04 Feb Film Fund-amentals: The Mouse That Reeled
As reported in Tuesday’s edition of Variety, Mickey Mouse has taken a hard dive. OK, the king rodent is not exactly lying flat on the mat, but he is reeling toward the ropes (presumably with some cartoon stars circling around his head). Net income has fallen 32 percent, large layoffs have been issued, and current economic forecasts are bleaker than the weather map before Hurricane Katrina.
So what does Robert Iger, President and CEO of the Walt Disney Company, intend to do? According to Variety, he plans to focus on a few tentpole movies and tighten spending. Granted, tentpole movies and tight spending are mutually contradictory terms, but by gum, that is the plan.
Too bad the only hit film that Disney had in the last quarter was Beverly Hills Chihuahua. Made for a mere $20 million with a worldwide take of $130 million, this non-tentpole film just paid the bills for the employees still standing at the Magic Kingdom.
For a comparison, let’s take a recent tentpole film from Disney. Pirates of the Caribbean: At World’s End made $958 million worldwide. Its production budget was estimated to be $300 million. So it was a definite hit that earned a little over three times its cost.
Beverly Hills Chihuahua earned over 6-1/2 times its cost, so the business logic does not appear to support Iger’s thinking. At the moment, however, his thinking is dominant for no other reason than the simple fact that a lot of other major figures in Hollywood have a similar amount of wool growing in their brains.
I am not suggesting that every film should be another Beverly Hills Chihuahua (good lord, I am not that evil), but the business model is important. And it is a model that many current studio executives have either forgotten or, perhaps, have never even learned.
— Dennis Toth