Disney Goofy to Pass on Fahrenheit 911: Shareholders Expect Moore
by Blaine Townsend
Most companies scoff at the notion of a social contract. Doing the “right thing”, they claim, will cost them money. But The Walt Disney Co’s decision to block its Miramax Films unit from distributing the Michael Moore political documentary Farhenheit 911 set a different precedent. This time, the company did the wrong thing, and it cost them money. Now Wall Street can join progressive groups in trying to figure out why.
When the news first broke that Disney was blocking Miramax from distributing the film, sensational theories abounded: it was to protect tax incentives in Florida or because of the influence of Saudi investors. But it was Disney that offered perhaps the least plausible of all: it was too partisan a project to release during a Presidential election cycle.
True, Disney is best known for family entertainment. But the company has demonstrated no other philosophical opposition to generating revenues from partisan political content or advertising during this election cycle. In fact, the approximately $1.2 billion in revenues Wall Street estimates Disney will earn from its broadcasting operations in 2004 are being bolstered by election year political advertising. Disney also produces extremely partisan content on its ABC Radio Network. ABC Radio’s website, in fact, touts conservative Sean Hannity as a “gutsy” talk show host who always “lands on the right side of the issue.” And like many major corporations, Disney is giving money directly to political action committees – the definition of a partisan project.
So it is unlikely that sanitizing Disney of partisan politics drove this decision.
It is also unlikely that the decision was based on a lack of commercial viability for the film. Michael Moore’s films have excellent track records. In fact, the previous record for cumulative gross receipts for a documentary was Michael Moore’s Bowling for Columbine. Its nine-month run in 2001 grossed nearly $22 million. In addition, the content and timing of Fahrenheit’s release certainly guaranteed marketing costs for this film would be much less than normal – making it even more attractive.
Case in point, the $21.9 million in gross receipts earned by Fahrenheit 911 during its first weekend eclipsed the opening weekend gross receipts for every other release by Disney this year. By the second week, the film had grossed $60 million. Before its run ends, Fahrenheit’s total gross (estimated at $100 million) will likely eclipse most of Disney’s 2003 or 2004 releases.
In the perplexing background of Fahrenheit’s stunning success, is the tepid execution of Disney’s studio operation. Far from growing the business, Wall Street analysts estimate Disney’s studio operation will be down 1% compared to last year. With Pixar Animation Studios (Finding Nemo, Toy Story) threatening to end its distribution relationship with Disney, Wall Street is looking for good news right now. Disney has not delivered.
To the contrary, while Fahrenheit was winning the “Palme d'Ore” at the Cannes Film Festival and becoming the most talked about release in the world, Disney was informing Wall Street that it was writing off three major releases, Home on the Range, The Alamo and Lady Killers and all but given up on a third, Around the World in 80 Days (which cost $120 million to make and has a total gross of $21 million).
So why punt this valuable asset? At the time, The New York Times wrote that Disney “loves its bottom line more than the freedom of political discourse.” True, some conservatives might have stayed away from Disney World had the company released Fahrenheit. But it is a stretch to think releasing the film would have hurt Disney’s business. Yet Disney, which always been about making a buck, passed on tens of millions of them in this case.
Something is not right with this picture.
Maybe Michael Moore will make a documentary exploring Disney’s decision (Mickey and Me?). Based on the success of Fahrenheit, it should be a moneymaker. I am sure smart companies will line up for the chance to distribute it.
Blaine Townsend is a vice president and portfolio at Trillium Asset Management Corp., the nation’s oldest and largest independent investment advisor concentrating solely on socially responsible investing.
by Blaine Townsend
Most companies scoff at the notion of a social contract. Doing the “right thing”, they claim, will cost them money. But The Walt Disney Co’s decision to block its Miramax Films unit from distributing the Michael Moore political documentary Farhenheit 911 set a different precedent. This time, the company did the wrong thing, and it cost them money. Now Wall Street can join progressive groups in trying to figure out why.
When the news first broke that Disney was blocking Miramax from distributing the film, sensational theories abounded: it was to protect tax incentives in Florida or because of the influence of Saudi investors. But it was Disney that offered perhaps the least plausible of all: it was too partisan a project to release during a Presidential election cycle.
True, Disney is best known for family entertainment. But the company has demonstrated no other philosophical opposition to generating revenues from partisan political content or advertising during this election cycle. In fact, the approximately $1.2 billion in revenues Wall Street estimates Disney will earn from its broadcasting operations in 2004 are being bolstered by election year political advertising. Disney also produces extremely partisan content on its ABC Radio Network. ABC Radio’s website, in fact, touts conservative Sean Hannity as a “gutsy” talk show host who always “lands on the right side of the issue.” And like many major corporations, Disney is giving money directly to political action committees – the definition of a partisan project.
So it is unlikely that sanitizing Disney of partisan politics drove this decision.
It is also unlikely that the decision was based on a lack of commercial viability for the film. Michael Moore’s films have excellent track records. In fact, the previous record for cumulative gross receipts for a documentary was Michael Moore’s Bowling for Columbine. Its nine-month run in 2001 grossed nearly $22 million. In addition, the content and timing of Fahrenheit’s release certainly guaranteed marketing costs for this film would be much less than normal – making it even more attractive.
Case in point, the $21.9 million in gross receipts earned by Fahrenheit 911 during its first weekend eclipsed the opening weekend gross receipts for every other release by Disney this year. By the second week, the film had grossed $60 million. Before its run ends, Fahrenheit’s total gross (estimated at $100 million) will likely eclipse most of Disney’s 2003 or 2004 releases.
In the perplexing background of Fahrenheit’s stunning success, is the tepid execution of Disney’s studio operation. Far from growing the business, Wall Street analysts estimate Disney’s studio operation will be down 1% compared to last year. With Pixar Animation Studios (Finding Nemo, Toy Story) threatening to end its distribution relationship with Disney, Wall Street is looking for good news right now. Disney has not delivered.
To the contrary, while Fahrenheit was winning the “Palme d'Ore” at the Cannes Film Festival and becoming the most talked about release in the world, Disney was informing Wall Street that it was writing off three major releases, Home on the Range, The Alamo and Lady Killers and all but given up on a third, Around the World in 80 Days (which cost $120 million to make and has a total gross of $21 million).
So why punt this valuable asset? At the time, The New York Times wrote that Disney “loves its bottom line more than the freedom of political discourse.” True, some conservatives might have stayed away from Disney World had the company released Fahrenheit. But it is a stretch to think releasing the film would have hurt Disney’s business. Yet Disney, which always been about making a buck, passed on tens of millions of them in this case.
Something is not right with this picture.
Maybe Michael Moore will make a documentary exploring Disney’s decision (Mickey and Me?). Based on the success of Fahrenheit, it should be a moneymaker. I am sure smart companies will line up for the chance to distribute it.
Blaine Townsend is a vice president and portfolio at Trillium Asset Management Corp., the nation’s oldest and largest independent investment advisor concentrating solely on socially responsible investing.
