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Monday, June 10, 2019

Disney’s Purchase of Fox a Decision for the Long Run, Not a Short-Term Hit

by Ray Keating
June 10, 2019

Accusations of businesses looking only at the short run usually are hurled by politicians, who, of course, specialize in short-run decisions. In reality, business owners and CEOs make decisions for a wide variety of reasons, and few, if any, are about trying to get a short-term kick at the expense of long-run well-being. 

The latest example is the purchase of Fox by Disney. We’re seeing via the box office that this acquisition wasn’t about boosting Disney’s bottom line in the short term.

When talking about 2019 Disney movies that were in the Disney column prior to the Fox merger, the House of Mouse is looking good in the short run, and for further building its brand and bottom line over the long haul. Disney is three for four so far, with the box office hits being Captain Marvel  (global gross of $1.13 billion), Avengers: Endgame ($2.73 billion, so far) and Aladdin ($607.6 million, so far), with Dumbo ($350.6 million) being the miss.

And it’s hard to see a miss coming among the pre-Fox-merger Disney line-up, with Toy Story 4The Lion King, Maleficent: Mistress of Evil, Frozen II and Star Wars: The Rise of Skywalker on the way through the end of the year.

However, the 20th Century Fox movies being released post-merger with Disney is a different story. Breakthrough offered a nice return with a box office take at $50.2 million on only a $14 million production budget. But it got ugly with the next two films. 

The botched Tolkien movie didn’t appeal to Tolkien fans, and hence it made a measly $7.7 million. 

And then there’s Dark Phoenix, the X-Men movie that just opened on June 7. It took in only $32.8 million domestically in its opening weekend, and a total global take of $136.6 million. Oh yes, and critics hate it, and audiences are less than pleased. With an enormous budget – widely reported at $200 million – Dark Phoenix is on its way to being a big box office bomb.

And the remaining Fox releases for 2019 look like a mixed bag. And while no one knows in the movie business what will hit and what will miss until the lights go down for audiences, the keys appear to be Ad AstraTerminator: Dark FateFord v. Ferrari and Spies in Disguise.

Ad Astra and Ford v. Ferrari particularly look intriguing. But we’ll have to see.

The sure bet, if you will, for Disney with the Fox deal was the acquisition of a wide assortment of IP that Disney will use, such as for its streaming service Disney+, and build on as well. For example, with Fox never having done anything well with the Fantastic Four and ending its X-Men run with two busts (Dark Phoenix and X-Men: Apocalypse) – while Logan was quite good, I’m not sure what to do with Deadpool, and who knows what will happen with The New Mutants – it will be Disney’s turn with these and a wide assortment of other properties to reboot and re-energize. 

That’s a long-run thing.

Ray Keating is the editor, publisher and economist for DisneyBizJournal.com, and author of the Pastor Stephen Grant novels. He can be contacted at  raykeating@keatingreports.com.

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