Walt Disney Co (NYSE:DIS) Takes $75-M Hit

Walt Disney Co (NYSE:DIS) Takes $75-M Hit

$DIS

Disney (NYSE:DIS) will take about a $75-H hit for The Finest Hours, its movie about heroism at the US Coast Guard that took only $40-M at the box office worldwide

Nevertheless, CEO Bob Iger said return on capital spent for filmmaking rose to 20% in Y 2014, up from 10%, which is about the industry average, and it rose to close to 30% in Y 2015.

Mr. Iger said Tuesday at the Deutsche Bank 2016 Media, Internet & Telecom Conference in Florida.

Disney’s film studio is firing on all cylinders, and Mr. Iger gave much of the credit to Marvel, Pixar and Lucasfilm.

Those acquisitions, he said, “exceeded expectations…”

Mr. Iger told the Wall Street analysts in attendance that when he was interviewing for the CEO job, he told the BOD (board of directors) that distribution was going to be a commodity and if he were in charge he would acquire content creators, and he even named Marvel, Pixar and Lucasfilm as his top targets.

Since those acquisitions and including Disney Animation, since Pixar brought that asset new management, Mr. Iger said 26 movies from those studios have been made, and 25 “have been real successes.”

Those movies have earned an average of $760-M each at the worldwide box office, plus they made much more when you throw in money earned from TV, consumer products and theme park attractions.

Disney’s park in Shanghai opens in 3 months, and Mr. Iger said that with transit services 300-M people will live with a 3.5 hour commute to the new theme park.

Beyond theme parks, China represents a huge opportunity, given it could become the biggest market for films next year or the year after that. But TV is trickier there, since regulators will only allow Disney to launch shows, not channels, Mr. Iger said.

As has been the case since August when Wall Street punished Disney’s stock for subscriber losses at ESPN, Mr. Iger touted the network’s performance and potential, saying it will be part of any skinny bundle craved by sports fans.

ESPN, he said, will remain an engine of growth in both operating income and revenue, but “it doesn’t mean its smooth,” he said, given contracts for sports rights need renewals periodically.

Stay tuned…

HeffX-LTN

Paul Ebeling

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