Disney Faces $200 Million Loss from 'John Carter'
Financial Times' Matthew Garrahan reported Monday that "Walt Disney (NYSE: DIS) will incur a $200 [million] writedown on 'John Carter', the action film based on the Edgar Rice Burroughs novel." Garrahan wrote that the film "has failed at the box office despite a $300 [million] production budget and an extensive global marketing campaign."
The film "John Carter" is about an American Confederate soldier who journeys to Mars and gets involved in an extraterrestrial war. According to Garrahan, the film "has generated $184 [million] in global ticket sales but with about half its takings going to cinema chains, Disney has had to adjust its earnings guidance for the quarter to reflect the film's performance."
Whereas Walt Disney Studios may have high hopes for future films including Pixar's "Brave" and Marvel's "The Avengers", Garrahan noted that "the abject failure of 'John Carter' is not likely to be forgotten in an industry where a single flop can wipe out a studio's annual profits." Garrahan: "Hopes were initially high for 'John Carter'." Interestingly, Garrahan commented that "Burroughs' source material, which inspired filmmakers such as James Cameron, has failed to energise young, male cinema goers, a crucial demographic for any big-budget action movie."
Commenting on the $200 million Disney writedown, the Wrap's Joshua Weinstein wrote, "'John Carter' is now an official flop." Weinstein: "[T]he movie's poor performance at the box office likely will force Disney to take a $200 million writedown." As such, "[t]he writedown means 'John Carter' is one of history's biggest flops." Weinstein attributed issues with "John Carter" to "costly reshoots, [the] lack of a recognizable star, [and] the director's inexperience with live action."
This most recent flop comes at a time when the American film industry is struggling in the midst of a weak economy and what appears to be a substantial lack of viable, creative ideas. The prospect of tough times for the American film industry is by no means new. In October 2011, I discussed how weak box office numbers reflect problems for Hollywood.
In December 2011, I discussed how Hollywood's holiday season was off to a poor start as fewer people were going to the movies. I later discussed possible trading ideas with respect to Hollywood -- including potential short positions for film production and theater companies. At that time, the Associated Press' David Germain commented that, "movie crowds keep shrinking -- down to a 16-year low as 2011's film lineup fell well short of studios' record expectations."
I previously discussed that some of Hollywood's problems could be related to a lack of innovative storylines that capture the hearts and minds of the American public. Even if that is the case, the lack of Hollywood creativity appears to be eclipsed by the struggling US economy. It doesn't matter how entertaining a movie appears, if you don't have money to buy the ticket, then you won't go see the movie. With rising food and energy prices, the American consumer may be finding himself unable to use any funds toward any discretionary spending. Even further, as is commonly written, if it is true Hollywood's target audience is young males, the phenomenon of high youth unemployment is most likely not helping the industry's situation.
In this light, the film industry would appear to have its work cut out for them in trying to produce films that rise up and match to the level of demand necessary in order to address high gas prices. Such demand (in particular for young males) may only be realized in films with established franchises like Star Trek and Batman. And that's not even getting into costs related to popcorn, candy, and drinks at movie theaters. The Detroit Free Press' David Ashenfelter reported on March 4, 2012 that one filmgoer has decided to file a class action lawsuit against a local AMC theater "in hopes of forcing theaters statewide to dial down snack prices." According to Ashenfelter's report, "a staffer at the National Association of Theatre Owners in Washington, D.C., angrily hung up the phone when asked about industry snack pricing practices." Interestingly, Ashenfelter noted that Hollywood.com analyst Paul Dergarabedian has said that "a difficult economy [is] mainly to blame" for low box office revenue, "not snack prices."
Thus, the flop of "John Carter" reflects ongoing problems with Hollywood. To be fair, even aside from arguably being fictionally anachronistic, the concept of a science fiction film based on Edgar Rice Burroughs' "Barsoom" novels about a Confederate soldier from Virginia with antebellum undertones who mysteriously travels to an extraterrestrial-populated Mars seems a bit outlandish...and over-the-top...and a bit silly, to be frank. Maybe a little too silly for the American public.
I mean, seriously, is that the best big-budget science fiction story-concept Disney could come up with? Maybe someone should mail Hollywood companies copies of some of Ray Bradbury's books. Or maybe Hollywood should think about re-making "1984" or "Brave New World" -- given the current political environment, I bet such a film would be quite successful with substantial box office revenue...and such a film could leave room for those bland socio-political undertones that Hollywood loves to use so much.
On a personal note, speaking as one who hasn't been to see a movie since "Atlas Shrugged: Part I", I am looking forward to maybe seeing "Battleship", "Dark Knight Rises" and/or "Hunger Games". Even with what appear to be interesting and entertaining movies on the horizon, it's beginning to appear that the film industry will not fully recover and have solid footing until that point when the everyday US consumer recovers and has solid footing.
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