The Force is Back! The Walt Disney Company (NYSE: DIS) has undoubtedly scored a major victory with its $4.05 billion acquisition of Lucasfilm. Star Wars fans will get to rejoice as the movie franchise has already been put back on the map for future releases. This acquisition price is said to be along the same valuation metrics as Marvel and Pixar, but Disney is truly getting a deal here. The Star Wars franchise value is only going to grow substantially in the years ahead under the power of Disney.
24/7 Wall St. evaluated the value of the Star Wars brand in early 2012, and the sales were already more than $30.5 billion. Disney will get to add untold billions of dollars to its future goodwill and accounts receivable for years and years into the future. If you don’t believe it, that figure of more than $30 billion is not adjusted for inflation and Star Wars is now thirty-five years old.
Could private equity firms step in and try to outbid Disney? It seems very unlikely as the deal has already been approved by George Lucas and by Disney’s board of directors. The buyout is also slated to close in the next few months. Disney can also milk more value out of the franchise than private equity firms because of its leverage with theme parks, television channels, merchandise stores, theater agreements, and ultimately due to Disney’s power in making deals ahead.
We did mention before, “Private equity firms, large media companies, and eccentric billionaires would be clamoring to sign confidentiality pacts to see if they could buy the rights to all of the Star Wars franchise. Owning the rights and intellectual property in the future would be worth much more than just millions of dollars. Would it sell for $1 billion? $2 billion? $10 billion?” Now we know. It was just over $4 billion.
The release of the 3D film “Star Wars: The Phantom Menace” and the ‘Star Wars: The Old Republic’ MMORPG video game have not changed the landscape too much since the last $30.5 billion valuation. There are supposed to be two more 3D releases ahead for Episode II and III. The relaunch of the movie franchise in 3D is only an incremental gain. What it will do is add to merchandise and product sales and will add to new media sales.
This figure of more than $30 billion is in real money. Disney has already promised future films as well as the incremental sales that will be generated around the films from television, interactive media, theme parks, live entertainment, and consumer products. Can $4 billion turn into $30 billion again? It should be easy for the likes of Disney.
Star Wars Episode 7 is not projected to hit theaters until 2015, followed by Episode 8 and Episode 9 in two or three year increments. When we valued the Ten Most Valuable Movie Franchises of All-Time, the Star Wars franchise was third behind James Bond and far behind the most valuable franchise of Harry Potter. Now imagine the future blockbuster potential here at modern day ticket sale prices. Avatar has had only one film and its total global sales had been tallied at almost $2.8 billion. Disney will likely be able to milk every bit of what Avatar did from consumers in its next Star Wars release.
It was just in 2007 that Forbes noted, “Star Wars’ initial release was followed by another five blockbuster films and a mini-industry of tapes and DVDs, toys, video games and books. Taken together over its 30 years of cultural dominance, the Star Wars franchise has earned more than $22 billion.” Another figure in late 2011 put the total Star Wars franchise value at a whopping $27 billion from Statistic Brain (using Forbes and Lucasfilm data). The figure of over $30 billion was using more recent data, and some of the calculations were extremely conservative.
George Lucas, the creator of Star Wars, is already a multi-billionaire. A year ago his net worth was listed as $3.2 billion by Forbes. So what if his net worth had been $3.6 billion before? Lucas is effectively the sole owner of Lucasfilm and the assets that are coming along with the sale to Disney. He will now be worth more than $7 billion without considering taxes.