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From the Los Angeles Times
Cheap hits add up at Disney
By Claudia Eller
Times Staff Writer
April 6, 2003
LOS ANGELES -- Walt Disney Co. chief Michael Eisner was seeing red.
The company had been clobbered by some costly box-office flops, movies that seemed to have strayed too far from the live-action family fare that once characterized Disney releases.
Eisner ordered that the studio slash its annual investment in movies and instructed his troops to produce more broad comedies and uplifting films that wouldn't depend on highly paid stars to deliver profits.
Since that mandate four years ago, Disney has indeed found a cheaper way to make money. It has produced a string of moderately priced, highly profitable hits, including Remember the Titans, The Princess Diaries, Snow Dogs, The Rookie and Sweet Home Alabama.
The latest success story: Bringing Down The House, a $35 million comedy starring Steve Martin and Queen Latifah. Last weekend, the film passed the $100 million mark in ticket sales and is poised to be a significant moneymaker for the entertainment giant.
The studio's run of lower-cost hits has been a welcome boost to Disney's bottom line at a time when some of its key business units -- most notably its theme parks and television network ABC -- are suffering.
"These are unexpected gifts that bail you out when things aren't working according to plan in your other divisions," said entertainment analyst Larry Gerbrandt of Kagan World Media.
'Obsessed with the cost'
The strategy also has cushioned the blow of some of Disney's bigger-budget misfires, most recently the animated space adventure Treasure Planet and the comedy Bad Company, which teamed Chris Rock and Anthony Hopkins.
Like the largely risk-averse Paramount Pictures, Disney is known to be one of the more fiscally conservative studios, producing many of its movies for a little more than half the industry average, about $60 million.
"Over the last couple of years, we have been more obsessed with the cost of our movies," said Disney Studios Chairman Richard Cook. "We're constantly looking at our investments and what our return on investment will be, and we are trying to have a slate of movies that are diverse in what they cost and in their subject matter and appeal."
It's no accident that last year Eisner selected Cook as the successor to former studio head Joe Roth, who helped shape the strategy but left in January 2000 to form his own entertainment concern. Arguably, nobody understands the value of the traditional family brand and how to sell it better than Cook, a 32-year company veteran who began as a ride operator at Disneyland.
Still, when it comes to helping him pick the right movies, Cook, who spent most of his career in distribution and marketing, relies heavily on his more experienced production chief Nina Jacobson, who says the studio's lower-cost hits did not spring from a preconceived business model but rather reflect a "belief in a business practice."
"Did we come up with a plan to have a certain amount of movies at this price every year? No," said Jacobson. "You can't back into decisions like that. The movies we make are determined by the scripts and our ability to package them well."
Jacobson likens Bringing Down The House to such successful comedies as Pretty Women, Splash and Down and Out in Beverly Hills, all made under Disney's more adult-oriented movie label Touchstone Pictures. "These movies are all good, clean fun made at a [moderate] price."
Increasing the odds
Although the odd-couple pairing of Martin and Queen Latifah proved a winning combination, it didn't hurt that the movie's release came on the heels of Latifah's red-hot performance in Chicago and just before Martin did a turn as this year's Oscar telecast.
"The timing was a stroke of luck," Cook said, noting that not all the studio's lower-cost movies have caught on with audiences. Chief among the disappointments were The Country Bears (which cost $35 million and grossed $17 million) and Big Trouble (which cost $40 million and grossed $7 million). Wall Street analysts suggest that because so many of Disney's movies today are reasonably priced, the studio has increased its odds of coming out ahead at the end of the year.
"Disney has a much higher probability of generating profits in its film portfolio," said analyst Jeffrey Logsdon of Gerard Klauer Mattison. "And because the films cost less, you start generating positive cash-flow earnings much faster than with the average studio film."
No megahit yet
At the same time, two of Disney's more expensive movies paid off big time last year. The Mel Gibson drama Signs, which cost $72 million, took in $228 million domestically, and the $60 million comedy The Santa Clause 2, starring Tim Allen, scored $140 million.
Cook said Disney will still roll the dice on a certain number of big-budget films each year, as it has on its upcoming releases Pirates of the Caribbean, which cost about $140 million, and The Haunted Mansion, budgeted at nearly $90 million -- both born from popular Disneyland and Walt Disney World attractions. Also, the studio's remake of The Alamo, now shooting in Texas, is budgeted at $95 million.
So far, Disney has yet to produce a megahit franchise movie such as Sony Pictures' Spider-Man, Warner Bros.' Harry Potter or New Line Cinema's Lord of the Rings, a project that Disney passed on for budgetary reasons. Each has spawned a sequel, merchandise and other lucrative spinoffs, earning the respective studios hundreds of millions of dollars in profit.
Disney is hoping that Pirates of the Caribbean from top-drawer producer Jerry Bruckheimer will fit the bill.
"It's not like we don't want a billion dollar franchise," Jacobson said.
Claudia Eller is a reporter for the Los Angeles Times, a Tribune Publishing newspaper.
Copyright © 2003, The Los Angeles Times
From the Los Angeles Times
Cheap hits add up at Disney
By Claudia Eller
Times Staff Writer
April 6, 2003
LOS ANGELES -- Walt Disney Co. chief Michael Eisner was seeing red.
The company had been clobbered by some costly box-office flops, movies that seemed to have strayed too far from the live-action family fare that once characterized Disney releases.
Eisner ordered that the studio slash its annual investment in movies and instructed his troops to produce more broad comedies and uplifting films that wouldn't depend on highly paid stars to deliver profits.
Since that mandate four years ago, Disney has indeed found a cheaper way to make money. It has produced a string of moderately priced, highly profitable hits, including Remember the Titans, The Princess Diaries, Snow Dogs, The Rookie and Sweet Home Alabama.
The latest success story: Bringing Down The House, a $35 million comedy starring Steve Martin and Queen Latifah. Last weekend, the film passed the $100 million mark in ticket sales and is poised to be a significant moneymaker for the entertainment giant.
The studio's run of lower-cost hits has been a welcome boost to Disney's bottom line at a time when some of its key business units -- most notably its theme parks and television network ABC -- are suffering.
"These are unexpected gifts that bail you out when things aren't working according to plan in your other divisions," said entertainment analyst Larry Gerbrandt of Kagan World Media.
'Obsessed with the cost'
The strategy also has cushioned the blow of some of Disney's bigger-budget misfires, most recently the animated space adventure Treasure Planet and the comedy Bad Company, which teamed Chris Rock and Anthony Hopkins.
Like the largely risk-averse Paramount Pictures, Disney is known to be one of the more fiscally conservative studios, producing many of its movies for a little more than half the industry average, about $60 million.
"Over the last couple of years, we have been more obsessed with the cost of our movies," said Disney Studios Chairman Richard Cook. "We're constantly looking at our investments and what our return on investment will be, and we are trying to have a slate of movies that are diverse in what they cost and in their subject matter and appeal."
It's no accident that last year Eisner selected Cook as the successor to former studio head Joe Roth, who helped shape the strategy but left in January 2000 to form his own entertainment concern. Arguably, nobody understands the value of the traditional family brand and how to sell it better than Cook, a 32-year company veteran who began as a ride operator at Disneyland.
Still, when it comes to helping him pick the right movies, Cook, who spent most of his career in distribution and marketing, relies heavily on his more experienced production chief Nina Jacobson, who says the studio's lower-cost hits did not spring from a preconceived business model but rather reflect a "belief in a business practice."
"Did we come up with a plan to have a certain amount of movies at this price every year? No," said Jacobson. "You can't back into decisions like that. The movies we make are determined by the scripts and our ability to package them well."
Jacobson likens Bringing Down The House to such successful comedies as Pretty Women, Splash and Down and Out in Beverly Hills, all made under Disney's more adult-oriented movie label Touchstone Pictures. "These movies are all good, clean fun made at a [moderate] price."
Increasing the odds
Although the odd-couple pairing of Martin and Queen Latifah proved a winning combination, it didn't hurt that the movie's release came on the heels of Latifah's red-hot performance in Chicago and just before Martin did a turn as this year's Oscar telecast.
"The timing was a stroke of luck," Cook said, noting that not all the studio's lower-cost movies have caught on with audiences. Chief among the disappointments were The Country Bears (which cost $35 million and grossed $17 million) and Big Trouble (which cost $40 million and grossed $7 million). Wall Street analysts suggest that because so many of Disney's movies today are reasonably priced, the studio has increased its odds of coming out ahead at the end of the year.
"Disney has a much higher probability of generating profits in its film portfolio," said analyst Jeffrey Logsdon of Gerard Klauer Mattison. "And because the films cost less, you start generating positive cash-flow earnings much faster than with the average studio film."
No megahit yet
At the same time, two of Disney's more expensive movies paid off big time last year. The Mel Gibson drama Signs, which cost $72 million, took in $228 million domestically, and the $60 million comedy The Santa Clause 2, starring Tim Allen, scored $140 million.
Cook said Disney will still roll the dice on a certain number of big-budget films each year, as it has on its upcoming releases Pirates of the Caribbean, which cost about $140 million, and The Haunted Mansion, budgeted at nearly $90 million -- both born from popular Disneyland and Walt Disney World attractions. Also, the studio's remake of The Alamo, now shooting in Texas, is budgeted at $95 million.
So far, Disney has yet to produce a megahit franchise movie such as Sony Pictures' Spider-Man, Warner Bros.' Harry Potter or New Line Cinema's Lord of the Rings, a project that Disney passed on for budgetary reasons. Each has spawned a sequel, merchandise and other lucrative spinoffs, earning the respective studios hundreds of millions of dollars in profit.
Disney is hoping that Pirates of the Caribbean from top-drawer producer Jerry Bruckheimer will fit the bill.
"It's not like we don't want a billion dollar franchise," Jacobson said.
Claudia Eller is a reporter for the Los Angeles Times, a Tribune Publishing newspaper.
Copyright © 2003, The Los Angeles Times