Disney to Take $75 Million Hit Over 'The Finest Hours'
But despite that miss, CEO Bob Iger said return on capital spent for filmmaking rose to 20 percent in 2014, up from 10 percent, which is about the industry average, and it rose to close to 30 percent in 2015.
Disney will take about a $75 million hit for The Finest Hours, its movie about heroism at the U.S. Coast Guard that made just $40 million worldwide, CEO Bob Iger said Tuesday at the Deutsche Bank 2016 Media, Internet & Telecom Conference in Florida.
Mostly, though, Disney's film studio is firing on all cylinders, and Iger gave much of the credit to Marvel, Pixar and Lucasfilm.
Those acquisitions, he said, "exceeded expectations by a lot."
Reminiscing a bit, Iger related to the Wall Street analysts in attendance that when he was interviewing for the CEO job, he told the board of directors that distribution was going to be a commodity and if he were in charge he'd acquire content creators, and he even named Marvel, Pixar and Lucasfilm as his top targets.
Since those acquisitions and including Disney Animation — since Pixar brought that asset new management — Iger said 26 movies from those studios have been made, and 25 "have been real successes."
In fact, he said, those movies have earned an average of an astounding $760 million each at the worldwide box office, plus they made plenty more when you throw in money earned from TV, consumer products and theme-park attractions.
Iger said that return on capital spent for filmmaking rose to 20 percent in 2014, up from 10 percent, which is about the industry average, and it rose to close to 30 percent in 2015.
He also defended the recent controversial decision to hike prices at theme parks in California and Florida for peak days. The CEO said Disney had been raising prices practically annually, but this time they wanted to do it "smartly" in a way that also managed crowding. There were "just too many people" at the parks on some days, he said.
The massive park in Shanghai opens in three months, and Iger said that with transit services 300 million people will live with a three-and-a-half hour commute to the new theme park. On the downside — in the near term, at least — Disney will take $300 million in pre-opening costs.
Beyond theme parks, China represents a huge opportunity, given it could become the biggest market for films next year or the year after that. But TV is trickier there, since regulators will only allow Disney to launch shows, not channels, Iger said.
As has been the case since August when Wall Street punished Disney's stock for subscriber losses at ESPN, Iger touted the network's performance and potential, saying it will be part of any skinny bundle craved by sports fans.
ESPN, he said, will remain an engine of growth in both operating income and revenue, but "it doesn't mean its smooth," Iger said, given contracts for sports rights need renewals periodically.