March 20, 2012

DISNEY, 'JOHN CARTER' AND THE $200M WRITE-DOWN (WSJ, DH, THR)

By Nancy Tartaglione-Moore

Disney on Monday said it expects to take a $200 million write-down on "John Carter" following the mega-budgted sci-fi pic's weak box office performance. The movie studio is now expected to report an operating loss of between $80 million and $120 million for its fiscal second quarter ending March 31.

So far, "John Carter" has taken about $53.2 million at the domestic box office with about $130.8 million outside the US and Canada.

"It certainly didn't meet the expectations of what I wanted or what I needed," Disney Studios chairman Rich Ross told The Wall Street Journal last week.

Deadline has parsed investor and analyst reactions and found that while the loss far exceeds forecasts of about $100-$150 million, the Street is disappointed, but not stunned. Disney shares were down less than 1% in after-hours trading and the movie studio accounts for only 16% of the company's revenues and 7% of its profits. Per Deadline, analyst David Joyce said he believes "investors will look forward to the summer franchise releases" which include "The Avengers" and Pixar's "Brave." But there's a larger lesson to be learned here. BTIG analyst Rich Greenfield says, "Failed theatrical movies increasingly don't sell at all in the DVD market."

The Hollywood Reporter notes that "John Carter" makes it four consecutive years that Disney has had to take a large write-down because of a poor performing movie, following "Mars Needs Moms," "Prince of Persia: The Sands of Time" and "The Sorcerer's Apprentice."

(We recently looked at the what went wrong scenarios here.)

Disney executives now say they have taken a tougher look at production budgets for its films, most notably for "The Lone Ranger," The Journal notes.