SLIPPED A MICKEY
By LAURA PETRECCA
NY Post
June 27, 2004
As its studios and ABC units struggle, Disney's image in the industry is of a sleepy, dopey, grumpy company in need of a doc.
Investors, meanwhile, are not happy.
Disney's 2004 box office showing is dismal, with "Around the World in 80 Days" only the latest big-budget flop. Without hits like last year's "Pirates of the Caribbean," shareholders fret that Disney isn't feeding future product lines and home video sales.
"If you don't have hits coming out, it erodes merchandising and related revenue streams," said one major investor.
Disney reported strong second quarter growth coming off a grim year before, and Wall Street analysts say the company should hit its 2004 financial targets.
But those targets are modest, especially set against a weak 2003, and Disney's is curtailing its ambitions.
On Thursday, the company announced it would scale back its live-action film production.
Recent failures at Disney's entertainment units have left some investors skittish and fueled speculation that the company might be vulnerable to a takeover.
The concerns follow Disney's near escape from Comcast's $60 million hostile takeover offer. Some say that if Disney continues to falter, Comcast will return with another bid.
That would be just the latest blow for the Mouse House.
Disney is still smarting from a lack of solid programming — and profits — at its ABC unit. The network, consistently last in the ratings race, still lacks a marketable drama franchise such as NBC's "Law & Order" and CBS's "CSI."
Disney's $5.2 billion purchase of Fox Family Channel from Haim Saban and Post parent News Corp. is criticized by some investors who say the company overspent for the programming.
On the retail front, Disney is bleeding cash through its Disney Store retail chain, with revenues last year plummeting by $161 million. It's currently in talks to pawn off the North American units through a long-term licensing agreement with Children's Stores.
Disney has also missed out on some profitable opportunities of late, such as taking a pass on distributing the critical hit "Fahrenheit 9/11."
"Fahrenheit" cost about $6 million to make and is expected to gross $30 million.
Not only did that decision rob the company coffers, it also deepened the exiting rift between Disney CEO Michael Eisner and Miramax Films founders Harvey and Bob Weinstein. The brothers ended up investing personally in the distribution.
The Weinstein brother's contract is up for renegotiation in 2005, with the risk that the brothers might hit the road. Their departure would be the second loss of a creative partnership. Earlier this year, Pixar Animation Studios said it would part ways with Disney.
That's an area where Disney can't afford to lose out. They already had a 26 percent drop in fiscal second-quarter operating income at its studios.
The studio's recent disaster, "Around the World in Eighty Days," is said to have cost the company $75 million but grossed only $11 million so far. Insiders say Disney has lost more than $250 million 2004 turkeys such as "The Alamo," "Home on the Range" and "Raising Helen
Executives at Burbank-based Disney deemed 2004 a "sobering year."
With Disney's fiscal year in September, time is ticking to have at least one hit before the books close.
The company says it has "high hopes" for summer releases "King Arthur," "The Village" and "Princess Diaries 2."
But box office analysts aren't so sure. Disney's white knight, "King Arthur," cost about $140 to film and promote, but it could still miss the mark.
" 'King Arthur' will have really strong competition from 'Spider-Man,' " said Abby Wike of ReelSource.
"It's a tough sell. It isn't exactly a film that will appeal to women, and that's who they need to pull in."
Last year at this time, Disney's Buena Vista film division led its competitors with 17.6 percent market share and $699 million in box office sales.
Now, Buena Visa is in 6th place, with an 8.8 percent market share and $360 million in sales, according to Nielsen EDI.
By LAURA PETRECCA
NY Post
June 27, 2004
As its studios and ABC units struggle, Disney's image in the industry is of a sleepy, dopey, grumpy company in need of a doc.
Investors, meanwhile, are not happy.
Disney's 2004 box office showing is dismal, with "Around the World in 80 Days" only the latest big-budget flop. Without hits like last year's "Pirates of the Caribbean," shareholders fret that Disney isn't feeding future product lines and home video sales.
"If you don't have hits coming out, it erodes merchandising and related revenue streams," said one major investor.
Disney reported strong second quarter growth coming off a grim year before, and Wall Street analysts say the company should hit its 2004 financial targets.
But those targets are modest, especially set against a weak 2003, and Disney's is curtailing its ambitions.
On Thursday, the company announced it would scale back its live-action film production.
Recent failures at Disney's entertainment units have left some investors skittish and fueled speculation that the company might be vulnerable to a takeover.
The concerns follow Disney's near escape from Comcast's $60 million hostile takeover offer. Some say that if Disney continues to falter, Comcast will return with another bid.
That would be just the latest blow for the Mouse House.
Disney is still smarting from a lack of solid programming — and profits — at its ABC unit. The network, consistently last in the ratings race, still lacks a marketable drama franchise such as NBC's "Law & Order" and CBS's "CSI."
Disney's $5.2 billion purchase of Fox Family Channel from Haim Saban and Post parent News Corp. is criticized by some investors who say the company overspent for the programming.
On the retail front, Disney is bleeding cash through its Disney Store retail chain, with revenues last year plummeting by $161 million. It's currently in talks to pawn off the North American units through a long-term licensing agreement with Children's Stores.
Disney has also missed out on some profitable opportunities of late, such as taking a pass on distributing the critical hit "Fahrenheit 9/11."
"Fahrenheit" cost about $6 million to make and is expected to gross $30 million.
Not only did that decision rob the company coffers, it also deepened the exiting rift between Disney CEO Michael Eisner and Miramax Films founders Harvey and Bob Weinstein. The brothers ended up investing personally in the distribution.
The Weinstein brother's contract is up for renegotiation in 2005, with the risk that the brothers might hit the road. Their departure would be the second loss of a creative partnership. Earlier this year, Pixar Animation Studios said it would part ways with Disney.
That's an area where Disney can't afford to lose out. They already had a 26 percent drop in fiscal second-quarter operating income at its studios.
The studio's recent disaster, "Around the World in Eighty Days," is said to have cost the company $75 million but grossed only $11 million so far. Insiders say Disney has lost more than $250 million 2004 turkeys such as "The Alamo," "Home on the Range" and "Raising Helen
Executives at Burbank-based Disney deemed 2004 a "sobering year."
With Disney's fiscal year in September, time is ticking to have at least one hit before the books close.
The company says it has "high hopes" for summer releases "King Arthur," "The Village" and "Princess Diaries 2."
But box office analysts aren't so sure. Disney's white knight, "King Arthur," cost about $140 to film and promote, but it could still miss the mark.
" 'King Arthur' will have really strong competition from 'Spider-Man,' " said Abby Wike of ReelSource.
"It's a tough sell. It isn't exactly a film that will appeal to women, and that's who they need to pull in."
Last year at this time, Disney's Buena Vista film division led its competitors with 17.6 percent market share and $699 million in box office sales.
Now, Buena Visa is in 6th place, with an 8.8 percent market share and $360 million in sales, according to Nielsen EDI.
