The highest-grossing movie of 2018 in the United States was Black Panther. My first guess would have been Infinity War but as it turns out, Infinity War was the number one in the worldwide box office and it barely came in number two domestically. However, your eyes should be fixed on what came in at number three. It’s The Incredibles 2. All three of these films were made by Disney. Not just the top three spots but Disney is responsible for numbers 9, 12, 14 and 18 on the list too. You shouldn’t be surprised to hear that in 2018 they had a higher market share than any other studio in America. More than a quarter of all the tickets sold at the box office were for Disney movies.
Disney has been growing exponentially. Let’s take a look at their revenue over the past 25 years. In 1993 they brought in $8.5B and in 2018 that was up to $59B, which is around seven times higher. If we were to look at their total assets as well, because they’ve been growing even faster, Disney is 8.4x bigger today than they were 25 years ago. A huge portion of this growth can be attributed to them making some strategic acquisitions. The biggest of which was a $71B acquisition involving Fox that was finalized on March 20th, 2019. Let’s take a look at some of their more significant acquisitions over the past 25 years, starting with Miramax in 1993. Disney bought the independent film company Miramax for $60M and helped turn them into something big under their control. They made movies like Scream, Armageddon, Chicago, No Country for Old Men and a few Best Picture winners along with Quentin Tarantino. These were all technically Disney films but they let producers do their own thing. They took in the money from them and they always had a final say. After owning them for 17 years they decided to sell it in 2010. The collection of films they built up over that time helped make it much more valuable than when they bought it. They ended up selling it for $660M. Then in 1995, Disney spent $19B to acquire a company called Capital Cities. Around 10 years earlier, Capital Cities had bought the TV network ABC who was already the majority owner of ESPN. In that deal in 1985, control of both networks went to Capital Cities. Later in 1995, it all went to Disney. The deal also included significant interests in other cable channels along with a bunch of various newspapers and magazines. If you’re ever wondering why they’re giving away so many trips to Disneyland on America’s Funniest Home Videos or why there’s so many Disney themed weeks on Dancing with the Stars, it should all make sense now.
There used to be a TV channel called Fox Family until Disney bought it in 2001 for $3B. They quickly renamed it to ABC Family and as of early 2016, the name has been changed again to FreeForm. A few years later in 2004, they bought the rights to The Muppets from Jim Henson’s family. The amount wasn’t disclosed but the Henson family had bought the rights for 78 million about a year earlier so it’s likely to be somewhere in that range. The deal included the rights to use Kermit and Miss Piggy and all of those characters but didn’t include the rights to the Sesame Street gang. Following that in 2006, they bought Pixar for the price of $7.4B. At that point, Pixar had yet to create anything considered even close to a failure. It was six great films; Toy Story, A Bug’s Life, Toy Story 2, Monster’s Inc, Finding Nemo and The Incredibles with Cars on the way. Disney and Pixar always worked closely together on a number of projects, but here they decided to come together for a bigger reason. Disney was having trouble with their animated movies and a deal like this would hopefully help things. Something interesting here is, Steve Jobs was the majority owner of Pixar, so this deal made him Disney’s largest stakeholder. In 2009 they made an acquisition that people continue to talk about. They bought Marvel for the price of $4B. An attractive part of this deal obviously was the 5000 characters that they would receive the rights to, but there were some major characters that Marvel could not get before the acquisition. Those included Spider-Man, all of the X-Men characters and the Fantastic Four. They didn’t get those but they got a lot of other good ones and because of this, they’ve had the freedom to create an entire cinematic universe.
In 2012 Disney paid $4B for Lucasfilms which is the owner of the Star Wars franchise which was fully owned by Star Wars creator George Lucas at the time. This deal made George Lucas the second largest shareholder of Disney after the now deceased Steve Jobs. George Lucas had been the main man behind the original trilogy and the prequels. Every Star Wars movie made since the acquisition starting with The Force Awakens has not really involved George Lucas and has been made by Disney. That brings me to their most recent deal with Fox where they paid $71.3B. Another acquisition that has been a long time in the making was the $52B bid that eventually ran to $71B for Comcast. The bid was approved with the exception of Fox’s regional sports networks considering Disney already owns ESPN. The result would otherwise end up being that Fox would own and operate those sports networks and their news channels in the Fox Network as well as some others.
So here’s what Disney gained. A massive list of studio market shares I wrote about in the beginning. Number five on that list was 20th Century Fox, which by the way, was just bought by Disney too. Further down the list at number 11 is Fox Searchlight who was also bought by Disney. If next year is anything like last year, they’ll be up to about 36% market share. Not to mention a huge collection of previously made movies that they now own. Something that’ll help them maintain these high sales is the fact that the new deal also includes the X-Men and the Fantastic Four characters. Don’t be surprised if you see some of them popping up in the MCU. This deal also includes some television networks such as FX and the National Geographic along with the rights to any characters owned by them and content produced by them in the past.
They also recently purchased Fox’s 30% share of Hulu. If my math is correct, that gives them a 60% stake, which is a majority stake. They’ve also expressed interest in acquiring an additional 10% from AT&T. Comcast owns the rest of it but I wouldn’t be surprised if I saw that transfer over sometime soon. This brings me to what was likely the biggest motivation behind all these deals and acquisitions. Streaming. Disney will continue to be completely dominant at the box office but that might not be the best industry to dominate. In the US, digital home entertainment revenue has been exceeding movie ticket sales for some time and as of 2018 fewer people are going out to the movies because they’re choosing to stay home and watch Netflix instead. This deal gives them controlling interest in Hulu but it’s also providing them with content for Disney Plus, a subscription service they’re planning to launch later this year.
I can only imagine how much content they can put out there. Disney has all these characters in their collection to create new content, all of which they plan to do. In my final attempt to show you that Disney is bigger than you know, there’s a lot more to this company that I failed to mention until now. Beyond TV networks and in addition to all the ESPN and Disney Channel’s FreeForm, ABC, FX and National Geographic they also own a 50% share of the History Channel and National Geographic along with some others that I’ve never heard of. They also have theme parks across the world. Disney as a whole has a number of entertainment channels that rake in over $20B per year which is about twice as much than their entire movie business. It’s safe to say that the deal with Fox will be beneficial to this part of their business too. It gives them all these new characters they can incorporate and endless possibilities for content that is yet to come.