Disney Posts $84 Million Q2 Loss8 May, 2012 By: Erik Gruenwedel
Box office fiasco ‘John Carter’ undermines studio, despite weak comparisons with last year’s ‘Mars Needs Moms’
Walt Disney Studios reported a second-quarter operating loss of $84 million, compared with operating income of $77 million during the previous-year period.
The loss was attributed to the North American box office failure of sci-fi actioner John Carter — a perceived tentpole title with a $250 million budget that the studio wrote off financially just weeks after its March 9 release, despite generating $200 million at the international box office. The film has generated $70 million to date domestically.
The “Carter” debacle, which cost Walt Disney Studios chairman Rich Ross his job, contributed to the studio reporting a 12% decline in quarterly revenue to almost $1.2 billion, compared with revenue of more than $1.3 billion last year.
Year-to-date, studio revenue is down 14% to nearly $2.8 billion from more than $3.2 billion. Operating income is down 27% to $329 million, compared with $452 million last year.
How bad was “Carter” to the Disney’s bottom line? Coming into the second quarter, Disney’s year-over-year comps were against hits Tron: Legacy and Tangled, as well as previous debacle Mars Needs Moms.
Parent The Walt Disney Co. committed exactly three sentences to studio results in its Q2 fiscal press release. CEO Bob Iger and CFO John Rasulo all but ignored studio results in prepared remarks during the fiscal call with analysts.
On the bright side, the Q2 studio results come just days after Disney-owned Marvel franchise film The Avengers shattered domestic box office records with a $207.1 million opening weekend, and a global performance of more than $702 million to date. The movie, which could top $1 billion in global ticket sales by Mother’s Day, has already been greenlighted for a sequel, Iger said.
The CEO said Disney would release Thor 2 and Iron Man 3 in 2013, with Captain America 2 slated for 2014. He said there are no plans to buy the Marvel X-Men characters from 20th Century Fox. Indeed, Iger said Marvel has 'a slew' of unnamed characters to mine for future projects — including theme parks in California, Europe and Asia (but not Florida) — negating the need to buy Marvel characters under license to other studios.
"What you're essentially seeing here is a true franchise not necessarily in the making, but having been made and launched," Iger said. "The box office is only one part of it. There are multiple opportunities to continue to mine these great set of characters."
When asked if a studio chairman replacement for the departed Ross was necessary in light of the autonomous management structure aligning Pixar Animation and Marvel under the Disney corporate umbrella, Iger — without indicating the status of Ross' replacement — said the studio played an integral role beyond a film's theatrical release, including marketing, distribution, catalog and live entertainment, among other issues.
"This is a business that probably requires someone to run it," he said.