Soaring ad revenues and subscription fees for its cable channels such as ESPN, ABC Family, and Disney XD along with a boost in revenue from its theme parks allowed the Walt Disney Co. to post a 21% rise in fiscal second quarter profits with net income for the three months ending March 31st rising to $1.14 billion.
Although, thanks to The Avengers Disney’s movie profits will soar in the next quarter, second quarter Disney studio numbers were brutal thanks to a $200 million write-down tied to the poor box office performance of John Carter, which cost $250 million to produce (and millions more to promote). John Carter has earned $271 million worldwide, which is less than half the amount it would have taken in order to break even (the rule of thumb is that studios get about 50% of the box office revenue, though the percentage of foreign grosses recovered is almost always less than that).
Although, thanks to The Avengers Disney’s movie profits will soar in the next quarter, second quarter Disney studio numbers were brutal thanks to a $200 million write-down tied to the poor box office performance of John Carter, which cost $250 million to produce (and millions more to promote). John Carter has earned $271 million worldwide, which is less than half the amount it would have taken in order to break even (the rule of thumb is that studios get about 50% of the box office revenue, though the percentage of foreign grosses recovered is almost always less than that).
The John Carter write-off created a loss of $84 million for Disney’s movie operations for the quarter. This loss contrasts with a $77 million profit in the same quarter a year ago, a profit that was achieved in spite of another enormous write-off for Mars Needs Moms, the movie that literally stopped Hollywood’s march towards a "motion-capture"” future dead in its tracks (see "'Mars' Kills 'Yellow Submarine'").
The resounding success of Joss Whedon’s The Avengers vindicates Disney’s $4 billion purchase of Marvel (see "Disney Buys Marvel"), which was ridiculed by some financial analysts in 2009 almost as much as the bailout of the auto industry. Disney CEO Robert Iger took advantage of a conference call with Wall St. analysts to crow about The Avengers as “a great illustration of why we like Marvel so much.”
It appears obvious that the success of The Avengers will be enough to turn around the fortunes of Disney’s movie unit in the third quarter, but the company’s other ailing unit, its Interactive Division remains a problem as it posted a $70 million loss for the quarter. According to the N.Y. Times, the Disney unit’s attempts to profit off of the Internet and video games have rung up losses of over $1.19 billion since 2008.
