Disney Film Studio Hopes for Texas-Size ‘Alamo’
LOS ANGELES (Reuters) – Walt Disney Co. is hoping its new movie “The Alamo” will put up a good fight at U.S. box offices this Friday after a quarter in which it failed to deliver a hit and lost a lucrative film deal with the makers of “Finding Nemo.”
The $98 million “Alamo,” a re-telling of 1836’s legendary battle in Texas’ fight for independence from Mexico, is a huge bet for the studio. Movies have fueled Disney’s earnings for the past several quarters with hits like “Nemo,” which it co-produced with Pixar Animation Studios Inc.
In January, Pixar walked away from renewing a long-term film deal with Disney that had produced five smash hits with $2.5 billion at box offices globally. Last week, Disney debuted its animated “Home on the Range” to poor ticket sales of $14 million and No. 4 placement at domestic box offices.
“A lot is riding on the Alamo,” said Paul Degarabedian, head of movie-tracking service Exhibitor Relations. “This is a movie that they have a lot invested in. They’ve really been pushing it on the marketing side.” The Alamo debuts April 9.
Degarabedian said Disney’s box office results so far this year are similar to 2003 except for one crucial bit. Last year, it released comedy sensation “Bringing Down the House” in the first quarter to $132 million in domestic ticket sales.
Disney’s six movies this year had brought in $197 million in ticket sales by April 4, while the five films last year had grossed $286 million by the same point, he said. He added that most of the studio’s fortunes rested on the summer.
SOME HOT, MOST NOT
In a teleconference with investors last week, Disney’s chief executive officer Michael Eisner said the movie studio group “is on fire,” but the heat has been lukewarm at best through 2004’s first three months.
“Range” cost $80 million to $100 million to produce and may lead Disney to take a financial charge, some analysts said — although others expect it to gain speed overseas.
Western-style epic “Hidalgo” cost $85 million to $90 million to make, and its box office is only at $60 million.
Disney’s top-grosser so far this year is ice hockey movie “Miracle” with a comparatively small $63 million in ticket sales, but it was made on a relatively low budget.
Eisner said last week word-of-mouth and expected reviews for “Alamo” looked good. “I won’t oversell it because I don’t want to disappoint,” he told investors on a conference call.
Studio chief Dick Cook told Reuters at the “Alamo” premiere in San Antonio that “No one movie makes or breaks a studio … that is crazy.”
But a poor performance by “Alamo” would put pressure on Eisner, Schwab SoundView analyst Jordan Rohan said in a research note.
Moreover, poor performance could also nudge the board toward negotiating with Comcast Corp., the cable company eager to buy Disney, Rohan said.
“With or without Eisner, if Comcast takes over Disney at a premium, the stock will go up,” Rohan added.
Beyond “Alamo” the bottom line may look less black this year partly because 2003 was so good.
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“Last year was just a phenomenal year,” said David Miller, financial analyst at Sanders Morris Harris.
In 2003 the studio had an internal rate of return on its movies of 25 percent, excluding “Nemo,” Miller said, quoting chief financial officer Tom Staggs. This year, Miller expects between 9 percent and 13 percent.
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