Peter Kafka

Recent Posts by Peter Kafka

The Math Behind Disney’s “Star Wars” Deal

Disney is paying George Lucas $4 billion for his “Star Wars” empire. Did it get a good deal?

That all depends, of course, on whether people want to see the next three “Star Wars” movies Disney says it is lining up.

It’s a tricky bit of guesstimating, because the people who were young enough to be wowed by Lucas’ first installment when it debuted in 1977, are now oldsters who are 40 and much older.

And many of those same people (cough) despise the last three movies he put out. But if a new generation of kids like this stuff, then Disney is in good shape.

Bernstein’s Todd Juenger breaks it down in a note today. For starters, he figures Lucasfilm does $860 million in revenue a year right now (see table below).

Next you have to guess what kind of performance Disney will get from the new movies. If each of the next three three movies does “Avengers”-like numbers, they’ll generate $1.5 billion at the box office, $2.8 billion overall, and generate $1 billion each in profits, and the deal works out for Bob Iger and his successor.

Is all that doable? Yes, he says: “Not heroic, given the ‘Star Wars’ brand and Disney’s unparalleled global consumer products network.”

Here’s the math:

Latest Video

View all videos »

Search »

Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work