Shares of Walt Disney Co. drop despite ‘Star Wars’ opening
The Walt Disney Co. headquarters are seen in Burbank.
“Star Wars” delivered record-breaking box-office results for Walt Disney Co. on Thursday night, but you wouldn’t know it on Wall Street.
In fact, shares of the Burbank company were down more than 3% a day after the debut of the company’s hoped-for blockbuster, “Star Wars: The Force Awakens.”
Most media company stocks were down in midday trading Friday as part of a wider sell-off in the market, but Disney’s losses outpaced its rivals. At one point, the stock had fallen about 3.8% to $107.80, despite the extraordinary opening for the newest “Star Wars” movie.
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One explanation could be Wall Street’s concerns about weaknesses in the company’s television business.
Last summer, Nielsen Media Research said that ESPN had lost about 3 million subscribers over the past year, which sparked a sell-off of media stocks on Wall Street in August.
Richard Greenfield, media analyst with BTIG Research, said in a report released Friday that Disney has overpaid for sports rights “based on overly aggressive multichannel video subscriber projections.”
Greenfield also changed his rating of Disney stock from “neutral” to “sell.”
However, he also noted that the new “Star Wars” picture would allow the company to “modestly” exceed analysts’ consensus expectations for earnings in fiscal 2016. He predicted the film would gross $2.6 billion worldwide.
A final box-office tally at that lofty plateau would make “The Force Awakens” the second-highest-grossing picture of all time, trailing only 2009’s “Avatar,” which grossed $2.8 billion worldwide. (Many analysts expect the film to earn $1.5 billion to $2 billion in global box-office returns.)
“The Force Awakens,” directed by J.J. Abrams, got off to a strong start on Thursday night, taking in a record $57 million in the United States and Canada. Box-office analysts have estimated the film’s domestic gross would be in the range of $180 million to $220 million through Sunday.
Disney, which acquired “Star Wars” creator Lucasfilm in 2012 for $4 billion, has said it will release four more pictures in the space series over the next four years.
The franchise also is a consumer products juggernaut, spinning out an array of merchandise, from video games to backpacks and action figures.
As a result, “Star Wars” could generate more than $25 billion in revenue over the next five years, according to analysts’ estimates. (How much of that Disney will keep is hard to calculate, in part because the company has not said how it divides revenue with its various partners.)
On Friday, credit ratings agency Moody’s said that the release of the new “Star Wars” film “positively affects the company’s credit.”
“The ‘Star Wars’ franchise is uniquely multi-beneficial to Disney, and clearly the evergreen intellectual property further diversifies and strengthens the company’s foundation alongside its most important franchises,” Moody’s said.
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