Explaining Southern California's economy

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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Disney earnings: This company is all about broadcast and parks

disney disneyland

Photo by KeithJ via Flickr Creative Commons

Sleeping Beauty Castle at Disneyland in Anaheim, California. The Walt Disney Company reported third-quarter earnings today, and parks proved themselves once again to be a revenue leader.

Disney just released earnings for its third fiscal quarter. They beat analysts' expectations in terms of profit, but the company missed on total revenues (although not by much). There's a story within that story, however, that relates to recent trends for the Mighty Mouse.

At about $11 billion, the company's revenue was up 4 percent from the third quarter of 2011 (Wall Street wanted more). Earnings per share were up 31 percent, from to $1.01 in 2012 versus $0.77 in 2011.

A decent quarter, but that's just the beginning of story. If you look at Disney's revenues, you see that stuff like the Disney Channel and ESPN — broadcast — and the parks and resorts business combined accounted for roughly $8.5 billion. That's...77 percent of total revenue for the quarter.

The movie business is at $1.6 billion.

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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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Disney gets its movie business back, just in time

Rich Ross (L), Walt Disney Studios Presi

FREDERIC J. BROWN/AFP/Getty Images

The Muppets get a Hollywood Blvd. star — and Disney turns in a solid first quarter. The movie business is still weak, however.

Disney just reported first quarter earnings, and they were pretty good. But they repeated a trend at the company: gains on theme parks and with media, including ESPN and ABC, but losses on Disney Movie Studios. 

This is from Reuters:

The film studio recorded an $84 million loss in operating income on "John Carter," which cost $250 million to produce and millions more to market.

As in recent quarters, Disney earnings were boosted by its media unit, which includes the sports channel ESPN and ABC. Operating earnings in that unit increased 13 percent to $1.7 billion in the latest quarter.

Earnings at the theme park unit rose 53 percent to $222 million.

"You've got a parks recovery that's underway, and you have a cable network business that's best in class. It showed good growth on the top-line there," said Janney Montgomery Scott analyst Tony Wible...

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How are Los Angeles companies handling the stock-market slide?

U.S. Markets Open Under Uncertain Economic Conditions

Daniel Berehulak/Getty Images

When will it end?

AP doesn't sugarcoat the bad news for investors:

The stock market extended its longest and deepest slump of the year Tuesday, caught between a recurring nightmare of European debt and the beginning of uncertain corporate earnings reports at home.
The Dow Jones industrial average fell almost 220 points and was on pace for its third triple-digit decline in four trading sessions. It hit its lowest point since Feb. 3, during the market's strong and steady climb earlier this year.

Prices for U.S. government debt rose for the fifth day in a row as investors sought a safe place for their money.

So how are public companies located in Los Angeles handling the decline?

The Big Three — Disney, Northrop Grumman, and Occidental Petroleum — are actually doing okay. They're all down, of course, but nobody has fallen off a cliff. Occidental has fared the worst, due to the assumption that weak demand for gas is going to hurt profits, most likely.

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