If Disney and Fox had merged last year, the combined studio’s domestic box office would have equaled $4.5 billion. That number creeps close to a 40% market share, a figure no major studio has ever hit. Book-ended by two Star Wars releases plus its Marvel and Pixar fare, Disney by itself hit an industry stateside record of $3 billion in 2016. Before the studio closes out this year with Star Wars: The Last Jedi, a Disney/Fox combo would already be poised to topple that number.
That’s unprecedented muscle held by one major studio in the theatrical marketplace, and it’s extremely daunting considering Disney’s tough reputation for lofty terms and strict conditions with theater owners on such tentpoles like The Last Jedi (reportedly a 65%-35% studio-exhibitor split and a four-week commitment).
Coupled with the expectation that Disney will build an OTT service to rival Netflix where it will own its own distribution portal, and it’s no wonder the distribution and exhibition community is pondering whether Disney-Fox will hold too much sway in the marketplace, potentially imposing its will on theaters to crowd rival distributors out of the best screens, and keep both Disney and Fox product in theaters for as long as possible. Is exhibition headed for a crisis?
With Disney-Fox product populating the lucrative box office periods of summer and the Christmas holiday, it will become increasingly difficult for other studios to find prime release dates on the calendar. Where and when do rival studios release their event films? Will other majors — we’re talking to you, Sony and Paramount — have no choice but to merge so that they can remain competitive with Disney-Fox and withstand the onslaught? Look how Disney changed the year-end holiday landscape with the introduction of Star Wars movies in 2015, which have controlled 40%-60% of the $1 billion ticket sales generated during the final two weeks of the year. Before that, the holiday corridor made room for a few studio offerings, and the prestige films that begin building momentum toward the Oscars. With Avatar entering the holiday corridor mix in December 2020, this gives Disney the power to stagger Avatar and Star Wars titles each holiday season (Fox has dated Avatar 4 and Avatar 5 for December 20, 2024 and December 19, 2025, respectively).
Consider the 2020 calendar alone: After a summer that will see three superhero movies (two from Marvel, one from Fox), as well as a Pixar film and the relaunch of the Indiana Jones franchise, the fall will unleash two more superhero films (one from Disney, one from Fox), followed by a Disney animation film, and Avatar 2 at year’s end.
The joint forces between Disney and 20th Century Fox, Fox 2000 and Fox Searchlight are the closest we’ve seen to a monopoly in Hollywood, and puts the studio in a position to expand its shelf space across all entertainment ancillaries, not just at the box office but also at Walmart and other retailers selling DVDs and merchandise, in international TV deals (as existing Disney and Fox deals expire), and premium pricing across all distribution channels. It will be daunting for rivals to compete. The new Disney will also be spending so much on P&A for its movies, they will be able to drive the best terms for commercial time.
“If I was an independent mom-and-pop theater, I would just close down; there’s no way to survive,” one distribution studio executive cried about one potential casualty of the merger. “With a 40% market share, how do you negotiate against that? These types of mergers use to be illegal, but not anymore.” Indeed, the most immediate question following a combined Disney-Fox slate is whether the merger will up rental terms on Fox product to the terms Disney enjoys on its films.
Still, there’s a sobering belief among top-level distribution and exhibition executives that the Disney monolith could be a good thing for the theatrical marketplace and exhibitors in the much-disputed area of windowing. With even more premium product from Fox, Disney will arguably have the closest working relationship with exhibition, more than any other studio. The potential big win here for exhibition is that Disney has been a staunch believer in protecting the 90-day window between theatrical release and ancillary, because its films have such staying power in theaters and such appeal in the aftermarket for family fare. The major exhibition chains have held fast to keep that window from closing. Most other studios would welcome a faster path to the ancillary part of the revenue waterfall.
AMC, the world’s biggest theater chain, seemed bullish over the Disney-Fox merger. “Both at Fox studios and Disney, we are the closest of partners,” AMC CEO Adam Aron told CNBC last week. “They provide us with great product. Talking about the acquirer, Disney, our relationship could not be closer, and they have turned out hit after hit after hit. AMC has made a lot of money partnering with Disney studios.” That’s no line: In 2016, AMC earned $1 billion in concessions, a company record.
“Disney can dictate to all these studios when it comes to windowing, and that will help exhibition,” says one exhibition vet about how the revamped merger can lead by example.
Disney’s major studio competitors, including Fox, called on exhibition to embrace a new premium PVOD, one that would fast-track theatrical titles into homes three weeks after playing in cinemas. The merger could quash such conversation. Progress toward PVOD has stalled in recent months anyway, not only because exhibitors and distributors are in a stalemate over revenue share terms, but also because Time Warner is currently occupied by its DOJ entanglements concerning the AT&T merger.
One Disney-Fox insider believes Disney will be incentivized to follow its existing course, even with more event-film releases. The current system allows Disney to raise each title’s profile with a strong theatrical run, elevating its ancillary value. Many felt that flooding Disney’s streaming service with a bulk of unknown, direct-to-home titles would only water down the ancillary and value of the library. Adding Fox’s 2,400 title film library gives Disney one of the best and biggest in town.
Will the home entertainment window collapse? Sources told Deadline that if it shrinks at all, it will only be a week or two. “Disney, more than any other studio, knows how to monetize the home entertainment window, and it’s only conceivable that they will continue to do so. This is about taking on Hulu and Netflix,” says one insider.
Take a look at the release schedule plotted for the foreseeable future, combining both the releases of Disney and Fox. Even the New York Yankees with the addition of MVP Giancarlo Stanton doesn’t have a lineup as daunting as this one. The lineup for 2021 is small only because most releases haven’t yet been dated that far out. Disney titles are in black, Fox titles in blue and Fox Searchlight titles in orange:
Jan. 12 The Post (20th/DreamWorks) – wide break
Jan. 26 Maze Runner: The Death Cure (20th)
Feb. 16 Black Panther (Disney/Marvel)
March 2 Red Sparrow (20th)
March 9 A Wrinkle in Time (Disney)
March 16 Love, Simon (20th)
March 23 Isle of Dogs (Fox Searchlight)
April 13 The New Mutants (20th/Marvel)
April 20 Super Troopers 2 (Fox Searchlight)
May 4 Avengers: Infinity War (Disney/Marvel)
May 25 Solo: A Star Wars Story (Disney/Lucasfilm)
June 1 Deadpool 2 (20th/Marvel)
June 15 The Incredibles 2 (Disney/Pixar)
July 6 Ant-Man and the Wasp (Disney/Marvel)
July 20 Alita: Battle Angel (20th)
Aug. 3 Untitled Christopher Robin Project (Disney)* & The Predator (20th)*
Sept. 14 The Darkest Minds (20th)
Sept. 28 The Kid Who Would Be King (20th)
Oct. 5 Bad Times at the El Royale (2oth)
Oct. 19 Can You Ever Forgive Me? (Searchlight)
Nov. 2 The Nutcracker and the Four Realms (Disney)* & Mulan (Disney)* & X-Men: Dark Phoenix (20th/Marvel)
Nov. 16 Windows (20th)
Nov. 21 Ralph Breaks the Internet: Wreck-It Ralph 2 (Disney)
Dec. 21 Untitled Lightstorm movie (20th)
Dec. 25 Mary Poppins Returns (Disney)
Dec. 25 Bohemian Rhapsody (20th)
Jan. 11 Ad Astra (20th)
Jan. 18 Spies in Disguise (20th)
Feb. 14 Gambit (20th/Marvel)
March 1 The Force (20th)
March 8 Captain Marvel (Disney/Marvel)
March 29 Dumbo (Disney/Marvel)
April 12 Untitled Disneytoon Studios (Disney)
May 3 Untitled Avengers (Disney/Marvel)
May 24 Aladdin (Disney)
June 7 Untitled Marvel Film (20th/Marvel)
June 21 Toy Story 4 (Disney/Pixar)
July 19 The Lion King (Disney)
Aug 9 Artemis Fowl (Disney)
Nov. 8 Nicole (Disney)
Nov. 22 Untitled Marvel Film (20th/Marvel)
Nov. 27 Frozen 2 (Disney)
Dec. 20 Star Wars: Episode IX (Disney/Lucasfilm)
Dec. 25 The Call of the Wild (20th)
Feb. 14 Nimona (20th/Blue Sky)
March 13 Untitled Pixar Animation 3D (Disney) & Untitled Fox Marvel
April 3 Untitled Disney Live Action (Disney)
May 1 Untitled Marvel (Disney/Marvel)
June 19 Untitled Pixar (Disney/Pixar)
June 26 Untitled Fox/Marvel (20th)
July 10 Untitled Indiana Jones (Disney/Lucasfilm)
July 17 Bob’s Burgers (20th)
Aug. 7 Untitled Marvel (Disney/Marvel)
Oct. 2 Untitled Fox Marvel (20th)
Nov. 6 Untitled Marvel (Disney/Marvel) & Ron’s Gone Wrong (20th/Locksmith Animation)
Nov. 25 Untitled Disney Animation (Disney)
Dec. 18 Avatar 2 (20th)
March 5 Untitled Fox Marvel
March 12 Untitled Disney Live Action (Disney)
June 18 Untitled Pixar (Disney/Pixar)
Nov. 24 Untitled Disney Animation (Disney/Pixar)
Dec. 17 Avatar 3 (20th)