Disney Brass Surprised at Fox Studio Underperformance

Back when Rupert Murdoch weighed in on 21st Century Fox fiscal calls, the senior media mogul was quick to praise the success of movies such as Avatar and Planet of the Apes. He was also quick to dismiss box office misses as part of a studio’s rollercoaster existence.

The fickle nature of theatrical releases in an age of over-the-top video, ultimately, is one of the reasons Murdoch put Fox Studio up for sale along with other media assets.

Disney’s $71.3 billion acquisition of 20th Century Fox Film Corp. was in part for the studio’s catalog, majority ownership of Hulu and future box office releases.

Apparently, Disney CEO Bob Iger and CFO Christine McCarthy weren’t prepared for a fiscal downturn at Fox Studio so soon after completion of the acquisition earlier this year.

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On the Aug. 6 fiscal call McCarthy disclosed that Fox posted a third-quarter (ended June 29) operating loss of $170 million — the opposite of a projected $180 million operating profit.

“One of the biggest issues we faced in the quarter was the performance of the Fox film business,” Iger said. “It was well below what it had been and well below what we thought it would be when we did the acquisition.”

Disney was quick to lay the blame on Dark Phoenix, whose reported $200 million production budget dwarfed its $65.8 million domestic box office. The film did generate more than $252 million internationally.

“I know what happens when a company gets bought,” Iger said, “Typically, operations and decision making comes to a halt. We avoided that when we acquired Pixar and Lucasfilm, but this was a very different position for Fox.”

Indeed, Disney announced the Fox deal in 2018, but the transaction wasn’t finalized until this March. While Fox will likely bounce back theatrically (Iger has high hopes for Ford vs. Ferrari), in the meantime, Disney’s theatrical prowess shows no sign of slowing.

With Marvel, Pixar and Lucasfilm content overperforming, Disney has generated a record $8 billion at the box office thus far in 2019.

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