Its slate is looking good, too. Even before the next “Star Wars” installment, summer moviegoers can see Johnny Depp reprise the Mad Hatter in “Alice Through the Looking Glass,” watch the Pixar sequel “Finding Dory” and catch the Steven Spielberg-directed adolescent tale “The BFG.” Yet another Marvel hero, “Doctor Strange,” hits theaters this fall.