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Here it comes. The movie event a generation has been waiting for since 1983. Since nearly every “Star Wars” fan hated the second trilogy of films, and the new film has been entrusted to director J.J. Abrams, who has done a nice job resurrecting “Mission: Impossible” and “Star Trek,” a lot of positive notices are expected out of “Star Wars: The Force Awakens.”
Walt Disney Co. (NYSE: DIS) has pulled no punches with its marketing for the film set for wide release on Dec. 18. In case you haven’t noticed, Disney has integrated “Star Wars” across its own television programming with various crossovers and special episodes. Its new animated series “Star Wars: Rebels” is an outstanding show that is completely true to the original series, and it has stuck endless licensing deals with retailers.
Here’s the good news. The film is going to be good. Yes, it is possible it will not be, but even if it is terrible, it is going to do fantastic business. The last installment in the series, 2005’s “Revenge of the Sith,” did $850 million in global box office alone, not including ancillary markets. Ticket prices have since increased 30%, so at a minimum, I think the film does $1.1 billion. My formal guess is $1.35 billion when all is said and done.
That’s if it’s a bad movie. If it’s great, it will be even higher. Why? Because everyone is going to see this movie. Everyone. Not just those of my generation for whom the original is a cultural touchstone, but for our kids, to whom we want to introduce to the series.
A New Hope for Disney Shareholders
As it is, Disney is in great shape as a company. There’s been a lot of criticism about the loss of subscribers at ESPN. I see this as a transition, and Disney has never had a problem adjusting to transitions, whether they be cultural, temporal or with management. With respect to ESPN, Disney will eventually filter in a la carte on-demand options that will shore up revenue. I’m not concerned.
In the meantime, revenue is going to bloom in the movie, TV and merchandising segments thanks to “Star Wars.” This is but the first film of many. We have the new trilogy, but also the spinoff film “Rogue One” and a young Han Solo film. All of these filter down into television tie-ins and merchandising. It’s all just getting started.
But there’s more. Disney doesn’t just own this property. It owns Lucasfilm, including the “Indiana Jones” franchise. That whole series will be rebooted. In the meantime, the studio is already reaping massive gains from Marvel Studios, which is executing brilliantly as it introduces new characters and then smashes them together in films like “The Avengers” series. Expect to see many more crossovers like this.
Marvel has a four-series deal with Netflix (NASDAQ: NFLX). It’s a far better deal for Marvel, which gets licensing fees and who knows what else from Netflix.
Marvel has network television shows, as well. It has merchandising tied into all of this. Marvel alone will provide content for Disney for decades, as will the other properties.
Think it’s too late to buy Disney? No way. In fact, if you want safe capital appreciation with a dividend, buy now. Disney shares trade ex-dividend on Thursday.
This Is Making Ordinary People Rich
Ordinary people across America are getting insanely rich. Take Gladys Holm. She never earned more than $15,000 a year as a secretary. But by making one simple move, she was able to leave an $18 million fortune to a children’s hospital when she died. There’s many more just like her.