Disney Headlines for July 30th, 2024

In this week’s Disney Headlines, Ryan Reynolds proves that he is Marvel Jesus, punctuating a great summer for Alan Bergman.

Meanwhile, from Hell’s heart doth Isaac Perlmutter stab at thee, Bob Iger. And Disney’s uncomfortable streaming relationship with David Zaslav begins.

We’ve got the start and finish of three different and wildly unlikely Disney shotgun marriages to discuss.

Disney’s Most Popular Character(?)

I keep saying that nothing surprises me these days.

Like many of you, I grew up in the Disney era of kindness and gentility.

Heroes like Mickey Mouse, Goofy, and Snow White exemplified my understanding of purity and family-friendly storytelling.

The last thing I ever expected was for Disney to shatter the record for an R-rated opening weekend, but here we are.

Deadpool & Wolverine has just exploded into theaters and torched the pace of everything that came before it, including Inside Out 2.

While the two films have literally zero commonality, they’re both carrying the proverbial torch for Disney Entertainment right now.

You may remember that Disney’s 2023 year in film performed about as well as Disney’s stock, which is to say not well.

As discussed last week, two executives lead Disney Entertainment.

Co-Chairman Dana Walden just had her moment in the sun with Disney programming earning a record number of Emmy nominations.

Meanwhile, Alan Bergman has been left holding the bag with Disney films, so he spent the last 18 months playing defense… but no more.

Disney currently claims the biggest film of the year, with Inside Out 2 crossing $1.5 billion worldwide.

That box office total makes it Pixar’s most successful film ever, as well as the top animated film of all-time.

As I type this, it’s the #12 film ever at the box office and is likely to finish in the top ten, needing less than $20 million more to reach that milestone.

Disney Ascendant

Historically, Deadpool films are frontloaded, so the Ryan Reynolds film isn’t certain to beat that total, but it has already earned $438 billion after one weekend.

Just to be clear, after three days, it was the #6 release of 2024.

It’ll be a top-three release by this time next week.

At this point, it’s a foregone conclusion that Disney claims the top two box office titles by mid-August.

Remarkably, Disney still has two other potential blockbusters, Moana 2 and Mufasa: The Lion King scheduled for release this year.

Right now, my expectation is that one year after the 2023 struggles, Disney will claim four billion-dollar blockbusters.

While they don’t owe it ALL to Deadpool, the reality is that Disney just released a movie where a guy swears hundreds of times and possibly kills even more…and audiences lapped it up.

The Disney you know is changing and evolving.

Bergman can finally take a victory lap, and nobody’s complaining about Disney movies anymore.

The Disney/WBD Bundle Arrives

Kids, let me tell you about something from the before times.

Adults would subscribe to something called “cable television,” thereby bundling together content from various corporations.

Some of the channels, like HBO, Showtime, and Cinemax, cost extra, while basic offerings like Disney Channel, TBS, and TNT came with the standard package.

This business model lasted for nearly 40 years, despite the fact that everyone in Hollywood and Wall Street is extraordinarily greedy.

That’s because nobody wanted to rock the boat on such a high profit margin business.

Then, streaming arrived and promptly disrupted broadcast and cable television.

Thus far, streaming has proven wildly unprofitable, with services like Max, Peacock, and Paramount+ losing billions of dollars thus far.

Until its most recent quarter, Disney’s direct-to-consumer division proved similarly unprofitable.

While Hulu and Disney+ technically had modest profits for those three months, it remains a financial work in progress.

Disney CEO Bob Iger knows that streaming will eventually prove lucrative, but Wall Street investors have grown impatient.

They want profits NOW, forcing Iger and his staff to accelerate their timeline.

Enter David Zaslav the (incompetent) CEO of Warner Bros. Discovery.

Two years ago, Zaslav oversaw the acquisition of Discovery, Inc.

Thus far, that deal has proven as successful as the maiden voyage of the Titanic.

Zaslav runs a company with a $20 billion market cap and long-term debt of $42 billion.

Suffice to say that Zaslav is desperate and ready to cut a deal.

So, Iger and Zaslav agreed to a unique streaming bundle.

Strange Bedfellows

They’re trying to reinvent the cable business model with a joint package of Disney+, Hulu, and Max.

The two companies just announced the subscription price for the service, and it may have caused you to do a double-take.

The ad-free version of this bundle costs $29.99, while the streaming bundle with commercials costs $16.99.

Yes, you can ostensibly save $13 a month by agreeing to watch commercials while streaming.

That’s a business tactic for them, not a deal for you.

Disney and WBD will earn a lot more than $13 each month if you allow them to serve ads.

You should think of this bundle the same way as the $4 introductory level for Disney+ in 2019.

Both companies are trying to entice a new generation of customers into accepting commercials as the cost of streaming.

Simultaneously, Disney has already cornered the market on streaming ad buys, a place where its tech is superior to even Netflix.

There’s a plan in place, and it’s going to lead to sustained revenue growth for Disney in the coming years.

Still, partnering with Zaslav is like Scar entering a business agreement with the hyenas.

Sour Grapes or Brilliant Con?

By now, you’ve probably heard that Isaac Perlmutter has sold all his Disney stock.

Why does this matter?

Perlmutter was the former chairman of the board for Marvel Comics.

Later, he merged his company with Marvel to become Marvel Enterprises, bringing the latter business out of bankruptcy.

In 2009, Perlmutter broke the bank when he sold Marvel to Disney for $4 billion.

Part of that transaction involves Disney stock.

So, for many years, Perlmutter claimed that he was the largest Disney shareholder.

There have been long-standing debates about whether this is true, but let’s just say, eh, close enough.

A staunch conservative, Perlmutter bristled over Disney leadership, infamously feuding with Marvel’s Kevin Feige and Bob Iger himself.

In 2022, Perlmutter aided his friend Nelson Peltz in an attempt to force their way into power on Disney’s board of directors.

Iger returned just in time to prevent such a fiasco.

Then, he chose to twist the knife by terminating Perlmutter from Disney.

One of Perlmutter and Peltz’s requests was for layoffs, so Iger gave Perlmutter what he wanted, thereby humiliating the billionaire.

Keep One Eye Open

Not coincidentally, Peltz came back for round two, once again using control of Perlmutter’s shares to form an existential threat to Disney’s current leadership.

Peltz suffered a devastating loss, but the outcome was beneficial to both billionaires.

Disney’s stock soared during the battle, eventually crossing $120 per share.

Peltz bragged that he made a billion dollars by selling his shares at the high point.

Now, Perlmutter has gone to the Wall Street Journal to gloat that he did the same.

According to the report, Perlmutter emptied his entire Disney portfolio, selling millions of shares, netting him nearly $3 billion.

Then, he teased that he might re-purchase if the stock price falls to the $65-70 range.

At the close of business on Friday, Disney was trading at $89.93.

So, Iger must do something to juice the stock price to avoid round three of this nonsense.

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