Welcome to the fourth in the series of articles looking in detail at the Walt Disney Companies merger with Lucasfilm. All opinions are my own and do not necessary reflect those of this site or its owners.
Every week between now and the actual anniversary of the deal I will look at a different aspect of the merger. I encourage you the Jedi News readers to join in the debate and discussion Twitter @JediNewsUK, Facebook, Instagram and your own blogs using the hashtag #JNDEBATES.
This blog we will look at the purported ‘nil-value’ assets of the deal.
A division of Lucasfilm that receives little attention is infact the largest, most versatile full-service audio post-production company in the movie industry. Given no coverage in the Disney / Lucasfilm merger – it is one of several parts of the deal that was considered by the main stream media as being of no value to Disney, and of no concern to the shareholders.
Skywalker Sound is infact very important and very valuable to Disney. Lets just take the cost benefits for one moment. All of Disney Pixar’s animated features had their audio recorded, dubbed, designed and post-produced at Skywalker Sound. Just in recent years Disney films such as Mars Needs Moms, Alice in Wonderland, Pirates of the Caribbean, John Carter, Maleficent, and the Lone Ranger to name just a few made use of Skywalker Sound. Across the group at Marvel, the Iron Man, Avenger, Captain America and Thor series of films all passed through the doors of Skywalker Sound. With Marvel, Star Wars, Disney, and Pixar the Walt Disney group of movie houses are producing more big budget mainstream movies than any other media conglomerate. If you take into account the audio costs of these movies, and couple that with the benefits and control of doing this work in-house you are making a massive cost and efficiency enhancement to your business. You can then add to that the desire of many of the movie greats whom wish to use the unrivalled Skywalker Sound for their movie production, and you have an extremely profitable, and valuable business.
Skywalker Sound is located within the 155,000 square foot Technical Building at Skywalker Ranch. There are effectively three ranches in Marin County often collectively thought of as Skywalker Ranch. Two of the ranches are effectively corporate campuses for the Lucasfilm companies. Whilst not part of the Disney deal these ranches have by all accounts been leased to Disney to allow continuity of business. One would assume that longer term that Skywalker Sound would relocate to Burbank, San Francisco to be nearer the rest of the Lucasfilm Disney owned empire.
The work slate for Skywalker Sound is impressive, and lengthy. I would assume that as long as they remain profitable and busy Disney would make that little to no changes. The role of the Disney execs is not to interfere successful businesses, but to enhance them.
That said the driver of the audio business is often less the business, or the tech of the business but the skills of the individuals. Skywalker Sound has the best staff in the audio business, and the best want to work there. If it remains THE place to be for staff to should retain its position. More than anything, people will determine the success of this division under Disney.
Industrial Light and Magic were given the very same status by the financial media, a nil-value part of the deal. Something not wanted by Disney, but which came as part of the package. They are perhaps right in that it was not an acquisition target in its own right, but in the world of special effects, ILM are the leaders.
ILM was formed specifically for the space epic we all know and love as Star Wars. No other facility of its type existed at the time, and it broke ground in special effects – of which there has been an incessant demand for since. A whole industry was formed to cater to the world of special effects in TV and Movie. ILM were and remain the leaders.
ILM works out of San Francisco and Singapore working in motion picture, commercial production, and attraction industries.
When you look at just part of its current work slate you can see the impact ILM is having on the industry. On the production list includes Tomorrowland, Captain America: Winter Soldier, The Fantastic Four, The Avengers: Age of Ultron, and Pirates of the Caribbean: Dead Men Tell No Tales, Jurassic World, Warcraft, Noah, Transformers: Age of Extinction and of course the future Star Wars movies.
In a similar vein to Skywalker Sound there is fantastic cost and efficiency savings to be had from having an in-house effects company especially when you consider the types of films Disney are and will make under the Lucasfilm and Marvel banners. All of these films will feature a wide range of special effects, and techniques. ILM will be a key player in the future of both of the studios, let alone the rest of the Disney group.
Little has been said by Disney regarding the future of ILM. It would be fair to say that Disney has a mixed record of handing special effects companies. Secret Lab was formed when Walt Disney Feature Animation’s Computer Graphics Unit merged with Dream Quest Images in October 1999. Secret Lab was one of the first major effects houses alongside ILM. Perhaps its most famous work being James Cameron’s groundbreaking The Abyss. Secret Labs was closed down in 2002. The second most intriguing special effects move by Walt Disney was the formation in 2007 of ImageMovers Digital. The goal was the creation of Robert Zemeckis produced 3D animations. Making ‘A Christmas Carol’, and ‘Mars Needs Moms’ – neither of which were commercial successes. Mars Needs Moms in particular was a spectacular failure – taking back less than a quarter of its cost. Operations were unsurprisingly closed in January 2011.
With a clouded history a lot of rumour has circulated about how Disney will work with ILM. Much of that speculation has been eased by the following two comments by Disney CEO Bob Iger about ILM, “our current thinking is that we will let it remain as is – they do great work – they work for multiple studios” and its ”a decent business for Lucasfilm and one we have every intention of staying in.”
Some people have pointed at layoffs in April 2013 as a potential negative for the future of ILM. These layoffs have more to do with the closure of LucasArts than ILM – with many of the positions overlapping the two organizations. So in thinking of the Disney owned ILM – we can largely ignore this event.
Much like Skywalker Sound, ILM may not have been seen as key to Disney’s future, or their target in buying Lucasfilm – but it can make itself invaluable and a hugely valuable asset in the growing movie making divisions of Walt Disney.
When I first started writing this series looking at the Disney / Lucasfilm deal – Indiana Jones fell into the category of nil-value assets. A major franchise that was part of the deal, but for which there appeared to be no interest to develop. All that has changed in the past month.
With Paramount owning much of the rights to the Jones franchise, it became a legally tricky franchise to develop for under the Disney umbrella. All that changed on 6th December when Disney announced that it had reached a deal with Paramount for the distribution and marketing of Jones movies. Under the arrangement Disney gains the rights to future films, whilst Paramount retain rights to the first four films, and receive a ‘financial participation’ in future films.
The deal allows Disney to start to monetise the Jones franchise, and opens the door to a fifth film, reboots, or spin offs. Whilst it may take two to three years before we see a new Jones film – the key to the future of this franchise was the Paramount deal.
At the time of the Lucasfilm purchase it may have been difficult to add value to the deal for the Jones franchise, now the opportunity is an open book and freshly untapped potential. If you consider that The Crystal Skull took $783 million at the box office – this franchise if developed correctly, can be as big for Disney as any one of the Marvel series of films. Lets not forget TV, games, and merchandise – as it was Bob Iger after all who was the chief at ABC, and was a massive supporter, at the time the Young Indiana Jones series aired.
Without a doubt Star Wars was the driving force behind Disney making the purchase of Lucasfilm. Less thought may have been given to the Indiana Jones franchise, ILM and Skywalker Sound. However, it would have quickly become apparent during due-diligence and sub-sequent to the completion of the deal that the other Lucasfilm divisions also hold potentially huge benefits to Disney. Shareholders and financial media may have fawned over the potential of the Star Wars franchise but they would be amiss to ignore the world leading companies that Disney have also purchased, and a second major franchise with a wealth of potential.
In the final blog in the series coming to you on the anniversary of the purchase of Lucasfilm (21st December 2013) we will look at the future of Star Wars, Lucasfilm, and its Maker – George Lucas.
Sources:
lucasfilm.com
thewaltdisneycompany.com
variety.com
skysound.com
ilm.com
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