Back in October 2012 when Disney purchased LucasFilm it stated:
Acquisition continues Disney’s strategic focus on creating and monetizing the world’s best branded content, innovative technology and global growth to drive long-term shareholder value.
https://thewaltdisneycompany.com/disney-to-acquire-lucasfilm-ltd/
So let’s see how Disney performed against its own objectives.
Deadline Hollywood published its estimated profit to Disney/LucasFilm for The Rise of Skywalker and it’s not good.
Net profit of US$300 million on worldwide gross box office of US$1.074 billion.
We updated our code and ran the numbers through our little model. The merchandising assumptions are as in our previous post. All we have to do is update the dictionary ‘star_Wars_Finance’ in our previous post’s code as follows:
star_Wars_Finance = {
'movie' : ['purchase','theforceawakens', 'rougeone', 'thelastjedi','solo','theriseofskywalker'],
'fin_year' : [2013, 2016, 2017,2018,2018,2020],
'gross_film' :[-4.05,2.066,1.056,1.321,0.3929,1.074],
'profit_film' : [-4.05, 0.78, 0.320, 0.417,-0.080,0.3]}
and the previous code will run.
All of the disclaimers in the previous post apply:
Disclaimer alert! We’re relying on various websites as sources for information, and we have no idea what is credible and what is not, so please treat this as a bit of fun rather than an authoritative analysis.
https://practicaleconomics.org/disney-star-wars-the-finances/
And please read our Disclaimer and do not under any circumstances make any financial decisions on the basis of this post.
Anyway, running the code gives the result:
Disney Star Wars Profit (2012 $US billion)
Bottom line is that, once the discounted_profit column is summed, Disney’s net loss from its 2012 LucasFilm purchase is US$2.01 billion dollars (in 2012 dollars).
The Rise of Skywalker needed to be big – it wasn’t.
In fact it needed to be bigger than was really possible, given the under-performance of The Last Jedi and Solo.
It’s also reasonable to ask whether US$4 billion was ever a realistic price for Disney to pay for LucasFilm?
Disney finally appears to be getting its act together with the Madalorian, although who knows what’s happening in LucasFilm at the moment. However, the discount factor relative to the purchase price is now getting very onerous. In 2021 every dollar profit earned is less than 50 cents compared to the 2012 purchase.
It’s trying to minimize losses now.
Compared to ‘creating and monetizing the world’s best branded content, innovative technology and global growth to drive long-term shareholder value’ much has been written on whether its content is ‘best branded’.
Our focus is the the economics/finances, and there is no other way to put it than Disney has destroyed a large amount of shareholder value with its LucasFilm purchase and Star Wars films.
Probably around US$2 billion dollars worth.
Is our analysis accurate? Or at least not completely off the planet?
Let us know in the comments.