The consequences of two major Hollywood studios merging became clearer Tuesday as Disney’s film empire reported a loss of $170 million in the third quarter related to the titles it inherited from 20th Century Fox, led by the pricey superhero pic Dark Phoenix.
“The Fox studio performance…was well below where it had been and well below where we’d hoped it would be when we made the acquisition,” Walt Disney Co. CEO Bob Iger said during an earnings call, acknowledging that Fox leadership was in a difficult spot between the time the merger was announced in December 2017 and closed in late March 2019.
Still, the public lashing couldn’t have been easy to hear for Hollywood veteran Emma Watts, who is among a small cadre of Fox film executives who made the leap to Disney, and is the vice chairman of the 20th Century Fox label.
Rumors have abounded in recent weeks that Watts was seeking employment elsewhere. However, sources tell The Hollywood Reporter that she’s striking a new contract with Disney and will keep overseeing the marquee Avatar, Planet of the Apes and Kingsman franchises, along with awards hopeful Ford v. Ferrari, set to hit theaters this fall, and Free Guy, a July 2020 comedy starring Ryan Reynolds, among other projects. And there Fox and New Regency’s Brad Pitt-starrer Ad Astra, which debuts in September after making its world premiere at the Venice Film Festival.
Watts is also overseeing the next installment in the Murder on the Orient Express series and Steven Spielberg’s West Side Story, set for release over Christmas 2020. (Fox’s superhero properties, including Deadpool and X-Men, now go to Kevin Feige’s Marvel.)
In discussing the $170 million deficit with investors, Iger said that Disney Studios co-chairmen Alan Horn and Alan Bergman are working with Watts to “consolidate and to cut back on the number of releases so as to focus on the kind of release that we hope would come out of that studio.”
Iger’s comments confirmed what Hollywood insiders have known for months: Fox is now a pared-down label that lives alongside Marvel Studios, Lucasfilm, Disney’s live-action studio, Pixar and Disney Animation. Sources say the 20th Century Fox silo could make 10 or more movies a year, with half or more headed directly for Disney’s new streaming service or Hulu, now controlled by Disney.
Continuing, Iger said, “it will probably take a solid year or two years before we can have an impact — obviously it takes longer on the development side — but an impact on the films that are actually in production. We’re all confident that we’re going to be able to turn around the fortunes of Fox live action and you’re going to see those results in a couple years.”
“I don’t mean to cast aspersions at any individual at all — it was a very difficult transition for that business,” Iger added during the earnings call.
Whatever the cause, Fox is currently a dismal No. 7 in domestic market share for the year (even behind Lionsgate) at 3.6 percent. Dark Phoenix, costing $200 million to produce before marketing, earned just $252.4 million at the worldwide box office, while the comedy Stuber also flamed out. “If these results had happened under the old ownership — the Murdochs — heads would have rolled,” says a former Fox executive.
Fox’s last major hit was Bohemian Rhapsody, which grossed north of $900 million pre-merger following its release in fall of 2018. In terms of mining the 20th Century Fox library for streaming purposes, Iger said Tuesday that Watts and her team will be rebooting Night at the Museum, Diary of a Wimpy Kid, Home Alone and Cheaper by the Dozen for Disney+.
Iger wasn’t as specific when it came to Fox Searchlight, the specialty label and home of multiple Oscars that’s overseen by Steve Gilula and Nancy Utley. “Fox Searchlight will continue to make the prestige films it’s known for, while expanding its high-quality original storytelling into the [direct to consumer] space,” Iger said.
Searchlight isn’t in the business of big-budget productions, and only releases a handful of movies annually. In the eyes of many analysts, a Searchlight movie that doesn’t work is merely a rounding error for Disney.
