'Home on the Range': Analysts already talking write-down
By Richard Verrier
Sentinel Staff Writer
April 6, 2004
After rounding up just under $14 million at the box office this weekend, Walt Disney Co. could be forced to take a write-down on its barnyard animated tale, Home on the Range.
The movie, which cost more than $100 million to make, came in at fourth place this past weekend, behind first-place Hellboy, runner-up Walking Tall and Scooby-Doo 2: Monsters Unleashed.
It "was a very disappointing weekend" for Home on the Range, said Jordan Rohan, an analyst with Schwab SoundView.
Although Wall Street was hardly counting on another Lion King, analysts said the tepid debut for Home on the Range puts further pressure on the Disney studio to bring home the bacon for the Burbank, Calif., entertainment giant.
The studio's financial showing is especially critical this year because Disney and its embattled chief executive Michael Eisner have promised double-digit earnings growth to its increasingly restless investors. Eisner was forced to give up the chairman's job last month after shareholders delivered a 43 percent vote of no-confidence in his management.
After a record year in 2003, the Disney studio has fared poorly with two other recent releases, Hidalgo and Ladykiller. Of even greater interest to investors will be the performance of Alamo, an expensive historical drama that hits theaters on Friday. It was originally scheduled to be released at Christmas, but was delayed because the studio said the film wasn't ready.
If the numbers for Home on the Range don't improve, Disney could be forced to write down as much as $100 million in production and marketing costs in the second quarter, Rohan said.
Another analyst, Tom Wolzien, with Sanford C. Bernstein & Co., added: "Anybody who would anticipate a rapid recovery in the animation product at Disney needs to wait awhile longer."
Dennis Rice, spokesman for Walt Disney Studios, said "we're pleased with the opening." He predicted the movie would do well over the upcoming Easter weekend and cited favorable results from Cinemascope, which tracks audience reaction.
Rice noted that Disney's Emperor's New Groove, which opened to $9.8 million at the box office in 2000, went on to make $89.3 million.
"It's way, way too early to talk about the financial future of the movies," Rice said. "We're not ready to put a nail in the coffin."
Other analysts agreed, and said it's too early to predict such a large write-down. Moreover, they said, strong DVD sales from last year's hits Finding Nemo and Pirates of the Caribbean will offset any losses.
"I definitely think it's disappointing, but it's a little too early to jump to conclusions," said Richard Greenfield, of Fulcrum Partners. "We'll have a lot better idea next Monday."
Smith Barney analyst Jill Krutick said in a research report that "we do not expect the film will be a major write-off." She added that Disney's animated films tend to do well overseas, citing Brother Bear, which made $19 million in its debut and went on to gross $215 million worldwide.
Still, Disney can ill-afford another setback in feature animation, the medium it pioneered.
The once-storied division has come under fire in recent years for its spotty record, which included the box-office flops Atlantis and Treasure Planet, for which the company was forced to take an estimated $74 million write-down. In the past three years, the unit laid off more 1,000 workers in an effort to reduce costs and transition into the brave new world of digital animation.
Although the studio say it hasn't given up traditional animation, Home on the Range was the last fully 2-D feature film in the company's pipeline.
The pressure to succeed has only intensified since Disney parted ways with Pixar Animation Studios, the leader in computer-animation behind the Toy Story and Finding Nemo hits, in a dispute over business terms. The relationship concludes after Pixar delivers two more digital movies to Disney.
Even so, Disney executives have touted their own animation capabilities.
As for Home on the Range, Wolzien said, "This apparently is not the start of the solution to Pixar."
Richard Verrier can be reached at richard.verrier@latimes.com or 1-800-528-4637, Ext. 77936.
By Richard Verrier
Sentinel Staff Writer
April 6, 2004
After rounding up just under $14 million at the box office this weekend, Walt Disney Co. could be forced to take a write-down on its barnyard animated tale, Home on the Range.
The movie, which cost more than $100 million to make, came in at fourth place this past weekend, behind first-place Hellboy, runner-up Walking Tall and Scooby-Doo 2: Monsters Unleashed.
It "was a very disappointing weekend" for Home on the Range, said Jordan Rohan, an analyst with Schwab SoundView.
Although Wall Street was hardly counting on another Lion King, analysts said the tepid debut for Home on the Range puts further pressure on the Disney studio to bring home the bacon for the Burbank, Calif., entertainment giant.
The studio's financial showing is especially critical this year because Disney and its embattled chief executive Michael Eisner have promised double-digit earnings growth to its increasingly restless investors. Eisner was forced to give up the chairman's job last month after shareholders delivered a 43 percent vote of no-confidence in his management.
After a record year in 2003, the Disney studio has fared poorly with two other recent releases, Hidalgo and Ladykiller. Of even greater interest to investors will be the performance of Alamo, an expensive historical drama that hits theaters on Friday. It was originally scheduled to be released at Christmas, but was delayed because the studio said the film wasn't ready.
If the numbers for Home on the Range don't improve, Disney could be forced to write down as much as $100 million in production and marketing costs in the second quarter, Rohan said.
Another analyst, Tom Wolzien, with Sanford C. Bernstein & Co., added: "Anybody who would anticipate a rapid recovery in the animation product at Disney needs to wait awhile longer."
Dennis Rice, spokesman for Walt Disney Studios, said "we're pleased with the opening." He predicted the movie would do well over the upcoming Easter weekend and cited favorable results from Cinemascope, which tracks audience reaction.
Rice noted that Disney's Emperor's New Groove, which opened to $9.8 million at the box office in 2000, went on to make $89.3 million.
"It's way, way too early to talk about the financial future of the movies," Rice said. "We're not ready to put a nail in the coffin."
Other analysts agreed, and said it's too early to predict such a large write-down. Moreover, they said, strong DVD sales from last year's hits Finding Nemo and Pirates of the Caribbean will offset any losses.
"I definitely think it's disappointing, but it's a little too early to jump to conclusions," said Richard Greenfield, of Fulcrum Partners. "We'll have a lot better idea next Monday."
Smith Barney analyst Jill Krutick said in a research report that "we do not expect the film will be a major write-off." She added that Disney's animated films tend to do well overseas, citing Brother Bear, which made $19 million in its debut and went on to gross $215 million worldwide.
Still, Disney can ill-afford another setback in feature animation, the medium it pioneered.
The once-storied division has come under fire in recent years for its spotty record, which included the box-office flops Atlantis and Treasure Planet, for which the company was forced to take an estimated $74 million write-down. In the past three years, the unit laid off more 1,000 workers in an effort to reduce costs and transition into the brave new world of digital animation.
Although the studio say it hasn't given up traditional animation, Home on the Range was the last fully 2-D feature film in the company's pipeline.
The pressure to succeed has only intensified since Disney parted ways with Pixar Animation Studios, the leader in computer-animation behind the Toy Story and Finding Nemo hits, in a dispute over business terms. The relationship concludes after Pixar delivers two more digital movies to Disney.
Even so, Disney executives have touted their own animation capabilities.
As for Home on the Range, Wolzien said, "This apparently is not the start of the solution to Pixar."
Richard Verrier can be reached at richard.verrier@latimes.com or 1-800-528-4637, Ext. 77936.
