So, Mickey Mouse is sitting pretty.
Walt Disney (NYSE:DIS) has made its third blockbuster purchase of a film studio, finishing off its trifecta of conquering the movie business with contemporary juggernauts, and sealing its fate as the premier entertainment provider for the next century.
Tuesday’s announcement that it had bought out George Lucas’ private kingdom, Lucasfilm — which lords over the Star Wars and Indiana Jones franchises — for $4 billion and would release a new episode in three years came as a shock to just about everyone. I guess people thought George would hold onto his empire forever, but sooner or later he had to pass the reins.
And what better place to pass them to?
Disney already has proven itself prescient by first buying up Pixar a few years back. The film studio has a perfect track record with its releases, with each film — including big names like the Toy Story franchise, A Bug’s Life, Finding Nemo and Ratatouille — generating hundreds of millions at the box office and even more in ancillary markets.
Not to mention, Pixar always has been about quality control, keeping a stable of smart and faithful storytellers from which wonderful movies are consistently produced. Pixar films are loved by nearly everyone, and there’s no sign the company will stumble with any release.
Ditto for the Mouse House’s purchase of Marvel. The superhero universe was purchased just as it was about to expand its tendrils in multiple directions, having laid the foundation for the blockbuster The Avengers with individual films focusing on its members. Sequels continue to pile up for Iron Man and Thor. There also are thousands of other characters in the Marvel universe that can be transferred to any media — film, TV, Internet, mobile, games … you name it. All the merchandising on top of the box office alone will yield billions for Disney, just like with Pixar.
And now comes Lucasfilm.
Despite the near-universal hatred for the last trilogy of films, Star Wars remains a premier branded universe. If you’ve been to Disneyland or Disney World, you know “Star Tours” has been a fixture for many years, so the buyout can’t be all that shocking.
Disney has announced three more films in the saga, with Episode VII supposedly queued up for 2015, and geeks everywhere (including me) are hoping that George Lucas will keep his word about merely playing a consultant role in the making of the next series.
It’ll take Disney awhile to recoup that $4 billion — starting with Episode I‘s release in 1999, through the 3D re-release of Episode I this year, the three prequel films brought in roughly $2.5 billion worldwide — but over time, this will prove to be a grand slam when you consider all the ancillary revenue streams across the globe.
As if Disney weren’t already a buy or even a “forever hold,” it’s now a strong buy and “forever hold.” The tremendous diversification of the Disney empire has just diversified even more, and these three movie studios will fill Disney’s coffers to the point where even those diamond-seeking dwarfs will be jealous.
As of this writing, Lawrence Meyers did not hold a position in any of the aforementioned securities. He is president of PDL Capital, Inc., which brokers secure high-yield investments to the general public and private equity. You can read his stock market commentary at SeekingAlpha.com. He also has written two books and blogs about public policy, journalistic integrity, popular culture and world affairs.