Disney's 2004 films are no blockbusters
But other bright spots may help meet projections that earnings will rise more than 50% this year.
By Richard Verrier | Sentinel Staff Writer
Posted July 12, 2004
LOS ANGELES -- It's a long way from the ticket line to the bottom line.
That's the case for Walt Disney Co., whose feature-film division has had a rocky first half of the year after setting industry records in 2003. The latest disappointment came with the debut of King Arthur, the $120 million summer action movie by producer Jerry Bruckheimer. It was in third place Sunday -- behind Spider-Man 2 and Anchorman: The Legend of Ron Burgundy -- with an estimated ticket take of $15.2 million during the weekend and $23.6 million since it opened Wednesday, according to Disney.
With that kind of start, there's little chance King Arthur will live up to the success of Bruckheimer's last summer movie for Disney, Pirates of the Caribbean: The Curse of the Black Pearl. The studio, No. 1 at the box office last year, is in sixth place now, tracking company Nielsen EDI said.
But Disney may still meet projections that its earnings will grow this year by more than 50 percent. Even as the studio sputters, the company is firing away on other cylinders, giving Chief Executive Michael Eisner breathing room as he seeks to shore up investors' faith in the Burbank-based entertainment company.
Underscoring his confidence in Disney's outlook, Eisner said at an investment conference Friday that management probably would recommended a dividend increase for shareholders this year.
There have been gains across various businesses, including theme parks, which are recovering from a three-year slump. Home-video sales of last year's box-office hits have been solid, and a strong advertising market has helped Disney's owner-operated TV stations. Operating income in the cable-TV group, which includes the ESPN sports juggernaut and Disney Channel, is expected to grow 20 percent in the third fiscal quarter.
All that gives the company a cushion to absorb financial hits elsewhere in the empire, notably at the struggling ABC-TV network and the studio.
"Disney, like other media conglomerates, benefits from having a diverse portfolio of businesses where potential risks and losses from one area can be offset by gains in another division," said Tim Wallace, managing director of investment research for UBS Securities.
That doesn't mean Disney is off the hook when it comes to box-office returns.
Many investors are particularly concerned about the spotty record of the animation division. Their anxieties were heightened earlier this year after Pixar Animation Studios, creator of the successful Toy Story franchise and Finding Nemo blockbuster, ended talks to extend its longtime lucrative partnership with Disney.
Box-office duds in the second half of the year could undercut Eisner's argument that Disney's worst days are behind it and provide more fuel to his fiercest critics, Roy Disney and Stanley Gold. The former Disney board members led a campaign against Eisner that culminated in a 45 percent protest vote against his re-election to the board in March. Eisner subsequently gave up his chairman's title.
"While poor performance may not undermine management's expectations, it could have an impact on investor sentiment about the company," Wallace said. "The studio has to come up with decent films this year."
Disney faces a tough time living up to its performance in 2003. The smash hits Pirates and Finding Nemo each amassed more than $300 million in U.S. ticket sales alone.
By this time last year, three Disney films had opened in the $30 million-plus range. In fact, the combined box-office openings of all of its movies so far this year total less than what Pirates made in its first two weeks.
This year, the lackluster performers or outright flops have included Hidalgo, the historic epic Alamo and the animated barnyard tale Home on the Range.
A more recent letdown was Around the World in 80 Days. The remake cost more than $110 million but took in only $22 million in the United States. Disney spent tens of millions of additional dollars to market the movie. The studio's financial exposure was minimized, however, because the movie was financed by billionaire Philip Anschutz.
Disney's biggest 2004 opening-weekend haul was $19.4 million for the Olympic hockey drama Miracle, which hit theaters in February.
The studio was hoping King Arthur would crack the $20 million mark during its inaugural weekend, but it suffered heavy competition and mixed reviews.
"Maybe there's a little bit of epic ennui," said Nina Jacobson, Disney Studios' production chief.
Disney executives are expecting King Arthur, which stars British actors Clive Owen and Keira Knightley, to fare well overseas and ultimately generate brisk home-video sales.
"The international market is going to be terrific for us," said Chuck Viane, the studio's president of domestic distribution.
The studio's upcoming slate includes The Village, a thriller from The Sixth Sense director M. Night Shyamalan, due this month. Next month comes Princess Diaries 2: Royal Engagement, the sequel to the hit romantic comedy. Bruckheimer's National Treasure, an action-adventure offering with Nicolas Cage, opens in November. And Disney is expected to do well with its November release of Pixar's upcoming animated movie The Incredibles. Disney will snare about 65 percent of the profits.
"We do have hopes for the second half of the year," Jacobson said. "We're confident that we can turn things around." Meanwhile, she said: "We're grateful that the after-market life of last year's movies has given us shelter during the storm."
Los Angeles Times reporter R. Kinsey Lowe contributed to this report. Richard Verrier can be reached at richard.verrier@latimes.com or 1-800-528-4637, Ext. 77936.
But other bright spots may help meet projections that earnings will rise more than 50% this year.
By Richard Verrier | Sentinel Staff Writer
Posted July 12, 2004
LOS ANGELES -- It's a long way from the ticket line to the bottom line.
That's the case for Walt Disney Co., whose feature-film division has had a rocky first half of the year after setting industry records in 2003. The latest disappointment came with the debut of King Arthur, the $120 million summer action movie by producer Jerry Bruckheimer. It was in third place Sunday -- behind Spider-Man 2 and Anchorman: The Legend of Ron Burgundy -- with an estimated ticket take of $15.2 million during the weekend and $23.6 million since it opened Wednesday, according to Disney.
With that kind of start, there's little chance King Arthur will live up to the success of Bruckheimer's last summer movie for Disney, Pirates of the Caribbean: The Curse of the Black Pearl. The studio, No. 1 at the box office last year, is in sixth place now, tracking company Nielsen EDI said.
But Disney may still meet projections that its earnings will grow this year by more than 50 percent. Even as the studio sputters, the company is firing away on other cylinders, giving Chief Executive Michael Eisner breathing room as he seeks to shore up investors' faith in the Burbank-based entertainment company.
Underscoring his confidence in Disney's outlook, Eisner said at an investment conference Friday that management probably would recommended a dividend increase for shareholders this year.
There have been gains across various businesses, including theme parks, which are recovering from a three-year slump. Home-video sales of last year's box-office hits have been solid, and a strong advertising market has helped Disney's owner-operated TV stations. Operating income in the cable-TV group, which includes the ESPN sports juggernaut and Disney Channel, is expected to grow 20 percent in the third fiscal quarter.
All that gives the company a cushion to absorb financial hits elsewhere in the empire, notably at the struggling ABC-TV network and the studio.
"Disney, like other media conglomerates, benefits from having a diverse portfolio of businesses where potential risks and losses from one area can be offset by gains in another division," said Tim Wallace, managing director of investment research for UBS Securities.
That doesn't mean Disney is off the hook when it comes to box-office returns.
Many investors are particularly concerned about the spotty record of the animation division. Their anxieties were heightened earlier this year after Pixar Animation Studios, creator of the successful Toy Story franchise and Finding Nemo blockbuster, ended talks to extend its longtime lucrative partnership with Disney.
Box-office duds in the second half of the year could undercut Eisner's argument that Disney's worst days are behind it and provide more fuel to his fiercest critics, Roy Disney and Stanley Gold. The former Disney board members led a campaign against Eisner that culminated in a 45 percent protest vote against his re-election to the board in March. Eisner subsequently gave up his chairman's title.
"While poor performance may not undermine management's expectations, it could have an impact on investor sentiment about the company," Wallace said. "The studio has to come up with decent films this year."
Disney faces a tough time living up to its performance in 2003. The smash hits Pirates and Finding Nemo each amassed more than $300 million in U.S. ticket sales alone.
By this time last year, three Disney films had opened in the $30 million-plus range. In fact, the combined box-office openings of all of its movies so far this year total less than what Pirates made in its first two weeks.
This year, the lackluster performers or outright flops have included Hidalgo, the historic epic Alamo and the animated barnyard tale Home on the Range.
A more recent letdown was Around the World in 80 Days. The remake cost more than $110 million but took in only $22 million in the United States. Disney spent tens of millions of additional dollars to market the movie. The studio's financial exposure was minimized, however, because the movie was financed by billionaire Philip Anschutz.
Disney's biggest 2004 opening-weekend haul was $19.4 million for the Olympic hockey drama Miracle, which hit theaters in February.
The studio was hoping King Arthur would crack the $20 million mark during its inaugural weekend, but it suffered heavy competition and mixed reviews.
"Maybe there's a little bit of epic ennui," said Nina Jacobson, Disney Studios' production chief.
Disney executives are expecting King Arthur, which stars British actors Clive Owen and Keira Knightley, to fare well overseas and ultimately generate brisk home-video sales.
"The international market is going to be terrific for us," said Chuck Viane, the studio's president of domestic distribution.
The studio's upcoming slate includes The Village, a thriller from The Sixth Sense director M. Night Shyamalan, due this month. Next month comes Princess Diaries 2: Royal Engagement, the sequel to the hit romantic comedy. Bruckheimer's National Treasure, an action-adventure offering with Nicolas Cage, opens in November. And Disney is expected to do well with its November release of Pixar's upcoming animated movie The Incredibles. Disney will snare about 65 percent of the profits.
"We do have hopes for the second half of the year," Jacobson said. "We're confident that we can turn things around." Meanwhile, she said: "We're grateful that the after-market life of last year's movies has given us shelter during the storm."
Los Angeles Times reporter R. Kinsey Lowe contributed to this report. Richard Verrier can be reached at richard.verrier@latimes.com or 1-800-528-4637, Ext. 77936.
