With Fox, Disney Will Have an Even Bigger Footprint in Hollywood
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cc Friday, March 8, 2019 latimes.com/news With Fox, Disney will have an even bigger footprint in Hollywood By RYAN FAUGHNDER TIMES STAFF WRITERs Walt Disney Co.’s entertain- ment kingdom is about to get a whole lot bigger thanks to its pending purchase of 21st Century Fox assets, and the rest of Holly- wood has only just begun to grap- ple with the consequences of the company’s increasing power. The long-anticipated $71.3- billion acquisition will put the X- Men, Homer Simpson, the Avengers, Buzz Lightyear, Kylo Ren and the gang from “Avatar” under the same roof, giving the Disney CEO Bob Iger surrounded by some of Disney's old and new properties. Burbank company an unprece- (Robert Carter For The Times) dented share of film and television even greater clout from a stream- companies, talent agencies and pay franchises. ing standpoint, and even greater -TV operators. The deal, expected to close in clout from an exhibitor stand- “What you have here is the ma- the coming days, would boost Dis- point." kings of a behemoth in every sense ney’s share of the domestic box Disney’s ambitions have taken of that word,” said Tuna Amobi, a office to at least 40% and rein- on a new urgency with the devel- media industry analyst with force its stronghold in toys, theme opment of its upcoming streaming CFRA. “It's hard to think that this parks and cruise lines. The Mouse service, Disney+, set to launch late deal gives them more leverage House will have an unrivaled say this year, and its increased owner- than they already have, but it over when and how movies are ship of Hulu, both of which will does.” released. pose a challenge to Netflix. All Some industry insiders are just "Basically, they become the these moves have wide-ranging now coming to terms with the like- 800-pound gorilla in the media implications for the various stake- ly fallout of the historic merger, landscape,” said Lloyd Greif, holders in entertainment, including which reduces the number of ma- chief executive of L.A. investment movie theaters, streaming video bank Greif & Co. “It gives Disney jor studios from six to five over- a time when attendance is under ticket sales for “Iron Man 3” dur- night. long-term pressure from TV, ing a dispute over revenue splits. “I don’t think the industry has streaming and video games. Ad- Anxiety has been tempered by remotely digested what that’s go- missions rose 5% to 1.3 billion in the belief that Disney will avoid ing to do to the pulse and culture the U.S. and Canada last year, but extracting terms so draconian that of the industry,” said one producer, were still down slightly from 2016. they draw the notice of regulators. who requested anonymity to allow However, to the surprise of some Some exhibitors argue that they him to speak candidly without fear cinema operators, the U.S. Depart- will benefit from Disney having a of reprisals. ment of Justice approved the mer- greater share of the box office, be- Theater anxiety ger last year with no mention of cause the company has a strong track record of producing popular entertainment. Theaters should make up ground lost on box office by generating more revenue from concessions. "Obviously, it’s an industry- changing event,” said Adam Aron, CEO of AMC Entertainment. “But we think it’s an event that will be good for consumers, good for thea- ters and good for movie makers." Eric Wold, an entertainment analyst with B. Riley FBR, said he In 2013, AMC halted advance ticket sales for “Iron Man 3” during a dispute would be “surprised if they push over revenue splits. (FREDERIC J. BROWN / AFP/Getty Images) up rates across the board for every- With a greater share of box of- how Disney’s clout could impact thing. If Disney’s going to put its fice receipts, Disney could pres- exhibitors. marketing muscle and theme parks sure theater owners to fork over a “This is unquestionably bad for behind new titles, maybe that’s larger portion of the box office for the theater companies,” said Doug worth paying for. You’d rather pay its films. Disney already receives Creutz, a media and entertainment 65% for a billion-dollar film than more than 60% of box office re- industry analyst with Cowen & 50% for a $100-million film.” ceipts for its biggest movies, in- Co. “Disney has been dominant, But privately, industry execu- cluding the “Avengers” and “Star and they will dominate more tives caution against wishful think- Wars” pictures. That’s higher than now.” ing. Some theaters worry that the the typical 50% split for movies, Disney and the theaters have number of movies released theatri- and having more franchises will come to blows before. With the cally will shrink dramatically once improve Disney’s already formida- release of 2015’s “Avengers: Age the Fox deal closes. Disney focus- ble negotiating position. of Ultron,” the company’s de- es almost exclusively on expensive Cinema chains depend on mov- mands on exhibitors provoked a productions that draw huge global ies like the upcoming “Star Wars,” rare response from the National audiences, and Fox’s more mid- “Toy Story” and “Frozen” sequels Assn. of Theatre Owners, which level films may be scrapped. to fill seats, and denying those represents the exhibition industry. Then there’s the looming spec- movies screens is not an option at In 2013, AMC stopped advance ter of Disney+, which will feature original Disney content that by- passes theaters. The advent of Dis- pected to preview for investors at Analysts say Disney’s entry in- ney’s streaming offering and the an April meeting. Disney hasn’t to the streaming wars could slow continued rise of Netflix could ac- revealed its pricing plan, but has Netflix’s growth. Disney is also celerate the push by studios to col- slowly unveiled details, saying it pulling its movies from Netflix, a lapse the traditional 90-day gap will include a live-action series blow for the company that has between a movie’s theatrical re- starring Diego Luna that will take benefited from being the streaming lease and its availability for home place before the events of “Rogue home of films such as “Black Pan- viewing. While theaters have long One: A Star Wars Story,” along ther.” A streaming service with protested any changes to so-called with a Marvel show about Loki, Disney family content may be a no windowing, fearing damage to the popular trickster god from -brainer investment for parents of their business model, the prolifera- “Thor” played by Tom Hiddleston. kids who watch Disney and Pixar tion of streaming services makes The service will include movies movies. the decline of theatrical exclusivity and shows from five brands: Dis- Disney has also said it will all but inevitable. ney, Pixar, Marvel, Star Wars and boost investment in programming A blow for Netflix? Fox’s National Geographic. for Hulu, currently one of Netflix’s biggest competitors. Disney will own 60% of Hulu after it acquires Fox’s 30% stake in the Santa Mon- ica streamer as part of the deal. Disney is expected to bolster Hulu with edgier Fox programming from channels such as FX Net- works. “The leg up Disney and 20th Century Fox have over the newer streamers is they have a historical knowledge of the television busi- ness, and they have been more Diego Luna, with Felicity Jones, stars as Cassian Andor in "Rogue One: A open to being creative than ever Star Wars Story." Luna will reprise the role for Disney+. (Lucasfilm Ltd.) before,” said Kevin Crotty, head of Los Gatos, Calif.-based Netflix TV lit for talent agency ICM Part- has used its debt-financed war “These guys are and have been ners. chest to create a jaw-dropping an IP [intellectual property] jug- But Netflix executives insist amount of film and TV content, gernaut,” said Ric Kay, head of they’re not worried. The company tightening its grip on the viewing MUFG’s Media, Telecom & recently said it faces more screen- public by amassing more than 140 Sports Finance practice. "Now time competition from online vid- million global subscribers. It you’ve got greater capabilities, eo game “Fortnite” than other flexed its power recently by raising greater breadth, wider talent pool streaming services. prices by $1 to $2 a month. and even bigger libraries in Dis- “We compete so broadly with But Disney is about to mount a ney’s hands. This will help feed all of these different providers that serious challenge to Netflix’s their offerings and be attraction any one provider entering only streaming dominance with the points for subscribers." makes a difference on the margin,” launch of Disney+, which it is ex- said Netflix CEO Reed Hastings in a recent video call with analysts. Making agencies sweat ing on Disney and other traditional content-hungry tech giant or mo- The consolidation of the studios players — such as AT&T-owned bile phone carrier. will also have ramifications for WarnerMedia — to invest heavily Some distributors have already talent agencies. Having five major in productions in order to fill their tried to downsize, or even rethink film companies instead of six — own streaming services with new their strategies, to adapt to the rap- and fewer theatrical films in the content. idly changing industry in which industry — means Disney will be “I know there's been a lot of mid-budget comedies, adult dra- able to extract better deal terms concern, with people saying we're mas and thrillers struggle to com- from talent agencies trying to get losing a studio, and that's going to pete with franchise films released their filmmaker and actor clients hurt our business,” said ICM’s by Disney.