For Disney, It's a Big World After All
Jul 21st 2012 2:02PM
Updated Jul 21st 2012 2:04PM
It's not a small world for Walt Disney (NYS: DIS) . The House of Mouse is conquering new magic kingdoms by quietly expanding its already significant international base. In India alone, Disney recently started reaching 250 million new consumers with a single purchase. Global ventures like this could bolster, and perhaps drive, the entertainment powerhouse's growth for the foreseeable future.
John Carter, a Russian favorite
When Walt Disney Pictures released John Carter in March, it was quickly labeled the biggest flop of all time. A critic from The New Yorker called it simply "a mess." In its last quarterly statement, Disney attributed an $84 million loss in its studio entertainment division "primarily" to the film.
The sci-fi film about a Civil War veteran battling 12-foot barbarians on Mars, however, broke box-office opening-weekend records in Russia. The Chinese loved it, too: It posted Disney's second-best weekend ever in China. Same for Mexico. Abroad, the film grossed a decent $210 million -- three times its domestic gross -- bringing the worldwide gross to $280 million.
Disney overestimated its losses from John Carter, which ought to buoy its studio entertainment earnings this quarter. Its last quarterly statement also does not include the absurdly successful The Avengers -- another international favorite. At $1.45 billion,The Avengers was the third highest-grossing movie worldwide in history. Of those sales, 58% came from theaters outside the United States.
A Disney World in every land
At 17 million visitors annually, Disney's Magic Kingdom in Orlando is the most visited theme park in the world. It is also the most iconic -- the world's theme park. However, much of Disney's growth in its parks and resorts division comes from overseas. Although domestic attendance increased 1% in 2011, international attendance increased 6%.
More visitors flocked to Hong Kong Disneyland to see the new Toy Story Land -- and spent more money per visit. (Just think what Disney could do with The Avengers Land, or a John Carter Land in Russia.) Tokyo Disney also saw an increase in visitors this past quarter, after March 2011's earthquake and tsunami.
In 2015, the Shanghai Disney resort will open to serve the world's most populous country. This resort will include, at first, a Magic Kingdom-style park, an entertainment district, and two themed hotels. Two additional theme parks will come later. Plus, Shanghai's upcoming Enchanted Storybook Castle will be the largest ofall Disney castles!
A wide world of sports
As much as the world loves Disney's movies and magical parks (and the Russians love John Carter), the heart of Walt Disney lies in its media networks, which bring in nearly 50% of the Mouse's total revenue. There are 100 international Disney Channels, reaching 141 million subscribers, not to mention the moneymaking behemoths ESPN and ABC, daily fixtures for many Americans -- and international folks, too.
ESPN owns or has distribution agreements with 47 international sports networks and reaches 200 countries and territories, including Brazil, Latin America, Canada, the Caribbean, Australia, New Zealand, and the Pacific Islands. In the United Kingdom, ESPN has a live sports network. Its reach it truly immense and an absolute boom for Disney.
A whole new world
Disney's biggest international story, and one largely neglected by the media, is its acquisition of Indian media conglomerate UTV Software Communications earlier this year. UTV owns six of the most popular entertainment, news, and film channels in India, a country with four times the population of the United States and a burgeoning middle class. A 2007 study by McKinsey estimates that the average household income in India will triple over the next two decades, and the country is expected to become the world's fifth-largest consumer economy by 2025.
Disney wants to be right there. Jay Rasulo, the company's senior executive vice president and chief financial officer, declared the company's ambitious goal to be "the family brand of India." With the UTV acquisition, it now reaches 100 million Indian viewers weekly, and 250 million total consumers through the conglomerate's multidimensional platforms. The opportunities in mobile, movies, and gaming are enormous.
Although the Mouse's next quarterly statement, to be released Aug. 7, is likely to attract media attention for its anticipated studio entertainment earnings, Foolish investors ought to keep a close eye on how UTV affects the revenue for its media networks. Over the long term, the company's international investments need to not only bring Disney to the growing Indian and Chinese middle classes, but also grow profits. Disney's world is rapidly expanding.
The article For Disney, It's a Big World After All originally appeared on Fool.com.Foolish intern Ryan Jepson owned shares of Disney at the time of publication. The Motley Fool owns shares of Disney. Motley Fool newsletter services have recommended buying shares of Disney. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.
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