Disney‘s $200M write down for John Carter appears to be the biggest loss to date for a single film — exceeding the inflation-adjusted $147M deficit from Cutthroat Island, the 1995 film that starred Geena Davis and proved to be the last straw for Carolco Pictures which went out of business. But investors are just beginning to wrap their minds around how serious the debacle is for Disney. The loss far exceeds analyst forecasts of about $100M to $150M. On Wednesday, Janney Capital Markets analyst Tony Wible said that “the impairment may not be as bad as feared”: He estimated $53M, with $180M only in a “worst case scenario.” Miller Tabak & Co analyst David Joyce also was surprised by Disney’s new figures. He expected the Studio unit to lose about $37M in the current quarter; Disney now says the loss could go as high as $120M. Joyce just shaved 2 cents off his earnings forecast for the fiscal year that ends in September, bringing it down to $2.99. While the Street is clearly disappointed, it isn’t stunned. Disney shares are down less than 1% in after-hours trading. At the end of the day, the Studio just accounts for 16% of the company’s revenues and 7% of its profits. Proving that hope springs eternal, Joyce says he believes “investors will look forward to the summer franchise releases” which include The Avengers and Pixar’s Brave. But there’s a larger lesson that could color how people look at future box office disappointments: “John Carter is a great example of how there’s no more safety net from DVD sales,” says BTIG analyst Rich Greenfield. “Failed theatrical movies increasingly don’t sell at all in the DVD market.”
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