September 17, 2019

Profit Flat at Disney, as ESPN and Parks Smooth Setbacks in Film

The film, released on July 3, cost about $400 million to make and market but has taken in only $175.6 million worldwide, roughly half of which goes to theater owners. While other studios have also had flops this summer, “The Lone Ranger” is by far the biggest: Disney on Tuesday said losses from the film would total $160 million to $190 million, depending on how well it does overseas.

For the fiscal third quarter that ended on June 29, prerelease marketing expenses for “The Lone Ranger” contributed to a 36 percent decline in operating income at Walt Disney Studios. That decline offset growth from Disney’s cable television and theme park units, and Disney reported an overall profit of $1.85 billion — essentially flat from the same period a year ago.

That profit translated to $1.01 a share. In the year-ago quarter, net income was $1.83 billion or $1.01 a share. Revenue climbed 4 percent, to $11.58 billion.

Speaking to analysts in a conference call, Robert A. Iger, Disney’s chief executive and chairman, did not point fingers at “The Lone Ranger,” starring Johnny Depp, directed by Gore Verbinski and produced by Jerry Bruckheimer.

“We still believe that a tent-pole strategy is a good strategy,” Mr. Iger said, referring to big-budget movies. “You still have to make really strong films.”

The full write-down for “The Lone Ranger” will be taken in the current quarter, the fourth in Disney’s fiscal year.

As usual, the Disney division that includes ESPN drove the company’s financial performance; operating income at the Media Networks unit rose 8 percent, to $2.3 billion. ESPN benefited from contractual rate increases from cable providers and higher advertising sales, although programming costs also climbed. In particular, ESPN had to pay more for Major League Baseball rights.

Even though the Easter holiday fell in a different quarter this year, operating income at Disney’s theme parks increased 9 percent, to $689 million. The company said growth came from higher spending at Walt Disney World in Florida and Disneyland in California, both of which set attendance records.

In addition to trouble at its live-action Disney movie label, the entertainment giant faced trouble in the gaming and broadcast television divisions.

As expected, Disney’s video game and Web unit continued to struggle before the release later this month of a major gaming initiative called Infinity. Interactive operating losses widened to $58 million from $42 million.

Operating income at the ABC broadcast network and a string of local television stations fell 21 percent, to $213 million, because of higher prime-time programming costs, lower sales of reruns and a decline in advertising revenue tied to a decline in ratings.

Mr. Iger said he is “bullish” on the new programs ABC plans to introduce in the fall, but added, “until the season unfolds, you can never quite tell.”

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Little Interest in ‘Lone Ranger’ Is a Blow for Disney

Walt Disney Studios spent the July 4 holiday watching its expensive action western, “The Lone Ranger,” disintegrate in a box-office collision with a strong performance by the goofy little animated heroes of Universal Pictures’s “Despicable Me 2.”

By Friday morning, “Despicable Me 2” had taken in taken in $59.5 million at the North American box office since its Tuesday night opening, according to an early estimate by, and appeared to be headed for five-day total of $115 million or more. Its projected total is sure to more than double the five-day take for “The Lone Ranger,” which by some estimates is expected to take in less than $50 million for the holiday, after collecting just $19.5 million in domestic theaters since Tuesday night.

Disney’s film stars Johnny Depp, was directed by Gore Verbinski, who joined Jerry Bruckheimer as a producer to revive the studio’s “Pirates of the Caribbean” team, and cost about $225 million to make, according to a person briefed on the expenses who spoke on condition of anonymity because of studio policy. That high cost came in part because of the wreckage from the movie’s railroad action scenes.

But critics were harsh. The film scored 37 of a possible 100 on the service, and A.O. Scott, reviewing for The New York Times, called it “a frantic grab bag of plots and themes, a semester-long Westerns 101 college course crammed into two and a half hours and taught by a professor whose lecture notes were rearranged by a gust of wind on his way to class.”

The audience, meanwhile, turned away from a film that seeks its appeal in Mr. Depp’s wisecracking reinterpretation of Tonto, the Native American sidekick to the masked ranger, John Reid, played by Armie Hammer, who has loomed large in American pop culture since the broadcast of a radio drama in the 1930s.

A Disney spokesman on Friday declined to discuss the film’s performance.

Early Tuesday, the analyst Doug Creutz, with Cowen Company in San Francisco, was quoted in a report from the Bloomberg News service, predicting that Disney would eventually write off $100 million on “The Lone Ranger.”

That would be about half the write-down it took on another large-scale film disaster, “John Carter,” which cost about $350 million to make and market, and collected only about $282 million at the worldwide box office after its release in March 2012. (Studios keep only part of the box office receipts, which are shared with exhibitors, but also collect money from home entertainment and other sales.) A year earlier, Disney had suffered a similar disaster with another expensive flop, “Mars Needs Moms.”

Alan F. Horn, a veteran Warner executive, became chairman of Walt Disney Studios last June, after “The Lone Ranger” was already being made.

Fierce competition from a crowded slate of blockbusters this summer leaves little room for “The Lone Ranger” to expand its appeal in coming weeks. On July 12, Warner Brothers and Legendary Pictures will open “Pacific Rim,” a robot battle fantasy that was promoted this week in trailers attached to “The Lone Ranger,” while Sony Pictures Entertainment will release “Grown Ups 2,” a sequel to an earlier comedy hit, which featuring Adam Sandler, Kevin James and Chris Rock.

By midday Friday, Disney shares were largely unchanged.

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