Cult Labs - So What Remake is Next?

Whatever they're doing, it doesn't seem it's working as well as they would like because their profits are down 15% on last year. That said, revenue was up, so the reduced profits could be because the films Disney have been making are incredibly expensive to produce and market; the likes of Avengers: Endgame will not be cheap.

This is an interesting read in the Wall Street Journal:

LOS ANGELES—A star-crossed “X-Men” movie and rained-out cricket matches contributed to growing pains at the newly integrated Walt Disney Co. and 21st Century Fox Inc.

Despite the blockbuster success of Disney’s “Avengers: Endgame,” the three months ended June 29 were marred by the weak performance of Fox entertainment assets purchased in the $71.3 billion deal that closed in March.

Disney fell short of analysts’ expectations for the quarter, sending shares down more than 3% in after-hours trading Tuesday.

Behind the disappointment were some of the high-profile assets acquired in the Fox deal. Fox movies like “X-Men: Dark Phoenix” flopped, even as Disney’s own hits set records.

Fox’s Star India, a TV network considered a linchpin in Disney’s international expansion strategy, dragged down the company’s direct-to-consumer segment after several matches in a major cricket tournament were canceled.

Disney Chief Executive Robert Iger opened his earnings call with investors by declaring it among the most complicated in his 14-year tenure as CEO.

Disney’s purchase of Fox—a deal that turned the world’s largest entertainment company into an even more powerful colossus—has given Disney valuable franchises like “Avatar” and significant overseas expansion.

But it has also tied the industry leader to a smaller rival that has lagged behind so far this year.

The Fox deal was driven by a companywide pivot toward a streaming strategy that will begin piping Disney programming into homes when a Disney-branded service launches in November.

Disney said Tuesday that that forthcoming service, called Disney+, will be available as a bundle along with its ESPN+ and Hulu offerings for $12.99—the same price as Netflix Inc. ’s most popular subscription plan.

Disney+ on its own will cost $6.99 at launch, the company has said.

Marketing for that service should begin in earnest at the end of this month, Mr. Iger said, and be featured by nearly every division of the company, from hotels to branded credit cards.

“ ‘Comprehensive’ is probably an understatement” for the marketing strategy, Mr. Iger said, calling the service “the most important product that the company has launched during my tenure in the job.”

Continued expenses related to launching Disney+, which requires dozens of hours of newly produced programming, should lead the company’s direct-to-consumer division to lose about $900 million in the quarter that ends in September, said Disney finance chief Christine McCarthy.

The Fox deal is still on track to produce about $2 billion in cost synergies by fiscal 2021, she added.

Profit in the company’s fiscal third quarter declined 40% to $1.76 billion, or 97 cents a share. Excluding charges related to the integration of the Fox properties and other items, profit fell to $1.35 a share from $1.87 a share. Revenue was $20.25 billion.

Analysts surveyed by FactSet had projected $1.46 a share, or $1.72 a share as adjusted, on $21.45 billion in revenue.

In the first complete quarter since the deal’s closing, Disney booked an impairment charge on the Fox flop “Dark Phoenix,” leading Mr. Iger to tell investors that his better-performing Disney studio was taking charge of the Fox operation.

Fox’s studio performance was “well below where we hoped it would be when we made the acquisition,” he said.

The 14-month delay between when the deal was announced and when it was completed likely contributed to the poor performance of Fox’s slate, he added, saying that “decision-making can grind to a halt” at a company when an acquisition has been announced.

Many workers at Fox spent those months unsure of whether they would be moving to Disney when the deal closed, and it had been unclear how some of Fox’s edgier movies would move forward in Disney’s family-friendly slate.

Fox assets in the studio segment contributed a $170 million loss tied to “Dark Phoenix” and other expenses.

The Fox team has been brought under the Disney wing, Mr. Iger said, adding that the “X-Men” franchise is now controlled by the company’s Marvel Studios, which has a nearly flawless record at the box office.

Given how long it takes to develop and produce a movie, Mr. Iger cautioned investors not to expect Fox’s studio fortunes to improve overnight.

“You’ll see those results in a couple of years,” he said.

Disney’s own movies have taken in more than $8 billion at the world-wide box office so far this year, an industry record that will only grow with the release of “Frozen 2” and “Star Wars: The Rise of Skywalker” in the coming holiday season.

The opening of a Star Wars-themed area at Disneyland unexpectedly cut into attendance at domestic theme parks, the company said, as some potential guests stayed away, worried about possible overcrowding.

While trade tensions between the U.S. and China haven’t depressed attendance at Shanghai Disneyland, Mr. Iger said the civil unrest in Hong Kong has hit traffic at its theme park there—a drop that will be reflected in the current quarter’s results.

https://www.wsj.com/articles/disneys...ps-11565123396