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'Avengers' + 'Star Wars' = big year for Disney

Who would win if Captain America fought Luke Skywalker? Why Disney, of course, which stands to bring in astronomical amounts of money this year from two big installments of two of the most popular film franchises ever

Ryan Nakashima (The Jakarta Post)
Los Angeles
Wed, May 6, 2015

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'Avengers' + 'Star Wars' = big year for Disney

W

ho would win if Captain America fought Luke Skywalker? Why Disney, of course, which stands to bring in astronomical amounts of money this year from two big installments of two of the most popular film franchises ever.

With its Marvel movie "Avengers: Age of Ultron" just having notched the second-biggest domestic opening weekend of all time and a new "Star Wars" movie coming this winter, analysts expect the company to post not only great movie studio results but a big uptick in merchandise revenue and profits this year. Everything from Captain America mugs to doggy Darth Vader Halloween costumes will likely get a lift.

"Avengers" has hauled in $664 million at theaters globally since its staggered release began two weeks ago, and buzz is already building for "Star Wars: Episode VII - The Force Awakens," set for release Dec. 18.

One indicator of the craze surrounding "Star Wars" is that a second teaser trailer for the film released two weeks ago has been viewed over 200 million times.

"The excitement around this movie is unlike anything we have ever seen before," CEO Bob Iger told analysts Tuesday.

Iger also told CNBC Tuesday morning that "Star Wars" is already the No. 1 franchise in the world for consumer products. The Walt Disney Co. plans a massive release of new merchandise surrounding the movie on Sept. 4, what it's calling "Force Friday."

"I think you can expect that the No. 1 franchise in the world is only going to strengthen," Iger told CNBC.

Second-quarter results released Tuesday are a good start. Earnings in the March quarter came to $1.23 per share, beating the $1.11 expected by analysts.

Studio results were better than projected, given a tough comparison to last year when the smash hit "Frozen" was released on home video. Parks attendance and guest spending were higher domestically even with higher ticket prices, and revenue and profits from goods like Hulk hands, Elsa dolls and lightsabers rose. Media networks profits slipped despite higher revenue, due to the higher cost of sports programming, including the new college football playoffs rights which ESPN splurged on.

Revenue rose 7 percent to $12.46 billion, also topping estimates for $12.28 billion.

Analyst Robin Diedrich with Edward Jones said that Disney's studio, its "lifeblood," is very healthy, as the company is preparing to unleash more Marvel films, a Pixar sequel to "Toy Story" and the start of several "Star Wars" movies over the next several years.

"With a very strong slate they have going for the next four to five years at least, we're looking for double-digit earnings from the company. We think there's still value in the stock at these levels," she said.

After initially climbing on the results, Disney shares closed down 22 cents at $110.81 on Tuesday. The stock has risen 38 percent in the last 12 months.

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Portions of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on DIS at http://www.zacks.com/ap/DIS (***)

 

 

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