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.

VidAngel Hit With $62.4 Million Damages Ruling for Copyright Infringement

A California District Court jury June 17 ruled bankrupt VidAngel must pay Disney, Warner Bros., Lucasfilm and 20th Century Fox, among others, $62.4 million in damages for illegally altering/filtering plaintiff’s DVD/Blu-ray Disc movies for its proprietary streaming video service.

VidAngel, based in Provo, Utah, had taken the discs and filtered out content it deemed objectionable, including nudity, profanity and violence, and then made the content available for streaming to subscribers.

“We disagree with today’s ruling and have not lessened our resolve to save filtering for families one iota,” Neal Harmon, CEO of VidAngel, said in a statement. “VidAngel plans to appeal the District Court ruling and explore options in the bankruptcy court. Our court system has checks and balances, and we are pursuing options on that front as well.”

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Studios in 2016 filed a copyright infringement lawsuit against Vid Angel, alleging the service circumvented anti-pirating safeguards embedded on DVD and Blu-ray Disc movies.

VidAngel responded with an antitrust counter-suit, which was denied. A federal judge ordered a preliminary injunction against the service, ordering it to remove the studio movies. An appeal by VidAngel to the Ninth Circuit of Appeals failed as well.

To the studios, the issue wasn’t censorship as much as it was infringement.

“The jury today found that VidAngel acted willfully and imposed a damages award that sends a clear message to others who would attempt to profit from unlawful infringing conduct at the expense of the creative community,” studios said in a statement.

20th Century Fox Studios Q2 Income Drops 66%

Twentieth Century Fox Studios Feb. 7 reported a 66% drop in second-quarter (ended Dec. 31, 2017) operating income to $131 million, compared to operating income of $389 million during the previous-year period.

Revenue topped $2.24 billion, which was down slightly from revenue of $2.26 billion last year.

The studio, which includes 2oth Century Fox Home Entertainment, attributed the decrease primarily to higher theatrical release costs, which more than offset higher theatrical revenue in the current quarter.

Release costs included Murder on the Orient Express, Ferdinand, The Greatest Showman, The Shape of Water (winner of 2 Golden Globes and nominated for 13 Academy Awards), Three Billboards Outside Ebbing, Missouri (winner of 4 Golden Globes and nominated for 7 Academy Awards) and The Post.

Partially offsetting the higher expenses were higher television production contributions, reflecting higher subscription video-on-demand revenue.

Revenue was also offset by lower home entertainment sales and pay and free TV licensing.

Fox’s top-selling discs in 2017 included Hidden Figures (released April 11, 2017) at $25.7 million in sales of 1.5 million units, and Logan, which generated $45 million on sales of 2.2 million disc sold since its May 23 retail release, according to The-Numbers.com.