Disney Expects 'The Lone Ranger' to Cost Studio up to $190 Million

6 Aug, 2013 By: Erik Gruenwedel

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Marketing cost associated with ‘The Lone Ranger’ negatively impact studio bottom line

Walt Disney Studios Aug. 6 said it expects to incur from $160 million to $190 million in impairment and other costs in the fourth quarter related to the box office failure of The Lone Ranger, Jay Rasulo, CFO of The Walt Disney Co., told analysts.

In addition, Rasulo said he expects the studio to take an additional $45 million hit when factoring in the strong home entertainment results from Marvel's The Avengers during the previous-year period. The Avengers ranks the third-highest grossing movie in history. Marvel's Iron Man 3, which generated more than $407 million at the domestic box office, hits retail Sept. 24, just six days prior to the end of the fourth quarter.

Meanwhile, the studio reported third-quarter (ended June 30) operating income of $201 million, down 36% from operating income of $313 million during the previous-year period. Studio revenue decreased 2% to $1.6 billion primarily due to a decrease in worldwide theatrical distribution results.

Lower theatrical results reflected pre-release marketing costs for The Lone Ranger and the performance of Iron Man 3 in the current quarter, compared with The Avengers in the prior-year quarter, partially offset by better performance of Monsters University in the current quarter, compared with Brave in the prior-year quarter.

 

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