As I was picking up my 4-year old son's toys the other day, it struck me that they were almost universally Pixar's Cars merchandise. A quick tally of the retail value of the die-cast cars, race tracks, bedsheets, books, and other Cars paraphernalia in his room came to over $200.
Disney did not sell me $20 worth of movie tickets and a $15 DVD. I was a $235 sale to them. My son's friends are also obsessive over the film, collecting all the characters' cars and theming birthday parties around the film. Just how much money is this film making?
Cars was released on June 6, 2006, five months after Disney purchased Pixar. Its production budget was $120 million. The film grossed $461 million worldwide. Disney netted half that from the exhibitors, i.e. $230 million.
Home video rentals totaled $46 million at last count. Disney netted about half that, or $23 million. The Cars DVD sold 9 million copies in its first week of release according to Rentrak. We can safely assume by this time 12 million units have been sold, generating $120 million at wholesale.
Our tally so far, on theatrical and home video is around $373 million. Net.
In a June 19, 2007 press release, Disney stated that "Cars has generated $2 billion in global retail sales with a mix of toys, electronics, home furnishings, apparel, video games and publishing." For comparison's sake, Pirates Of The Caribbean merchandise has generated half that. By my math, since its release, Cars toys sales has equaled Lucasfilm's Star Wars merchandise sales.
Figure a 15% license fee on this merchandise, and Disney has netted another $300 million, bringing our NET total so far to $673 million, on a $120 million investment. In one year.
Bob Iger was roundly criticized for overpaying when he spent $7.5 billion in January 2006 for Pixar. If you assume Disney is amortizing that purchase over 15 years, the Pixar purchase costs $500 million per year.
To date, Cars has probably made over $500 million in profit, thereby covering the "payments" on the Pixar purchase. Viewed through an accountant's eye, Disney purchased Pixar for free. Since the date of the Pixar purchase, Disney stock has appreciated from $24.7 per share to $34.5, an increase of nearly $19 billion dollars in market cap, or nearly 3 times the Pixar purchase price.
And they got Steve Jobs, the most creative executive in business right now. Nice work, Bob.
Michael who?
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