Disney Creates an Empire with the Acquisition of Lucasfilm for $4.05 Billion

Walt Disney Buys Lucasfilm

Pixar, ABC, Marvel Entertainment,  and now Lucasfilm all rest comfortably under the watchful eye of the House of Mouse – The Walt Disney Company also owns 80% of ESPN shares, 27% of Hulu, and has a 50% of A+E Networks. With this new acquisition, the Disney powerhouse has already made plans to release a new Star Wars trilogy beginning with Star Wars Episode VII set to release by 2015. Details and more after the break!

In 2009, Disney acquired Marvel Entertainment for a cool $4.24 billion. As of Tuesday, October 30, 2012 Walt Disney now owns a galaxy far, far away for $4.05 billion. You know what this means right? Princess Leia Organa Solo of Alderaan is now a Disney Princess – I think all fangirls across the globe snickered with glee. The world of cosplay will never be the same again. Will they create a Mickey Mouse Darth Vader helmet, or maybe a Minnie Mouse slave Leia? There are so many possibilities.

Let’s get onto the real news at hand here.

Below is the official video statement from the Chairman and CEO of Walt Disney, Bob Iger along with George Lucas, Chairman and CEO of Lucasfilm. Not only will Disney acquire Lucasfilm, which was founded by Mr. Lucas in 1971, but also Industrial Light and Magic, LucasArts, and Skywalker Sound.

The header picture is hilarious because Bob Iger looks incredibly enthusiastic about this purchase, while George Lucas is giving the camera the old deer in the headlights glance.

I am not going to re-post the entire press release from Walt Disney, but I will share with you the highlights and my thoughts on it.

Under the terms of the agreement and based on the closing price of Disney stock on October 26, 2012, the transaction value is $4.05 billion, with Disney paying approximately half of the consideration in cash and issuing approximately 40 million shares at closing. The final consideration will be subject to customary post-closing balance sheet adjustments.

Psshh $4.05 billion. Chump change. Let’s see what Iger has to say:

“Lucasfilm reflects the extraordinary passion, vision, and storytelling of its founder, George Lucas. This transaction combines a world-class portfolio of content including Star Wars, one of the greatest family entertainment franchises of all time, with Disney’s unique and unparalleled creativity across multiple platforms, businesses, and markets to generate sustained growth and drive significant long-term value.”

Not only will Disney own the rights to Star Wars, but also Indiana Jones, American Graffiti, Howard the Duck, Willow, and Red Tails. I’m sure the many theme parks will have a field day coming up with rides for those properties. What does our old pal Georgie boy have to say about all of this:

“For the past 35 years, one of my greatest pleasures has been to see Star Wars passed from one generation to the next. It’s now time for me to pass Star Wars on to a new generation of filmmakers. I’ve always believed that Star Wars could live beyond me, and I thought it was important to set up the transition during my lifetime. I’m confident that with Lucasfilm under the leadership of Kathleen Kennedy, and having a new home within the Disney organization, Star Wars will certainly live on and flourish for many generations to come. Disney’s reach and experience give Lucasfilm the opportunity to blaze new trails in film, television, interactive media, theme parks, live entertainment, and consumer products.”

It’s now time to pass Star Wars on to someone else? A statement many fan boys/girls wish they heard back in 1999, when The Phantom Menace released. So who is Kathleen Kennedy exactly? We’ll let George Lucas introduce her to us:

As you have seen, it appears as though Lucas will still have some involvement in the making of the next trilogy as a creative consultant. Hopefully he will leave it up to Kennedy to decide what is best for the franchise. Kennedy has been a producer of such films as E.T.: The Extra-Terrestrial, Back to the Future, and more. She was also the co-founder of Amblin Entertainment with Steven Spielberg and her husband, Frank Marshall. She was named Co-Chairman of Lucasfilm earlier this year, but has been named full successor and President.

Kathleen Kennedy, current Co-Chairman of Lucasfilm, will become President of Lucasfilm, reporting to Walt Disney Studios Chairman Alan Horn. Additionally she will serve as the brand manager for Star Wars, working directly with Disney’s global lines of business to build, further integrate, and maximize the value of this global franchise. Ms. Kennedy will serve as executive producer on new Star Wars feature films, with George Lucas serving as creative consultant. Star Wars Episode 7 is targeted for release in 2015, with more feature films expected to continue the Star Wars saga and grow the franchise well into the future.

If they are expected to release a film by 2015, they need to get crackin’. Lucas has claimed there are written treatments for the next three installments, but let’s hope someone misplaced them among the shuffling of company documents. Warner Bros. and DC Entertainment have already begun working on a Justice League movie set for 2015 and The Avengers 2 also has the same year in their sights as well. Could 2015 be the year that we see a nerd die from sheer joy?

George Lucas Mickey Mouse

The press release goes into some mumbo jumbo describing the recent acquisitions Disney has acquired and how successful they’ve been – and obviously they would have to be since they could afford to toss around $4 billion.

The Boards of Directors of Disney and Lucasfilm have approved the transaction, which is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act, certain non-United States merger control regulations, and other customary closing conditions. The agreement has been approved by the sole shareholder of Lucasfilm.

There are current happenings that the two companies will work on as time passes on. The press releases continues with some “forward-looking statements” from Bob Iger that are only speculations and should taken with a grain of salt.

“Lucasfilm fits perfectly with Disney’s strategic priorities. It is a sustainable source of branded, high quality creative content with tremendous global appeal that will benefit all of Disney’s business units and is incredibly well suited for new business models, including digital platforms. Adding the Lucasfilm IP to our existing Disney, Pixar and Marvel IP clearly enhances our ability to serve consumers, strengthening our competitive position — and we are confident we can earn a return on invested capital well in excess of our cost of capital.”

The bigger picture here is, what’s going to happen within the Star Wars universe?

“The last Star Wars movie release was 2005’s Revenge of the Sith – and we believe there’s substantial pent up demand. In 2015, we’re planning to release Star Wars Episode 7 – the first feature film under the “Disney-Lucasfilm” brand. That will be followed by Episodes 8 and 9 – and our long term plan is to release a new Star Wars feature film every two to three years. We’re very happy that George Lucas will be creative consultant on our new Star Wars films and that Kathleen Kennedy, the current Co-Chair of Lucasfilm, will executive produce. George handpicked Kathy earlier this year to lead Lucasfilm into the future. She’ll join Disney as President of Lucasfilm, reporting into Walt Disney Studios Chairman Alan Horn and integrating and building the Star Wars franchise across our company.”

This is all too good to be true. You would think that this was all written by The Onion. A new Star Wars film every two to three years? If this is just a tease, there will be a huge backlash in the geek community. If Disney thought they could deal with the Marvel geeks, just wait until they witness the firepower of fully armed and operational Star Wars geeks.

Disney’s track record with Marvel and Pixar do prove that they have the capabilities to sufficiently grow already mature companies, so it will only be a matter of time until we see this turn into a success too.

George Lucas Walt Disney

The remainder of the press release goes on to discuss the accomplishments of Pixar and Marvel, along with the timeline of the new Marvel movies including, Iron Man 3, Thor: The Dark World, Captain America: The Winter Soldier, and The Avengers 2.

Senior Executive Vice President and CFO of Walt Disney, Jay Rasulo, also put in his two-cents about the acquisition of Lucasfilm:

“Lucasfilm, and more specifically the Star Wars franchise, fits perfectly within the Disney portfolio of intellectual properties and the strategic and financial implications of this acquisition are compelling. Our team has spent a tremendous amount of time evaluating this deal and we have concluded we are uniquely positioned to maximize the value of Lucasfilm’s IP in a manner that can generate substantial value for our shareholders above and beyond the purchase price.”

Yes the financial implications means, TOYS, RIDES, THEME PARKS, CLOTHING, RESORTS, LUNCH BOXES!

“Let me note that in 2012 Lucasfilm’s consumer products business is expected to generate total licensing revenue that is comparable to the roughly $215 million in consumer products revenue Marvel generated in 2009, the year in which we announced our acquisition. With renewed film releases, and the support we can give the Star Wars property on our Disney-branded TV channels, we expect that business to grow substantially and profitably for many years to come.”

You know what you could do, if you want to make the big bucks? RELEASE THE ORIGINAL VERSIONS OF THE FIRST STAR WARS TRILOGY ON BLU-RAY. Is that too hard to ask?

“Lucasfilm has not released a Star Wars film since Revenge of the Sith in 2005. However, adjusted for inflation, as well as growth in both international box office and 3D, we estimate the three most recent Star Wars films would have averaged about $1.5 billion in global box office in today’s dollars. This speaks to the franchise’s strength, global appeal and the great opportunity we have in the film business.”

Scrooge McDuck is probably sitting around, sipping a margarita, while he prepares an expansion to his coin vault.

It’s crazy to think that one company owns all of these incredible franchises. They are practically running the gambit on successful entertainment properties these days. Warner Bros. seems to be going no better or worse with the New 52 in the DC Comics world, there are no more Harry Potter films to bank on, and there won’t be a DC superhero film until 2015 with the Justice League. They do however have The Hobbit, and I’m sure they are clutching on to that property along with Harry Potter as they sleep at night.

Where will Disney go next? They will be pretty busy with Phase 2 of The Avengers, production of a new Star Wars film, and other Pixar films in the works. It was only three years ago when the company bought Marvel, who else could they shop around for? I wish them the best of luck and look forward to seeing Star Wars Episode VII. (It’s kind of funny to think, a little over a year ago, Disneyland re-opened/re-imagined the Star Tours ride, with a full marketing campaign with Darth Vader strolling through Magic Kingdom.)

Source: Walt Disney

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