Disney Acquires Lucasfilm

Greg is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Well, it's official. The deal that Disney (NYSE: DIS) started in October to absorb Lucasfilm has concluded. It's a dream come true (except maybe to original Star Wars trilogy purists). What does this mean for Disney—besides a new installment in the Skywalker saga?

Disney is known for its wise buys; it acquired Pixar in 2006 for $7.4 billion, which as of early 2012 is the highest average grossing studio in the business. Since absorbing Marvel Entertainment for $4 billion in 2009, the “Marvel Cinematic Universe” has become the fourth highest grossing film franchises of all time, and continues to promise box office success.

As of 2011, major competitor Warner Bros. (NYSE: TWX) currently ranks as the second major film studio in the world; Disney ranks fourth. But even with Warner Bros. dominating 18.1% of the market share in 2011 (compared to Disney's 12.2%), Disney’s acquisition of Lucasfilm and all its subsidiaries is sure to give Warner Bros. a run for its money.

As unpredictable as the Lucasfilm buyout might have seemed, in hindsight it's only natural. Disney's worked closely with Lucas for a long time, as far back as 1986 with his directing of EPCOT's musical attraction film Captain EO. Since 1989, Hollywood Studios has been hosting both Star Tours, the simulated ride spin-off of Episodes IV-VI (with a more recent Jedi Academy show), and the Indiana Jones Epic Stunt Spectacular! attraction.

Compare the 2011 overall attendance numbers to those of Universal Studios, which currently holds operating theme park properties in Hollywood, Orlando, Singapore, and Japan. Universal Studios Recreation Group brought in 30.8 million visitors, while Disney Parks and Resorts attracted a staggering 121.4 million, making it the largest amusement park corporation in the world. Looks like Lucasfilm made the smart choice; nobody does global better than Disney.

What advantages does Lucasfilm bring with it? 

Hopefully a lot, since Disney paid an end total of about $4.06 billion for Lucasfilm—$2.208 billion in cash and leaving 37,076,679 shares available for stockholders at $50 (closing price) per share. The Lucasfilm acquisition includes the Indiana Jones and Star Wars franchises, as well as all other subsidiary companies including Skywalker Sound, Industrial Light & Magic, and LucasArts.

By owning the rights to these, Disney is now equipped with even more businesses historically responsible for Academy Award-winning visual effects, sound effects/editing and score recording, and game console publishing/developing—not to mention all the consumer goods that go along with them.

What is Lucasfilm’s future with Disney?

Though the stock market future is unpredictable, analysts consider it more advantageous to buy Disney stock than to sell. For now that’s good news for Disney, which is known worldwide for its superior creative output.

At the time of the Lucasfilm buyout in late December, the closing price was higher than the original due to Disney’s stock worth, a sign of Disney’s good faith in a successful partnership with Lucasfilm—and successful it’s sure to be.

In addition to the news buzz of a future Star Wars film, think of all the marketing opportunities. The Star Wars franchise itself has flourished for almost 40 years and will most likely continue to do so. Who better than Disney to take it (and Lucasfilm in general) to the next level?

The idea of successful global economic growth is at the core of The Walt Disney Company’s business strategy. Robert Iger, president and CEO of Disney, has confidently stated that he believes the world-renowned Lucasfilm acquisition, united with Disney’s access to many different markets and industries, will produce that growth and, in turn, enduring worth. We agree.

Looks like The Force is now with Disney.


copyhubwriters has no position in any stocks mentioned. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of General Electric Company and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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