Disney CFO Won't Predict 'Banner Year' for Film Studio
Walt Disney CFO Jay Rasulo declined on Wednesday to predict 2014 will be a "banner year" for the conglomerate's film studio.
"2007 and 2008 were like banner years for our studio ... and I'm not going to say that this year is going to be a banner year," Rasulo said. "But the first half of this year we delivered like over $800 million in operating income. Those years, my recollection is they were over $1 billion, maybe a billion and change or something like that. So we're well on our way."
Rasulo was speaking at the MoffettNathanson Media & Communications Summit in New York.
The Wall Street analysts in attendance were also reminded that the animated hit Frozen, along with Thor: The Dark World, helped Disney to report last week that quarterly operating income at its film studio more than quadrupled year-over-year to $475 million.
The CFO reiterated that Disney's love for franchise films can generate consumer products, theme-park attractions and the like. Frozen is an example, since it has so far generated twice as much in sales at Disney Stores than did Tangled after the same amount of time, and consumers are clamoring to see Frozen characters at the parks.
"I think we have taken the studio strategy down to say, 'OK, let's be very particular, very careful about what we do in terms of blockbuster, live action, to make sure that it does fit into some franchise strategy. I think that gives us a higher success rate and allows us to do what we do best," he said. "Because if you do a blockbuster that doesn't have any of that aftermarket, then you're not utilizing that infrastructure that you've built up."
Acquisitions like Pixar and Marvel "accomplished everything we hoped for and more" for the film studio and beyond and he expects similar returns from Lucasfilm beginning with Star Wars: Episode VII next year. "That's the big inflection where you start to see the payback. Then there's no looking back."
The CFO also said Disney's recently acquired Maker Studios, a network of 55,000 YouTube channels, will be used to push out shortform digital content promoting Star Wars and Marvel. He called Maker "a very kindred spirit ... they're smart people and they have good taste."
Rasulo called Disney "the ultimate multiplatform business in the media space," though he acknowledged things could be better at ABC.
"Do we need better shows? Yes, we need better shows," he said. He added, though, that there's been "a lot of buzz" from advertisers at the TV upfronts this week.
He also went on about the opportunity with Netflix, Amazon.com and other digital distributors of premium content because they've not only helped Disney to further monetize new movies and shows but have also given more life to its library content.
"There's never been a better time to create great content," he said.
Rasulo also reminisced about Disney California Adventure being a lackluster park that wasn't drawing enough visitors from overcrowded Disneyland next door. But vast improvements at the former "definitely solved that issue," he said. "We see enormous growth ahead of our expectations," he said of the side-by-side parks in Southern California.