The Avengers Should Make Up For Disney’s John Carter Debacle

by Trefis Team
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Disney’s (NYSE:DIS) filmed entertainment arm, which competes with Time Warner (NYSE:TWX), Viacom (NASDAQ:VIA) and News Corp (NASDAQ:NWS), will be releasing The Avengers on May 4th in the U.S., and predictions for the opening weekend are huge. Based on pre-release tracking, the movie is expected to earn over $150 million domestically on its opening weekend. [1] That puts it in the company of record-breaking films such as The Dark Knight and the Harry Potter series.

See our complete analysis for Disney

On track for massive opening weekend…

The Avengers combines several of the studio’s existing properties, including Iron Man and Captain America, which have had hugely successful individual films over the past few years. Given that these franchises are already established it seems to be a near certainty that the film will be a massive success.  The only question is how it will stack up against the standards set by The Dark Knight and Harry Potter and the Deathly Hallows Part 2, which raked in $158 million and $170 million domestically on their respective opening weekends. [1]

.. which should make up for John Carter failure

The success of The Avengers should help Disney recoup some of the losses it incurred with the failure of John Carter earlier this year (see The Significance Of John Carter’s Failure For Disney). This also demonstrates the enormous profit potential of comic book-based franchises, and certainly seems to justify Disney’s $4 billion acquisition of Marvel Entertainment in 2009 (the Avengers franchise is based on Marvel comics). While we estimate that Marvel’s publishing and licensing division contributes less than 5% of Disney’s value, the real value from that deal comes from leveraging Marvel properties to produce blockbuster films. We account for films – even those based on Marvel properties – in the Disney Studios division, which we estimate makes up close to 20% of Disney’s value.

 

Our price estimate for Disney stands at $52, implying a premium of about 20% to the market price.

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Notes:
  1. How ‘The Avengers’ Stacks up Against Other Marvel Movies, hollywood.com, Apr 16 2012 [] []
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