I’m pumped for the newest Star Wars flick that will release in December, and I know I’m not the only one.
Even though we won’t see it hit the big screen for another two months, Fandango announced that the movie’s first day of presale ticket sales were the highest it has ever reported. It’s the same story for IMAX presale ticket sales, which set a new one-day record.
From what I’ve seen, it seems like the film’s distributor, Disney (DIS), could use the boost right about now.
Cable-cutting has dragged on most of the big-name media distributors, but especially on ESPN, which is one of Disney’s most profitable sources of revenue. The sports channel has struggled to keep up with the changing culture of media consumption, as its most reliable revenue stream-fees from cable and satellite subscribers-continues to evaporate.
In the last four years alone, ESPN has lost over 7 million subscribers, so Disney is tightening the belt and asking the channel to cut costs by $100 million next year and $200 million in 2017.
ESPN has also labored under the growing cost of sports’ rights fees. The NFL’s “Monday Night Football” costs $1.9 billion a year to broadcast, a 72% increase over the previous contract, and its new NBA deal tripled in price this year as well.
That’s why I wasn’t all that surprised to hear that ESPN is cutting its workforce by almost 4%.
While ESPN scrambles to get its act together, Disney is aggressively pursuing other channels of revenue, and this new Star Wars venture should be a huge boon. I hated the second trilogy (who didn’t?) but the first three films were amazing and I have a feeling they’re going to pick up on it again.
This franchise rests upon endless merchandising and spin-off content-everything from t-shirts and Lego sets to costumes, blankets, TV shows, comic books and more.
All that just adds more value to Disney, which will be reaping the benefits for years down the line.
I also expect Disney to see strong profits from its new project DisneyLife, a European subscription service that offers movies, books, music and TV shows. The service is slated to go live in the United Kingdom next month, and there’s no doubt the company will take advantage of the service’s multimedia approach by cross-selling merchandise.
Like any smart media corporation these days, Disney clearly has its eye on subscription-based streaming, as management has licensed pay-TV rights for their movies to show on Netflix (NFLX), too.
The stock got hammered in early August after the company noted some ESPN subscriber losses in its fiscal third-quarter report and continued to struggle through the late-August market sell-off. The shares have made a significant 25% rebound off their lowest levels, and the Star Wars movie could have a lot to do with where DIS trades from here.
Disney was certainly oversold at its most depressed levels and I expect it to continue to come back, especially with all the cash that is about to start pouring into the company’s pockets soon.