Disney's Next Acquisition Speculation / Discussion

[bartholomr4]

Sony released its latest quarterly earnings report this morning. The company based in Japan, only reports what is required legally (much less than an American Based company) so there isn't a great deal of detail about segments, etc. What is available includes the following:

The results which were reported for the Sony Pictures Entertainment (SPE) segment show the division is about 12 % of the companies revenue and Profit (which was up 44% year over year likely due to this summers Spider-man movie) is about 14%.

Sony recently closed on the purchase of EMI records in India, so the results include year over year increases in revenue, expenses, etc.

The company also reported a change in future forecast revenue and profit in the Movie segment, because planned movies have been delayed in release. It is interesting to note, the company had No expenses in the quarter allocated toward movie or television production.

Television revenues and profit are very small, and negative year over year.

 

[bartholomr4]

I have said Disney should buy the Spiderman rights and all of the Marvel library Sony owns for 5 billion. Remember, even if the future rights revert to Disney in a sale, the existing library would still go to the new owner.

I appreciate your estimate, but with respect believe it to be too high.

Disney uses a Discount Cash Flow model to value its acquisitions. To support a $5 Billion dollar price tag, the asset (the Spider-verse) would have to generate (using the Discounted Cash Flow Model) over $14.2 Billion dollars over 10 years.

While valuable, the entire SPE Movie Library barely generates $100 Million a year in revenue. If we assumed all of this was the Spider-verse you could assume $1.4 Billion for the library's value. The other $12.8 Billion would have to come from new revenue sources, either Movies or Television (because Disney already gets all of the other revenue from the spider-verse). Even if you allow for inflation, those Movies and/or Television shows would have to generate probably $800 million in profit (after all expenses) in year one and rise up to close to $2.0 Billion in year ten.

Removing the cost of production, participation of the movie theaters, and other costs, and assuming Disney's long term Cash flow Margin from movies of about 34%, in the first year revenue requirement equates to $2.3 billion and in year ten $5.8 billion. While an awesome (my favorite) character and movie franchise, I just don't think the Spider-verse will yield this much revenue. Disney has too many other franchise characters to build stories around which it hasn't yet introduced, at an almost zero cost.

Without adding all the detail I assumed here, I think the Discounted Cash Flow model supports a value of the remaining Sony controlled exclusive rights to Spider-verse (that Disney doesn't control) is about 1.7 Billion dollars. This assumes the exclusive rights are transferable in the market-place, which of course, there is speculation the rights revert back to Marvel upon a change in ownership from SPE. Patience on Disney's part probably gets the exclusive rights back for free.

Others will disagree, and stated with respect and just to add another perspective. I think this difference in perceived value and bean-counter approach to establishing a purchase price is the reason why Sony (struggling on multiple fronts) hasn't yet sold the rights back to Disney.

 

[seascape]

I appreciate your estimate, but with respect believe it to be too high.

Disney uses a Discount Cash Flow model to value its acquisitions. To support a $5 Billion dollar price tag, the asset (the Spider-verse) would have to generate (using the Discounted Cash Flow Model) over $14.2 Billion dollars over 10 years.

While valuable, the entire SPE Movie Library barely generates $100 Million a year in revenue. If we assumed all of this was the Spider-verse you could assume $1.4 Billion for the library's value. The other $12.8 Billion would have to come from new revenue sources, either Movies or Television (because Disney already gets all of the other revenue from the spider-verse). Even if you allow for inflation, those Movies and/or Television shows would have to generate probably $800 million in profit (after all expenses) in year one and rise up to close to $2.0 Billion in year ten.

Removing the cost of production, participation of the movie theaters, and other costs, and assuming Disney's long term Cash flow Margin from movies of about 34%, in the first year revenue requirement equates to $2.3 billion and in year ten $5.8 billion. While an awesome (my favorite) character and movie franchise, I just don't think the Spider-verse will yield this much revenue. Disney has too many other franchise characters to build stories around which it hasn't yet introduced, at an almost zero cost.

Without adding all the detail I assumed here, I think the Discounted Cash Flow model supports a value of the remaining Sony controlled exclusive rights to Spider-verse (that Disney doesn't control) is about 1.7 Billion dollars. This assumes the exclusive rights are transferable in the market-place, which of course, there is speculation the rights revert back to Marvel upon a change in ownership from SPE. Patience on Disney's part probably gets the exclusive rights back for free.

Others will disagree, and stated with respect and just to add another perspective. I think this difference in perceived value and bean-counter approach to establishing a purchase price is the reason why Sony (struggling on multiple fronts) hasn't yet sold the rights back to Disney.

I believe the Spiderverce is going to be viable and very profitable. In addition, I think it will hurt the MCUs box office and profitably because Sony Pictures should be putting out a Spiderman movie every other year and 1 to 2 Spiderverce movies. That way they can put out 2 movies a year. In an ideal world I would have Disney buy the rights and put out 4 MCU movies a year, one each quarter.

Now, for the bean counter, you are right that the value is very subjective. I believe owning the entire library and having them on Disney Plus is worth it. Besides, having Spiderman is the other movies does help the box office.

 

[AnotherDayAnotherDollar]

I appreciate your estimate, but with respect believe it to be too high.

Disney uses a Discount Cash Flow model to value its acquisitions. To support a $5 Billion dollar price tag, the asset (the Spider-verse) would have to generate (using the Discounted Cash Flow Model) over $14.2 Billion dollars over 10 years.

While valuable, the entire SPE Movie Library barely generates $100 Million a year in revenue. If we assumed all of this was the Spider-verse you could assume $1.4 Billion for the library's value. The other $12.8 Billion would have to come from new revenue sources, either Movies or Television (because Disney already gets all of the other revenue from the spider-verse). Even if you allow for inflation, those Movies and/or Television shows would have to generate probably $800 million in profit (after all expenses) in year one and rise up to close to $2.0 Billion in year ten.

Removing the cost of production, participation of the movie theaters, and other costs, and assuming Disney's long term Cash flow Margin from movies of about 34%, in the first year revenue requirement equates to $2.3 billion and in year ten $5.8 billion. While an awesome (my favorite) character and movie franchise, I just don't think the Spider-verse will yield this much revenue. Disney has too many other franchise characters to build stories around which it hasn't yet introduced, at an almost zero cost.

Without adding all the detail I assumed here, I think the Discounted Cash Flow model supports a value of the remaining Sony controlled exclusive rights to Spider-verse (that Disney doesn't control) is about 1.7 Billion dollars. This assumes the exclusive rights are transferable in the market-place, which of course, there is speculation the rights revert back to Marvel upon a change in ownership from SPE. Patience on Disney's part probably gets the exclusive rights back for free.

Others will disagree, and stated with respect and just to add another perspective. I think this difference in perceived value and bean-counter approach to establishing a purchase price is the reason why Sony (struggling on multiple fronts) hasn't yet sold the rights back to Disney.

Pictures produces more than that in revenue. FY 18 had 987B Yen in sales and 55B in OI. FY 19 forecast has 1T yen in sales and 70B yen in OI. Divide that by roughly 100 and that's the numbers in USD. If you want to be specific then you have to see the FOREX trade during that time. However you are absolutely right and I have long said that paying over 1-2B is overpaying let alone 5B. My only thing is Sony devaluing the value of the Spiderman brand by releasing crap. And they will. If Disney can get the rights back, along with distribution to previous SM movies, previous Marvel movies (i.e Ghost Rider, MIB), previous Muppet movies/tv shows that Sony has the rights to then maybe they can overpay and get it all back. HBO Max is a major player and it sounds pretty good. Disney will need to have all the content it can on Hulu and Disney+ to compete with them IMO.

However with all the smoke (i.e. selling Harbinger from Valiant to Paramount, rumor of selling Masters of the Universe to Netflix, selling crackle, shutting down Vue) one has to start to wonder if they are beginning to prepare to get out of this segment. Worth noting that Pictures has - by far - the lowest ROIC for Sony. They also spend the most amount of capital in pictures just to get the smallest return. They would really be better off divesting Pictures and using that capital to either a) Buy back b) Increase dividends c) Use it on other segments or a new one (i.e. robotics).

 

[bartholomr4]

Pictures produces more than that in revenue. FY 18 had 987B Yen in sales and 55B in OI. FY 19 forecast has 1T yen in sales and 70B yen in OI. Divide that by roughly 100 and that's the numbers in USD. If you want to be specific then you have to see the FOREX trade during that time. However you are absolutely right and I have long said that paying over 1-2B is overpaying let alone 5B. My only thing is Sony devaluing the value of the Spiderman brand by releasing crap. And they will. If Disney can get the rights back, along with distribution to previous SM movies, previous Marvel movies (i.e Ghost Rider, MIB), previous Muppet movies/tv shows that Sony has the rights to then maybe they can overpay and get it all back. HBO Max is a major player and it sounds pretty good. Disney will need to have all the content it can on Hulu and Disney+ to compete with them IMO.

However with all the smoke (i.e. selling Harbinger from Valiant to Paramount, rumor of selling Masters of the Universe to Netflix, selling crackle, shutting down Vue) one has to start to wonder if they are beginning to prepare to get out of this segment. Worth noting that Pictures has - by far - the lowest ROIC for Sony. They also spend the most amount of capital in pictures just to get the smallest return. They would really be better off divesting Pictures and using that capital to either a) Buy back b) Increase dividends c) Use it on other segments or a new one (i.e. robotics).

Yes, Pictures (which includes all Movies, Television and Library) does return more. My reference was just to the library. I think we are in general agreement

One consideration about executing anything than a "change" in the exclusive licensing agreement(s). Disney/Sony could add in other rights (Muppets and Ghost Rider), but I do think Disney/Marvel would be at risk of a regulatory review if they acquire the previous library. I doubt either Sony or Disney would want to go thru that process (would take a year likely). Changes to agreements on assets you own is much easier from a regulatory review perspective.

 

[AnotherDayAnotherDollar]

Yes, Pictures (which includes all Movies, Television and Library) does return more. My reference was just to the library. I think we are in general agreement

One consideration about executing anything than a "change" in the exclusive licensing agreement(s). Disney/Sony could add in other rights (Muppets and Ghost Rider), but I do think Disney/Marvel would be at risk of a regulatory review if they acquire the previous library. I doubt either Sony or Disney would want to go thru that process (would take a year likely). Changes to agreements on assets you own is much easier from a regulatory review perspective.

I am not sure acquiring distribution to previous library would open it to regulatory review. Why would it? It didn't require regulatory approval when they acquired Paramount's distribution rights. You may be right, but I don't see the need for regulatory approval for acquiring the distribution to 3 dozen or so products (including tv show episodes) out of a library of well over 5-10K.

 

[Darkprime]

Yea getting the distribution for previous movies wont be an issue at all. It would be part of the overall package. Tbh I'm not sure Disney would even want them tho. The most important distribution rights would be Homecoming & FFH and MCU Spider-Man 3. Its more likely that Disney would not want to associate their brand with the Raimi,TASM and Venom films. Those would be forgotten plus id imagine theyre line of thinking is fans of those films probably own some sort of physical or digital copy already anyway.

 

[bartholomr4]

Yea getting the distribution for previous movies wont be an issue at all. It would be part of the overall package. Tbh I'm not sure Disney would even want them tho. The most important distribution rights would be Homecoming & FFH. Its more likely that Disney would not want to associate their brand with the Raimi,TASM and Venom films. Those would be forgotten plus id imagine theyre line of thinking is fans of those films probably own some sort of physical or digital copy already anyway.

If Disney buys something it will have a regulatory review (which to your point may be nothing). If an existing contract is modified, on something you own, but license to another company, no review.

 

[Darkprime]

If Disney buys something it will have a regulatory review (which to your point may be nothing). If an existing contract is modified, on something you own, but license to another company, no review.

Buying film rights is not the same thing as buying Fox. Did Disney require DOJ / FTC approval when they brought out the Star Wars contract from Turner? No.

 

[bartholomr4]

Buying film rights is not the same thing as buying Fox. Did Disney require DOJ / FTC approval when they brought out the Star Wars contract from Turner? No.

"How is a Merger Defined for Antitrust Purposes?

For antitrust purposes, a “merger” includes any acquisition of assets, stock, or share capital of another person or entity, even if the acquisition does not result in control of the target company. An acquisition of less than a controlling interest does not obviate HSR (Hart-Scott-Rodino Antitrust and Improvement Act) filing requirements if the acquisition exceeds the operative thresholds.

What are the Relevant Thresholds That Trigger HSR Filing Requirements?

Three thresholds determine the applicability of HSR filing requirements. First, one of the parties to the transaction must be in commerce in the United States or otherwise affect U.S. commerce.

Second, the acquiring party must be acquiring securities, non-corporate interest, or assets of the target in excess of $80.8 million.

Third, if the transaction exceeds $80.8 million but does not exceed $323 million, at least one party involved in the transaction must have annual net sales or total assets of at least $161.5 million, and the other party must have annual net sales or total assets of at least $16.2 million. "

Disney qualifies on all three categories assuming it pays more than $80.8 Million for the distribution rights.

 

[AnotherDayAnotherDollar]

Yea getting the distribution for previous movies wont be an issue at all. It would be part of the overall package. Tbh I'm not sure Disney would even want them tho. The most important distribution rights would be Homecoming & FFH and MCU Spider-Man 3. Its more likely that Disney would not want to associate their brand with the Raimi,TASM and Venom films. Those would be forgotten plus id imagine theyre line of thinking is fans of those films probably own some sort of physical or digital copy already anyway.

They will be putting Fox's X-Men and FF in the service. I feel very confident on that. I think they are breaking it down with "Marvel Cinematic Universe" and "Other Marvel work" or something like that. I remember seeing a screenshot from the Netherlands.

If Disney buys something it will have a regulatory review (which to your point may be nothing). If an existing contract is modified, on something you own, but license to another company, no review.

Here's a loophole, modify the contract to say that the rights to previous work are transferable and owned by the IP owners upon termination of the contract. There's a specific section in the document that states that the copyright to production work belongs to SPE. Change that to say it belongs to Marvel. It's just changing the contract. I don't think they would have this loophole for the other Marvel work and Muppets, but for Spiderman it's fairly straightforward.

"How is a Merger Defined for Antitrust Purposes?

For antitrust purposes, a “merger” includes any acquisition of assets, stock, or share capital of another person or entity, even if the acquisition does not result in control of the target company. An acquisition of less than a controlling interest does not obviate HSR (Hart-Scott-Rodino Antitrust and Improvement Act) filing requirements if the acquisition exceeds the operative thresholds.

What are the Relevant Thresholds That Trigger HSR Filing Requirements?

Three thresholds determine the applicability of HSR filing requirements. First, one of the parties to the transaction must be in commerce in the United States or otherwise affect U.S. commerce.

Second, the acquiring party must be acquiring securities, non-corporate interest, or assets of the target in excess of $80.8 million.

Third, if the transaction exceeds $80.8 million but does not exceed $323 million, at least one party involved in the transaction must have annual net sales or total assets of at least $161.5 million, and the other party must have annual net sales or total assets of at least $16.2 million. "

Disney qualifies on all three categories assuming it pays more than $80.8 Million for the distribution rights.

They paid Paramount well over 100MM for the rights to distribute IM3 and Avengers. Undisclosed for the Phase 1 movies, but I'm guessing over that as well. I don't remember that going through regulatory approval.

 

[bartholomr4]

There is a great article on the Hollywood Reporter this morning where the heads of all of the studios are jointly interviewed. It is amazing the relationships between these studio execs and how they have all worked together and for each other over the years.

https://www.hollywoodreporter.com/f...tive-roundtable-7-major-studio-chiefs-1250718

Of interest to this thread and the relationship between Disney and Sony, I found this dialogue very interesting:

HOLLYWOOD REPORTER: Alan and Tom, you recently had a little dispute over Spider-Man. What was the one thing above all else that resolved that standoff over Marvel producing the next Sony installment?

ALAN HORN (Disney)The fan base, which is important to all of us, seemed to really respond to what Tom and his folks have done before with our people. They like the fact that the Marvel Cinematic Universe and Kevin Feige were involved [in the two Spider-Man films]. We heard feedback out there that suggested that joining forces once again was probably really a good idea.

HOLLYWOOD REPORTER: Will this partnership continue after the trilogy? Tom, you've shown you can do Spider-Man without Marvel on the animated film Spider-Man: Into the Spider-Verse.

TOM ROTHMAN (Sony)Yes, we have. But I agree with my distinguished colleague. This was a classic win-win-win. A win for Sony, a win for Disney, a win for the fans. The only thing I would say is that news cycles and the rhythm of negotiations do not necessarily overlap. And this is, in the words of Shakespeare, "a consummation devoutly to be wished". We would have gotten there, and the news got ahead of some things.

ALAN HORN (Disney)I agree with that.

We all hope for the Spider-verse to return to Marvel. Perhaps as Tom Rothman states, this is also a "consummation devoutly to be wished"
It is reasonable to think both Sony and Disney are farther down this path than we think, and they are already working on what happens after the next two Spider-man movies.

It is clear from the interviews these studio chiefs are close and talk together all the time. The article also points out how the box office results of a film are becoming less and less important to the studios. Also how the margins are compressing and streaming revenues becoming more and more important.

 

[seascape]

There is a great article on the Hollywood Reporter this morning where the heads of all of the studios are jointly interviewed. It is amazing the relationships between these studio execs and how they have all worked together and for each other over the years.

https://www.hollywoodreporter.com/f...tive-roundtable-7-major-studio-chiefs-1250718

Of interest to this thread and the relationship between Disney and Sony, I found this dialogue very interesting:

HOLLYWOOD REPORTER: Alan and Tom, you recently had a little dispute over Spider-Man. What was the one thing above all else that resolved that standoff over Marvel producing the next Sony installment?

ALAN HORN (Disney)The fan base, which is important to all of us, seemed to really respond to what Tom and his folks have done before with our people. They like the fact that the Marvel Cinematic Universe and Kevin Feige were involved [in the two Spider-Man films]. We heard feedback out there that suggested that joining forces once again was probably really a good idea.

HOLLYWOOD REPORTER: Will this partnership continue after the trilogy? Tom, you've shown you can do Spider-Man without Marvel on the animated film Spider-Man: Into the Spider-Verse.

TOM ROTHMAN (Sony)Yes, we have. But I agree with my distinguished colleague. This was a classic win-win-win. A win for Sony, a win for Disney, a win for the fans. The only thing I would say is that news cycles and the rhythm of negotiations do not necessarily overlap. And this is, in the words of Shakespeare, "a consummation devoutly to be wished". We would have gotten there, and the news got ahead of some things.

ALAN HORN (Disney)I agree with that.

We all hope for the Spider-verse to return to Marvel. Perhaps as Tom Rothman states, this is also a "consummation devoutly to be wished"
It is reasonable to think both Sony and Disney are farther down this path than we think, and they are already working on what happens after the next two Spider-man movies.

It is clear from the interviews these studio chiefs are close and talk together all the time. The article also points out how the box office results of a film are becoming less and less important to the studios. Also how the margins are compressing and streaming revenues becoming more and more important.

I think the most interested and disappointing thing is both Disney and Universal agreed they don't want to aggravate China. Movies should be made to telk stories and no company should just say they are a business and have to look at important markets.

 

[AnotherDayAnotherDollar]

There is a great article on the Hollywood Reporter this morning where the heads of all of the studios are jointly interviewed. It is amazing the relationships between these studio execs and how they have all worked together and for each other over the years.

https://www.hollywoodreporter.com/f...tive-roundtable-7-major-studio-chiefs-1250718

Of interest to this thread and the relationship between Disney and Sony, I found this dialogue very interesting:

HOLLYWOOD REPORTER: Alan and Tom, you recently had a little dispute over Spider-Man. What was the one thing above all else that resolved that standoff over Marvel producing the next Sony installment?

ALAN HORN (Disney)The fan base, which is important to all of us, seemed to really respond to what Tom and his folks have done before with our people. They like the fact that the Marvel Cinematic Universe and Kevin Feige were involved [in the two Spider-Man films]. We heard feedback out there that suggested that joining forces once again was probably really a good idea.

HOLLYWOOD REPORTER: Will this partnership continue after the trilogy? Tom, you've shown you can do Spider-Man without Marvel on the animated film Spider-Man: Into the Spider-Verse.

TOM ROTHMAN (Sony)Yes, we have. But I agree with my distinguished colleague. This was a classic win-win-win. A win for Sony, a win for Disney, a win for the fans. The only thing I would say is that news cycles and the rhythm of negotiations do not necessarily overlap. And this is, in the words of Shakespeare, "a consummation devoutly to be wished". We would have gotten there, and the news got ahead of some things.

ALAN HORN (Disney)I agree with that.

We all hope for the Spider-verse to return to Marvel. Perhaps as Tom Rothman states, this is also a "consummation devoutly to be wished"
It is reasonable to think both Sony and Disney are farther down this path than we think, and they are already working on what happens after the next two Spider-man movies.

It is clear from the interviews these studio chiefs are close and talk together all the time. The article also points out how the box office results of a film are becoming less and less important to the studios. Also how the margins are compressing and streaming revenues becoming more and more important.

Interesting article and one can only hope they are further down this path than we think.

I also think - to keep with this topic - that Disney is not acquiring anything for at least 3-5 years. Distribution rights/amendment of contracts notwithstanding. Reasons for that are as follow:
1) Fox acquisition and integration. This is Iger's final and biggest M&A play for his legacy as CEO. He needs to ensure everything is smooth. He is not going to acquire anything else while he's CEO, so for sure nothing until at least he leaves which is end of 2021.
2) Streaming. Disney+ has been said to be the company's biggest initiative and its whole future depends on it. Hulu will need to be revamped and further integrated. ESPN+ will need to continue improving and so on. IIRC it is a losing venture until FY2024. They need to get this right, so until things are starting to go on the right path they won't add the headache of buying anything else.
3) They are at a historical high leverage ratio. They are not going to add to that leverage and according to McCarthy their plan is to deleverage quickly by end of FY2021.

Also a lot of it will depend on who the next CEO is. Right now the 2 most talked about names are Kevin Mayer and Bob Chapek. Whoever it is they will want to leave their own legacy. Expanding Parks and Resorts and how the company can bring in more revenue and profit to shareholders. Mayer, for example, likes FoxNext and wants to keep it as opposed to Iger who wants to sell it. One can easily see Mayer looking to get Disney as a major player in the game publishing industry. Warner is the only traditional media company that has done well in that space and it's in no small part because of some strategic acquisitions.

 

[seascape]

Interesting article and one can only hope they are further down this path than we think.

I also think - to keep with this topic - that Disney is not acquiring anything for at least 3-5 years. Distribution rights/amendment of contracts notwithstanding. Reasons for that are as follow:
1) Fox acquisition and integration. This is Iger's final and biggest M&A play for his legacy as CEO. He needs to ensure everything is smooth. He is not going to acquire anything else while he's CEO, so for sure nothing until at least he leaves which is end of 2021.
2) Streaming. Disney+ has been said to be the company's biggest initiative and its whole future depends on it. Hulu will need to be revamped and further integrated. ESPN+ will need to continue improving and so on. IIRC it is a losing venture until FY2024. They need to get this right, so until things are starting to go on the right path they won't add the headache of buying anything else.
3) They are at a historical high leverage ratio. They are not going to add to that leverage and according to McCarthy their plan is to deleverage quickly by end of FY2021.

Also a lot of it will depend on who the next CEO is. Right now the 2 most talked about names are Kevin Mayer and Bob Chapek. Whoever it is they will want to leave their own legacy. Expanding Parks and Resorts and how the company can bring in more revenue and profit to shareholders. Mayer, for example, likes FoxNext and wants to keep it as opposed to Iger who wants to sell it. One can easily see Mayer looking to get Disney as a major player in the game publishing industry. Warner is the only traditional media company that has done well in that space and it's in no small part because of some strategic acquisitions.

I agree with almost everything you wrote. My only real question, which will be answered in the reports next week is what is the exact amount of debt on the books after the sale of Sky and the Fox Sports Networks. I think it may not be as high as many think. Remember half the sale was stock and the other half debt, but the debt will be lower because of these sales.

Another thing that will be interested is their new analysis as to Disney Plus subscribers, projected short term losses and when they expect to be profitable. I think the time frame will move up and the losses less than originally thought. The numbers they gave in the Spring were very conservative, especially considering the Verizon deal.

 

[bartholomr4]

Interesting article and one can only hope they are further down this path than we think.

I also think - to keep with this topic - that Disney is not acquiring anything for at least 3-5 years. Distribution rights/amendment of contracts notwithstanding. Reasons for that are as follow:
1) Fox acquisition and integration. This is Iger's final and biggest M&A play for his legacy as CEO. He needs to ensure everything is smooth. He is not going to acquire anything else while he's CEO, so for sure nothing until at least he leaves which is end of 2021.
2) Streaming. Disney+ has been said to be the company's biggest initiative and its whole future depends on it. Hulu will need to be revamped and further integrated. ESPN+ will need to continue improving and so on. IIRC it is a losing venture until FY2024. They need to get this right, so until things are starting to go on the right path they won't add the headache of buying anything else.
3) They are at a historical high leverage ratio. They are not going to add to that leverage and according to McCarthy their plan is to deleverage quickly by end of FY2021.

Also a lot of it will depend on who the next CEO is. Right now the 2 most talked about names are Kevin Mayer and Bob Chapek. Whoever it is they will want to leave their own legacy. Expanding Parks and Resorts and how the company can bring in more revenue and profit to shareholders. Mayer, for example, likes FoxNext and wants to keep it as opposed to Iger who wants to sell it. One can easily see Mayer looking to get Disney as a major player in the game publishing industry. Warner is the only traditional media company that has done well in that space and it's in no small part because of some strategic acquisitions.

Totally agree, and pray it is not Chapek.... I really think Kevin Mayer is the choice the board will make (not mine) because he has been Iger's strategic thinker and "Fix-it" guy. He has the best grasp of all of the Disney businesses, where Chapek is just a bean counter.... probably a good one, but he doesn't have the chops to run this company.

I performed some consulting for the Disney C-suite in 2014. I learned a great deal about how Iger thinks about these individual divisions and how he is more of a peace maker and a cajoler (making everyone work together). You need to be a diplomat of the highest order to run this company. Mayer has these skills. Counting beans and /or trading commodities (i.e. Chapek) will not sit well with all the ego's which run this firm, and letting the ego's be what they are, is key to driving the story......

 

[brodie999]

There is a great article on the Hollywood Reporter this morning where the heads of all of the studios are jointly interviewed. It is amazing the relationships between these studio execs and how they have all worked together and for each other over the years.

https://www.hollywoodreporter.com/f...tive-roundtable-7-major-studio-chiefs-1250718

Of interest to this thread and the relationship between Disney and Sony, I found this dialogue very interesting:

HOLLYWOOD REPORTER: Alan and Tom, you recently had a little dispute over Spider-Man. What was the one thing above all else that resolved that standoff over Marvel producing the next Sony installment?

ALAN HORN (Disney)The fan base, which is important to all of us, seemed to really respond to what Tom and his folks have done before with our people. They like the fact that the Marvel Cinematic Universe and Kevin Feige were involved [in the two Spider-Man films]. We heard feedback out there that suggested that joining forces once again was probably really a good idea.

HOLLYWOOD REPORTER: Will this partnership continue after the trilogy? Tom, you've shown you can do Spider-Man without Marvel on the animated film Spider-Man: Into the Spider-Verse.

TOM ROTHMAN (Sony)Yes, we have. But I agree with my distinguished colleague. This was a classic win-win-win. A win for Sony, a win for Disney, a win for the fans. The only thing I would say is that news cycles and the rhythm of negotiations do not necessarily overlap. And this is, in the words of Shakespeare, "a consummation devoutly to be wished". We would have gotten there, and the news got ahead of some things.

ALAN HORN (Disney)I agree with that.

We all hope for the Spider-verse to return to Marvel. Perhaps as Tom Rothman states, this is also a "consummation devoutly to be wished"
It is reasonable to think both Sony and Disney are farther down this path than we think, and they are already working on what happens after the next two Spider-man movies.

It is clear from the interviews these studio chiefs are close and talk together all the time. The article also points out how the box office results of a film are becoming less and less important to the studios. Also how the margins are compressing and streaming revenues becoming more and more important.

Wow... I'm surprised their friendship brought them to being friendly neighbours. Who knows what else they'll work on together other than Spider-Man? Maybe they'll work on some video games on Pixar and Disney characters considering Marvel and Fox are collaborating with Sony Interactive Entertainment on Predator and the Iron Man VR games.

 

[Darkprime]

Wow... I'm surprised their friendship brought them to being friendly neighbours. Who knows what else they'll work on together other than Spider-Man? Maybe they'll work on some video games on Pixar and Disney characters considering Marvel and Fox are collaborating with Sony Interactive Entertainment on Predator and the Iron Man VR games.

Feige just gave Sony their first billion dollar movie in like 7 years. So Its in Sony's best interest to remain in business with Disney/Marvel.

 

[brodie999]

Feige just gave Sony their first billion dollar movie in like 7 years. So Its in Sony's best interest to remain in business with Disney/Marvel.

Well, if Disney keeps working with Sony on movies beyond the Spider-Man IP, the latter might have many more billion movies for years to come. So it's in their best interest to start working in business with all of Disney(Pixar, Marvel, Lucasfilm and Fox).

 

[bartholomr4]

Feige just gave Sony their first billion dollar movie in like 7 years. So Its in Sony's best interest to remain in business with Disney/Marvel.

I totally agree... Reading this article made me think the focus on traditional "box office" is changing. The whole eco-system you are trying to survive in is evolving rapidly. Sony doing business with Disney/Marvel and it entire eco-system is the key question. It's clear that SPE is at a distinct disadvantage between the other companies represented in the article. Movies are its only real Sony offering at the moment, and they have no real distribution channel outside of what these other companies are willing to license from SPE. The disadvantage is obvious. Sony has one item Disney wants (the Spider-verse) and they should be really glad they have it, or SPE would be non-existent.

We chat alot on these forums on waiting lines for a ride as a harbinger of success, and the total box office take in the theater as the success of a film. These are important, but its the whole eco-system which is key.