Disney Stock Down After 'Cars' Debut (http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2006/06/12/financial/f135737D62.DTL&feed=rss.business) -- SFGate/AP, 2006-06-12
Shares of The Walt Disney Co. dipped slightly Monday, then rebounded, reflecting lower than expected ticket sales during the opening weekend of the Pixar animated film "Cars." Shares closed down 43 cents, or 1.5 percent, to $28.90 on the New York Stock Exchange, but had dropped as low as 85 cents, or 3 percent, earlier in the day.

While its first film since Disney bought Pixar Animation Studios for $7.4 billion brought in an estimated $62.8 million, making it the top movie at the weekend box office, actual figures released Monday put ticket sales lower at $60.1 million.

The unofficial "buzz" around the Studio yesterday and this morning was definitely some mild disappointment about Cars opening weekend. While they seemed pleased it was #1 at the box office, I think they were expecting something closer to at least 80 million.

There's definitely no feeling they think it's anything like a flop. Just that I think they were hoping to come back to work on Monday and find they a super mega-hit in their camp.

My contacts are now saying they are hoping it makes up for the opening weekend as "word-of-mouth" spreads about the film, which might give it less drop-off in the weeks to come, and exhibit really "long legs." Still big expectation for the long-haul.

Disney does kinda have a recent track record for overpaying for companies, just to watch those companies slowly tank under it's leadership. That and the fact that many on Wall Street did feel Disney overpaid for Pixar...I think has the market just a tad nervous with these opening numbers of the first release after the acquisition.

I think the correlation between stock price and an opening weekend take is rather silly to me. I have a feeling that this movie is going to have some staying power and will make some serious cash.

Did Disney overpay for Pixar? Probably so.(My opinion) But if you consider it a long-term investment (like they should) you can't expect for it to pay for itself overnight. I mean, the merchandising rights alone is going to score big from this movie for a while, I would bet.

People shouldn't be too hepped up about specific opening weekend numbers though $60 million is certainly less than hoped.

The Incredibles and Finding Nemo both opened with almost the exact same three-day total ($70 million) but Finding Nemo did about $100 million more domestically than did The Incredible. We'll know next weekend which is more is the more likely path.

The difference is that Disney has marketed the HECK out of "Cars", apparently to little effect. This indicates to me that studio execs knew they had a less-than-the-usual-stellar offering from Pixar. I haven't seen the movie yet, as it's the least intriguing (from a story and concept perspective) to me so far. I'll certainly buy it when it comes out on DVD, but it's not drawing me into the theater like even "Chicken Little" did.

The difference is that Disney has marketed the HECK out of "Cars"

Ummm, Disney markets the HECK out of most of their movies, especially animated ones.

Yeah, I'm curious which Pixar movie hasn't had the heck marketed out of it? Early on in the process there were some rumblings that Disney was underplaying The Incredibles to try and show Pixar how important Disney's marketing was to their success (they were still on the outs) but that faded when the marketing engine fully kicked in.

I wonder if "Cars" is going to end up being Pixar's equivalent to "Pocahontas". That film was a big hit at the box-office and has been quite successful both in merchandising and other secondary markets over the years, but it was called a "disappointment" at the time and still has something of a reputation for being an underperformer. The main reason for this is that it followed "Beauty and the Beast", "Aladdin" and "The Lion King", each of which had been a bigger blockbuster than the previous. Many, particularly in the financial world, pretty much decided that anything less at the box-office than what those three films had made was a disappointment, no matter how large the profits brought into the company by a film really were.

Pixar has had such an exceptional string of successes that they probably are now also going to deal with that kind of inflated expectations. That is how we get a situation where a $60 million opening weekend is treated by some as a sign of failure...

-Jeff

Ummm, Disney markets the HECK out of most of their movies, especially animated ones.

yeah - but Cars is different this time. usually there are the ubiquitous toys, clothing, bedding, video games, and park promotions. As well as McDonalds happy meals. However, with CARS you have NASCAR, Auto Club, insurance companies (really anything auto related), candy, soft drinks, internet services (which Incredibles did too since "Dash" was all about speed), etc. And I think the total number of licensees for toys and just the sheer amount of STUFF is, to say the least, volumous.

Pirates is getting similar treatment - although I think the breadth of items is not as broad.. and there have limited some of the licenses (like Zizzle being the only toy producer).

Jeff, I think you make a good point. Expectations are set according to the last "high score" sort of speak. Given Pixar's past offerings, Cars has some real big shoes, I mean tires, to fill.

At the same time, with the price of movie tickets going up (at least in my area) it gets costly to go out to the movies. Some people might want to hear what the grapevine has to say about it before dumping a good chunk of cash for a night out.

Yes, but it is also worth keeping in mind that The Incredibles was considered a disappointment as well for the same reasons.

I argued back when that Disney was overpaying for Pixar (as a pure money decision). But opening weekends for Pixar movies have not been reliable indicators of ultimate performance. The multiples are all over the place.

Yes, but it is also worth keeping in mind that The Incredibles was considered a disappointment as well for the same reasons.

I argued back when that Disney was overpaying for Pixar (as a pure money decision). But opening weekends for Pixar movies have not been reliable indicators of ultimate performance. The multiples are all over the place.

you're right... I think a lot of Wall Street is still focused on the traditional model of movie distribution - and the "immediate information event" aspect of announcements for Media companies - opening weekend, opening sales of a DVD, etc. - and then all of a sudden the long term $$ come out and the company looks good.

I wonder what Wall Street will do when Iger finally gets his idea to release a movie in theaters and on DVD at the same time... someone's got to rethink how to gauge performance then!

yeah - but Cars is different this time. usually there are the ubiquitous toys, clothing, bedding, video games, and park promotions. As well as McDonalds happy meals. However, with CARS you have NASCAR, Auto Club, insurance companies (really anything auto related), candy, soft drinks, internet services (which Incredibles did too since "Dash" was all about speed), etc.

I'm going to disagree that there's more for "Cars" because they were worried about it. I think "Cars" lends itself to more partners because of the subject matter. No "real life" companies to partner with for a movie about monsters or superheroes. I can't think of a time when a real Disney animated film (pickups like "Valiant" don't count) didn't get a mega-marketing blitz behind it, even when it's a video release and all they really want to do is mess with another studio's theatrical release...

I'm going to disagree that there's more for "Cars" because they were worried about it. ...

well, I never said it was because they were worried about it (that was another poster). I was just making the point there was more this time - for whatever reason...

I think the reason their advertising might not have worked it because it started so soon. I remember a few years ago hearing about 'Cars', and seeing trailers even back then. By the time the movie came out I was thinking, "wow, they couldn't even finish the darn thing. It must be a wreck".

Rather than exciting me, and giving the impression that a lot of work had gone into the movie, I felt like they didn't know what they were doing, and a lot of work had to go into the movie to "fix" it. I was dragged to see it by a friend, and was surprised at how well it was done, but I never would have seen it otherwise.

The early advertisement only made me believe they were pushing something that they expected to flop. Just my $.02

I think the reason their advertising might not have worked it because it started so soon.

This certainly is a well known danger in advertising and marketing, often referred to as "shooting your wad too soon."

While you often can and want to do some advance marketing and advertising to help build anticipation...if you do too much too far in advance...it can often backfire on you, and you find the balloon can't hold the air that long. It starts to leak. And folks start to lose interest. Like what you feel happened to you in this case.

A trailer tease now and then, fine. But you may be right. There was an awful lot of full-on billboard, print and other media ads out way, way in advance of the release date. It may have lost some impact along the long way.

The marketing strategy for Cars may have been influenced too much by the Disney-Pixar merger...with some at Disney hot to get maximum exposure for the benefit of Wall Street, right away. At the cost of later devaluing the impact those ads had on the actual film release.

In other words, in this particular case...the heavy early advertising may have been more "political" and posturing for Wall Street, than marketing for the film. And that might have cost the film a few bucks out of the gate.

well, but I also wonder whether so much of the advertising and merchandise marketing was planned and contracted well prior to the Pixar Merger being made more public. How long in advance do you think it takes marketing and designers to plan this stuff out - and get contracts in place for some of the gear. If I recall correclty, this was the disputed "last film" in the original contract between Pixar and Disney - so I wonder if the machine was started to get as much out of the film as possible without the knowledge of the merger.

Then, when the merger was going to happen, there was even MORE focus on the paired success of the two companies together.. Hmm...