A look at Disney’s movie business
The Walt Disney Company’s (DIS) new animated film Zootopia has already reached $300 million at the US box office. Disney has many movies lined up for this year, including Marvel’s Captain America: Civil War, The BFG, and another animated film, Moana. Last week, Disney announced a new Indiana Jones movie set to be released in 2019.
At a Deutsche Bank investor conference early this month, Disney stated that it considers the ROIC (return on invested capital) as an important criterion for its movie business. Disney saw its ROIC, which excludes returns from the Star Wars movie, go from 20% in 2014 to 30% in 2015. This indicates that Disney is performing better than its competitors in the studio entertainment business, such as Comcast’s (CMCSA) Universal Pictures. The movie business usually sees an ROIC of 10%.
Disney’s studio entertainment segment in fiscal 1Q16
Disney’s studio entertainment segment saw revenues of $2.7 billion in fiscal 1Q16, up by 46% year-over-year, with an operating income of $1 billion. This segment’s operating income has grown by a phenomenal 86% since fiscal 1Q15. As the above chart indicates, in fiscal 2Q16, 21st Century Fox’s (FOXA) filmed entertainment segment was the second-largest contributor to the company, representing 30% of its total revenues of $7.4 billion in 2Q16.
21st Century Fox makes up 0.65% of the PowerShares QQQ ETF (QQQ). 4.7% of QQQ’s holdings are in the television sector. QQQ also holds 0.84% in Netflix (NFLX). In the next part of this series, we’ll look at how Disney expects Star Wars to fuel its merchandise and licensing revenues growth.