Disney Takes $50 Million Write-Down on Canceled Film

Last Thursday, Disney Chief Financial Officer Jay Rasulo discussed the company’s performance this fiscal quarter at a presentation to investors at the Bank of America/Merrill Lynch Media, Communications and Entertainment Conference in Beverly Hills. Rasulo also disclosed that the company had taken a $50 million write-down following the cancellation of one of its upcoming films.

Following the cancellation of a stop motion animated film helmed by Henry Selick, the company has taken a $50 million write-down, which will cost the company two cents per share. The film, which was originally slated for release in late 2013, was canceled one year into its production; Rasulo commented that the project was “discontinued after looking at it.”

In addition, Rasulo disclosed that the company had not seen the increase in television advertising revenue that it was expecting following the Summer Olympics, when the majority of viewers were tuned into NBC. However, Rasulo feels hopeful that this will quickly improve, commenting:

“We did not see the kind of rebound after the Olympics that we thought we would when we gave our last view of advertising with our third-quarter results (Disney’s third fiscal quarter ends June 30). We do not see that persisting. Our first fiscal quarter advertising looks very, very strong.”

Rasulo also discussed some of the company’s biggest recent successes, including Cars Land at Disney California Adventure and the global expansion of the Disney Channel. About Disney Channel, Rasulo said:

“Disney Channel has become the biggest franchise grower for the company worldwide. It used to be animation, but the amount of time kids spent in front of the TV and web devices … mobile devices … in front of the Disney Channel make this an incredibly powerful vehicle.”

In addition, Rasulo discussed the recent hiring of Alan Horn as the new head of Walt Disney Studios. Rasulo emphasized that Horn was not brought in to make big changes at the studio, but rather to build upon and strengthen the studio’s current franchise-based strategy. He explains:

“You shouldn’t look for a fundamental change in our strategy of limiting our slate to films that we can successfully exploit and build brands around,” he said. “With [Horn’s] experience in this business, he is focused on every aspect of it … [including] how big the studio has to be to support the kind of slate we have out there and how we can efficiently deliver great products to the screen.”

Upcoming films for Walt Disney Studios include Tim Burton’s Frankenweenie and the new animated film Wreck-It Ralph, which will both debut in theaters this fall.


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