'John Carter' Debacle: Inside the Fallout for Disney (Analysis)

5:00 AM PST 03/15/2012 by Kim Masters
Frank Connor/Disney
"John Carter"

The sci-fi debacle opens up new questions about the studio's weak pipeline and overall movie strategy.

This story originally appeared in the March 23 issue of The Hollywood Reporter.

Now that John Carter has landed with a resounding thud, Hollywood is trying to decipher whether Disney will conclude that it needs to change the guard or at least tweak its strategy when it comes to homegrown live-action films.

Since chairman Rich Ross, 50, arrived in October 2009 and set out to remake the film studio, competitors and others have been watching to see whether the former cable television executive could find his legs in the movie business. Some in the industry -- pointing to marketing missteps and a sputtering pipeline -- had turned thumbs down even before Carter failed, bringing an expected write-down of more than $150 million. Others believe that Ross, perceived as a favorite of Disney chief executive Robert Iger, will escape blame and be judged instead on next year's slate.

PHOTOS: 'John Carter' Red Carpet Premiere Arrivals

From the start, Ross' plan of attack was clear: He would get live-action movies from key suppliers -- Marvel, producer Jerry Bruckheimer and DreamWorks (which pays Disney a fee to distribute its films). Pixar and Disney's animation unit were to provide a reliable stream of cartoon hits. The studio's limited live-action slate would be based on branded, marketable concepts that would flow through the Disney machine -- from consumer products to theme parks. Ross did not rely on experience, letting go staffers including distribution chief Mark Zoradi and marketing chief Jim Gallagher and bringing in producer Sean Bailey as his production head and outsider MT Carney to run marketing. (Carney left the studio in January.)

Ross' makeover has yet to produce strong results. Although Ross' predecessor, Dick Cook, put Carter into production at a budget just under $200 million, the head of a rival studio says Ross bears responsibility for the ultimate, significantly higher cost as well as the weak opening ($30.2 million domestically plus $69.1 million worldwide) because he oversaw the production and marketing. Disney's only other in-house live-action movie for the year is The Odd Life of Timothy Green, a small film with Jennifer Garner and Joel Edgerton that's set for release in August. "They've greenlighted one movie [for 2012]," says this competitor. "How is that possible?"

At the same time, this executive notes, movies from Disney's other live-action suppliers have fallen short for the year. Ross' fight to dial back the budget on Bruckheimer's Lone Ranger, with Johnny Depp, pushed the release to May 2013. (The budget was trimmed from $250 million to $215 million.) And DreamWorks, facing money woes, has only two movies: Steven Spielberg's Lincoln and a small drama, Welcome to People.

FILM REVIEW: John Carter

By far the brightest spot in live-action this year is Avengers, Disney's first release from Marvel, opening May 4. That film should do big box office, and Disney hopes the Marvel investment will begin to show results. (Disney paid more than $4 billion to acquire Marvel and an additional $115 million to Paramount for rights to Avengers and Iron Man 3, set for release in 2013.) But competitors say one Marvel movie is not enough to offset the lack of product in the pipeline. "What should have happened is Rich should have stepped up and filled in the gaps," one says. Disney declined comment.

Certainly a company of Disney's heft can absorb the Carter loss; the film's failure has not made the smallest dent in its stock price. "A big write-down in a single movie … should not impact next year's earnings," says analyst Alan Gould of Evercore. (At Disney's annual meeting March 13, CFO Jay Rasulo said it was too early to analyze the financials of the film.)

But even if Carter inflicts no lasting damage, several executives say Disney cannot afford to let live-action production languish. For one thing, says a competitor, the film studio does not have enough movies flowing through its pipeline to justify its overhead (4,000 employees, including Pixar and animation). Another top exec says the shortfall creates longer-term problems. "The movie business is a brand-building business," he says. "They need fresh intellectual property to help drive the machine, and that comes primarily from the movie business."

Another says Disney's top executives -- including Iger -- are paying a price for their inexperience in movies and for focusing too heavily on brands and products. "If the first thing discussed in a meeting is merchandise and sequels, you're probably going to lose money because you're not talking about the movie," he says. As to how Disney will react to its issues in live action, industry observers are split. Some believe Iger might be forced to make a management change in the wake of Carter, after some interval. ("You don't do it so close to the event," says one. "It's too obvious.") Some sources also say that the influential John Lasseter, head of Pixar and chief of Disney animation, has expressed concern to Iger about the lack of experience at the studio. (A rep says Lasseter "remains supportive of the team at Disney.")

Most doubt that Iger will make changes, despite studio operating profit being down 20 percent in fiscal 2011, to $656 million. They believe he likes Ross and dislikes the movie business and will continue to limit the studio's role in generating live-action films. If so, they say that decision is baffling. "You have the Disney machine," says a competitor. "They could, a few times a year, turn out $15 million, $20 million movies that they could pop out on a weekend."

Others believe Ross will be judged on results from 2013, when he will have a fuller pipeline including two significant bets: Lone Ranger and Oz: The Great and Powerful, a prequel to The Wizard of Oz directed by Sam Raimi. (Maleficent, with Angelina Jolie, is shooting this summer but is not dated.) And other Disney suppliers will contribute potential hits: Pixar will add the prequel Monsters University, and DreamWorks will bring the Spielberg-directed sci-fi movie Robopocalypse. Marvel will contribute Iron Man 3 and Thor 2.

But once again, the two home-grown Disney films -- Lone Ranger and Oz -- are expensive $200 million-plus bets. And the head of a rival studio says that puts Disney in the position of taking on big risk with too few smaller movies to hedge the bet. "A good analogy is Moneyball," he says. "You can't just have home-run hitters. You've got to have a few movies where you just try to get on base."

♦♦♦♦♦

THE DISNEY BLAME GAME: Despite Disney CEO Robert Iger's reported wish that there be no finger-pointing over the failure of the $275 million movie, this is Hollywood -- fingers started to point before it was released. The dreaded digits are aimed at one or more of these candidates.

Andrew Stanton: The brilliant Pixar talent behind Finding Nemo and WALL-E, Stanton had never worked in live action before. Not only were there pricey reshoots, but sources say he had a heavy hand in marketing decisions.

Rich Ross: With Carter in motion when he took over as studio chairman in October 2009, could Ross have taken on Stanton and Pixar by pulling the plug or slashing the budget? Maybe not -- and the rest is history.

MT Carney: The Disney marketing chief was an outsider whose inexperience in the movie world showed. But on this one, Stanton overruled her -- and she's been gone since January.

Dick Cook: The former Disney studio chairman agreed to make the film at just under $200 million (it went up due to reshoots). When he was ousted in September '09, the script wasn't final and the movie was still being cast.

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