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Disney earnings: A good fourth quarter, but old problems remain

disney disneyland

Photo by KeithJ via Flickr Creative Commons

The Happiest Place on Earth continues to bring in profits for Disney, which is making money on theme parks but losing money on movies.

Disney just reported earnings for its fourth quarter and financials for its fiscal year. Fourth-quarter earnings were basically in line with expectations, even though the entertainment giant — which just spent $4.05 billion to buy Lucasfilm and the "Star Wars" franchise — didn't quite bring in as much revenue as analysts wanted, for the second consecutive quarter. Still, profits were up and a $10-billion-plus quarter isn't too shabby.

Overall, the company reported a three percent increase in revenue year-over-year. 

However — and it's a big howeverDisney continues to struggle with both its movie and interactive businesses. Year-over-year, broadcast, theme parks, and consumer products revenues were all up — with parks up by 10 percent. Studio entertainment and interactive revenues were both down year-over year — with interactive posting a 14 percent loss for both the quarter and the fiscal year.

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Is Lucasfilm the last nail in the Disney filmmaking coffin?

George Lucas Poses With A Group Of "Star Wars" Inspired Disney Characters At Disney's Hollywood Studios

Handout/Getty Images

George Lucas meets a group of "Star Wars"-inspired Disney characters. Disney just bought Lucas' company, Lucasfilm, for $4.05 billion.

Sorry to get to a Halloween headline a few days late, but Erica Orden had a very good piece in the Wall Street Journal Thursday about how Disney's $4.05 billion acquisition of Lucasfilm, announced this week, will basically place in-house filmmaking at the feet of CEO Bob Iger's purchases: Pixar for $7.4 billion in 2006 and Marvel for $4 billion in 2009.

Here's Orden:

With the new "Disney-Lucasfilm" brand set to release a "Star Wars" sequel every other year beginning in 2015, the original studio is likely to face an even-further-reduced capacity to produce and distribute its own live-action fare. In total, Disney distributes roughly a dozen films each year.

Disney Chief Executive Robert Iger indicated this week that the coming "Star Wars" films will supplant Disney movies on the release schedule. Disney doesn't plan to spend more than it already does on film production, Mr. Iger said, meaning each new "Star Wars" film will lead to one less Disney film.

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Update: Disney buys Lucasfilm for $4B : 'Star Wars: Episode 7' due in 2015 (poll)

Stormtroopers

Chris Jackson/Getty Images

"Stars Wars" Imperial storm troopers. They work for Disney now.

UPDATE 4: Iger and his team see upside in the deal in the future, in terms of exploiting new filmmaking opportunities and realizing new consumer-product opportunities. The idea seems to be that "Star Wars" merchandising has room to run outside North America.

Also, Disney doesn't have a completely free hand with "Star Wars," due to intellectual-property claims that Fox and Paramount may hold from the films that they worked on.

UPDATE 3: In its last earnings report, Disney had over $4 billion in cash. However, Iger pointed out that Disney expects a return on Lucasfilm "well in advance of its cost of capital," suggesting that the company didn't burn half its cash on hand to make this acquisition. Although the company is proposing to buy back, in several years, the shares it issued to complete the deal. This will hit Disney a bit in terms of share value — issuing new stock will dilute the value of existing stock.

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Ousted Disney Studios head Rich Ross lands in Murdochland at Shine America

Rich Ross (L), Walt Disney Studios Presi

FREDERIC J. BROWN/AFP/Getty Images

Rich Ross, on left in glasses, ran Walk Disney Studios until this April. Now he's landed at Shine America as CEO.

Back in April, Rich Ross was pushed out as the president of Walt Disney Studios, the moviemaking arm of the Mighty Mouse. This was just after the debacle of "John Carter," a bloated box-office flop, and before the advent of "The Avengers," which shattered box office records.

Ross, who had come from TV, was in the wrong place at the wrong time. "The Avengers" aside, Disney has been struggling of late to get its core filmmaking business back in track, even as the company has seen theme parks bring in solid revenues. It goes without saying that Disney isn't really Disney without movies. So it made sense that Disney named a movie executives' executive to the post in Alan Horn.

Meanwhile, Ross has landed on his feet — back in TV. He was just named CEO of Shine America, which is part of the Shine Group, an enterprise overseen by Elisabeth Murdoch, daughter of Rupert Murdoch.

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Disney names an executives' executive in Alan Horn to run movie studio

Marvel Studios Celebrates Release Of "Marvel's The Avengers" At The New York Stock Exchange

Stephen Lovekin/Getty Images

Ringing the opening bell at The New York Stock Exchange as part of a celebration of the release of Marvel Studios "Marvel's The Avengers" on May 1, 2012 in New York City. Walt Disney Studios' new head, Alan Horn, will want to see more events like this.

When Rich Ross, a former TV guy, was ousted as the head of Walt Disney Studios, the moviemaking arm of the Mighty Mouse, it was generally assumed that someone with a tad more experience on the film side would be his replacement.

Ultimately, Disney went with experience and then some. Maybe a bit too much experience, in fact.

Alan Horn assumes the role, coming out of semi-retirement after a strong tenure at Warner Bros., where as president he oversaw the highly successful "Harry Potter" and "Dark Knight" franchises. This is from Bloomberg:

Chief Executive Officer Robert Iger has placed a high priority on the studio, which lost $84 million last quarter because of “John Carter.” The studio is benefiting this month from “Marvel’s The Avengers,” which has posted $1.31 billion in worldwide sales and lifted Disney to first in U.S. theater revenue at $742.7 million....

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