Analysis of Disney Lucasfilm Purchase for $4.05B

Yesterday, the Walt Disney Company surprised the world by announcing their acquisition of Lucasfilm Ltd., the entertainment company founded by George Lucas and home to one of the iconic pop culture franchises, Star Wars.  Under the terms of the agreement, the transaction value is $4.05 billion, with Disney paying approximately half in cash and issuing approximately 40 million shares at closing (i.e., George Lucas’ retirement fund).  In addition to the Star Wars and Indiana Jones franchises, Disney will acquire all of Lucasfilm Ltd.’s operating businesses – including Industrial Light and Magic and Skywalker Sound.  Continue reading for our analysis of the purchase, and what it means for Disney and Star Wars fans.

Disney CEO Bob Iger and "Star Wars" Creator George Lucas at Walt Disney World

Walt Disney Co. president and CEO Bob Iger (left) and "Star Wars" creator George Lucas (right) join "Star Wars" villain Darth Vader (center) May 20, 2011 at Disney's Hollywood Studios theme park in Walt Disney World during grand opening ceremonies for "Star Tours -- The Adventures Continue." Photo by Kent Phillips, © Disney Enterprises, Inc.

Disney’s video of CEO Bob Iger and George Lucas discussing the announcement.

First Pixar, followed by Marvel Studios, and now Lucasfilm Ltd., this is Bob Iger’s legacy as CEO of the Walt Disney Company.  He has shored up Disney’s creative properties with other successful entertainment brands and is exploiting them to “fullest franchise potential and maximum value.”  The Lucasfilm acquisition will impact three major areas for Disney’s bottom line including movies, merchandising, and the theme parks.  Let’s look at each one separately.

MOVIES

Scene from Star Wars Episode 1

Jedi Knights Qui-Gon (Liam Neeson, left) and Obi-Wan (Ewan McGregor) battle Sith Lord Darth Maul. © Lucasfilm, Ltd., all rights reserved

 

Plans are already underway to complete the Star Wars saga with Episodes VII – IX, the first film to be released in 2015.  As stated by Bob Iger,

The last Star Wars movie release was 2005’s Revenge of the Sith – and we believe there’s substantial pent up demand.  In 2015, we’re planning to release Star Wars Episode 7 – the first feature film under the ‘Disney-Lucasfilm’ brand. That will be followed by Episodes 8 and 9 – and our long term plan is to release a new Star Wars feature film every two to three years.

Purist Star Wars fans are nervous about the Mouse’s takeover of Lucasfilm, and how Disney will handle the next generation of live action Star Wars films.  However, those same fans were also upset at George Lucas’ reboot of the Star Wars franchise with Episodes I – III.  Therefore, can Disney’s treatment of their beloved franchise be much different than what they’ve already experienced with the prequels?

movie poster for Star Wars Episode 1 in 3D

Photo Courtesy of Lucasfim Ltd. © Lucasfilm Ltd. & TM. All Rights Reserved.

 

For those concerned, look at how Disney has handled its other acquisitions with Pixar, Marvel, and even earlier with Jim Henson’s Muppets.  Each of these studios and intellectual properties have maintained their unique character and identity.  Furthermore, films released under the Marvel Studios banner have become a cash cow for The Walt Disney Studios with this summer’s Marvel’s The Avengers pulling in $1.5B worldwide since its release on May 4, 2012 (Disney purchased Marvel for ~$4B in 2009).

Shortly after the purchase was made public, the Star Wars website posted a video of George Lucas discussing the Disney buyout, and the new movies to come via incoming president of Lucasfilm, Kathleen Kennedy.

Star Wars fans should be thrilled at the prospect of additional Star Wars saga films.  Until now, we only had the 3D releases of the films to anticipate.  George Lucas was not getting any younger, and was not going to make new Star Wars films himself.  With Disney’s backing, we now have fresh (hopefully) Star Wars movies in the queue.  Not to mention, there is still the Star Wars: The Clone Wars animated series and the parody Star Wars: Detours animated series to watch.  The Walt Disney Studios, once known for princess movies and fairy tales, has, with the purchase of Marvel and now Lucasfilm, certainly increased its appeal for young boys (and Dads).

MERCHANDISING

LEGO Star Wars at Star Wars Celebration VI

Another financial boon of this acquisition is Disney’s take from merchandising.  This Halloween, notice how many children come to your door dressed as Clones, Stormtroopers, or Jedi Knights.  Notice the LEGO Star Wars kits for sale in toy stores across the country.  Notice the video games, books, light sabers, bed sheets, etc. one can purchase.  At the Star Wars Celebration VI convention held this past August in Orlando, FL, thousands of rabid Star Wars fans flocked to buy unique Star Wars licensed merchandise.   Plus, Disney already has a foot in this arena with the very popular Disney/Star Wars mash up products that are sure to become more prevalent on store shelves and theme parks.  The revenue stream from merchandising alone will bring in a flow of cash into the Disney coffers.

plush Admiral Ackbar

THEME PARKS

Bob Iger and George Lucas at Disney's Hollywood Studios for opening of Star Tours

Walt Disney Co. president and CEO Bob Iger (left) and "Star Wars" creator George Lucas (right) join "Star Wars" villain Darth Vader (center) May 20, 2011 at Disney's Hollywood Studios theme park in Walt Disney World during grand opening ceremonies for "Star Tours -- The Adventures Continue." Photo by Gene Duncan, © Disney Enterprises, Inc.

 

Theme Parks are the holy grail of the Disney Empire, and this is what has Disney fans the most excited, the prospect of an expansion of the Star Wars presence in the Disney Parks.  Bob Iger’s video statement specifically mentioned the theme parks stating, “fans can expect… more theme park attractions,” and Iger’s prepared remarks also included the parks, “We’ve actually had a great working relationship with Lucasfilm for years — with Star Wars and Indiana Jones themed attractions in our parks in Anaheim, Orlando, Paris and Tokyo.”  So what can theme park fans expect?  A logical first step would be to include a Star Tours attraction at Hong Kong Disneyland as well as the under construction Disneyland Shanghai.  However, the Disney/Star Wars fans are certainly hoping for more.

Star Tours Marquee

With the massively successful opening of Cars Land at Disney California Adventure this summer, it had been rumored that the Lights, Motor, Action stunt show and Backlot Tour would be replaced at Disney’s Hollywood Studios with its own Cars Land.  However, with the Indiana Jones Epic Stunt Spectacular and Star Tours already in the park, many Star Wars fans would love to see a full blown “Lucas Land” take over Hollywood Studios instead of Cars Land.

Logo for Walt Disney's Avatar Project

© Disney Enterprises, Inc.

 

In September 2011, Disney announced a partnership with filmmaker James Cameron to bring an AVATAR themed land to Disney Parks.  Construction was slated to begin at Disney’s Animal Kingdom park in 2013.  Over a year has passed, and very little additional news has surfaced regarding the proposed AVATAR-land.  In addition, in a September, 2012 LA Times article the two (maybe 3?) proposed AVATAR sequels originally slated for December 2014 and 2015 have been pushed back to 2015 at the earliest, and no mention was made of the proposed AVATAR-land for Disney’s Animal Kingdom.  Some have speculated the Disney/AVATAR project is on the rocks, and perhaps the Lucasfilm deal is the final nail in the coffin.

Chewbacca and family at Disney's Star Wars Weekends

Image © Lucasfilm Ltd. & Disney Enterprises, Inc.

 

Presumably, there’s no reason as to why Disney couldn’t go ahead with AVATAR-land in addition to a Star Wars expansion.  Disney’s Animal Kingdom theme park certainly needs the attention.  However, that would be a great deal of capital expended by Disney into the theme parks.  Now that Disney owns Lucasfilm, it would seem they have an intellectual property that’s more of a “sure bet” of resonating with theme park fans than AVATAR.  For a concrete example, see how many children come to your door trick-or-treating in AVATAR vs. Star Wars costumes.  Personally, I wouldn’t be surprised to see the AVATAR project shelved in favor of a Star Wars expansion, and personally, I would be one of the first in line to see a new Star Wars land.  Maybe they could include some of the props below in the land (OK, I just wanted an excuse to show the Skywalker Ranch video again).

So what do you think of the Disney Lucasfilm acquisition?  Are you excited, opposed, indifferent?  If you’re excited, what are you most looking forward to, and if you are opposed, why?  Please leave a comment below and keep the conversation going.  For more family entertainment news, be sure to follow Adventures by Daddy on twitter and “like” our facebook page too.

About Dave Parfitt

Married, father of two girls, and living in the heart of the Finger Lakes. I'm a runner with a PhD in neuroscience and a passion for travel.