The Free Press, Mankato, MN

Community News Network

November 1, 2012

Disney's $4 billion 'Star Wars' deal spotlights Iger's bet

(Continued)

LOS ANGELES —

Iger, 61, is reinventing Disney's film business through acquisitions of popular animated and live-action characters.

"Marvel's The Avengers," the first film from that acquisition to be marketed by Disney, is the top movie of the year worldwide, with $1.51 billion in ticket sales, according to Box Office Mojo. The picture, Disney's biggest ever, led to a 24 percent jump in profit in the quarter ended June 30.

Iger is also using Pixar and Marvel characters as fodder for theme-park improvements, such as the Cars Land attraction that opened this year at the California Adventure park in Anaheim. Disney parks also feature "Star Tours" and "Indiana Jones" rides.

"The question is, could Lucasfilm have the same earnings power as Marvel," said Brett Harriss, an analyst with Gabelli & Co., in Rye, N.Y., who has a hold rating on the stock. "It's not a stretch to think that Lucasfilm could be as productive as Marvel."

Lucasfilm will generate 25 percent of its revenue this year from its film library and a slightly higher percentage from consumer-product licensing, Jay Rasulo, Disney's chief financial officer, said on the conference call. The balance comes from the company's video games, effects and sound businesses.

In 2005, when Lucasfilm released the last "Star Wars" picture, the company generated $550 million in operating income, Rasulo said.

The acquisition will dilute Disney's earnings per share by "low-single digit percentage points" in the current fiscal 2013 and 2014 and add to profit the following year when the new picture is released, he said. The company plans to repurchase an amount of shares equal to the 40 million issued in the next two years.

Lucasfilm's consumer-products revenue this year will be comparable to the $215 million Marvel generated in 2009, when Disney acquired it, Rasulo said, suggesting 2012 sales of about $860 million for all of Lucasfilm. Disney seeks to expand "Star Wars" merchandise beyond toys and sees international markets, now 40 percent of consumer-product revenue, as a growth opportunity, he said.

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