Disney buys out George Lucas. This is one of those acquisitions that hits mainstream media radar. It is not so much because of this size of the buyout. In fact this one doesn’t even come close to the top 10, with number 10 being the purchase of Citicorp in 1998 for $72.6B and number 1 being a telecom acquisition worth $202.8B in 1999. That is more than 50 times larger than the widely covered Disney-LucasFilm purchase.
It is not so much the size of the buy, but more the pop culture fondness or lack thereof for Disney and Star Wars. It has caused quite an outcry among fans and I think the reason is that people have too narrow of a view of both The Walt Disney Company and LucasFilm Limited. Let us take a look why this is starting with Disney.
It is my opinion that most people have a slanted view on what Disney is. For the older generation, it’s simply Mickey Mouse and the theme parks. For the younger generation maybe Disney just means the Disney Channel. Regardless of peoples’ views Disney, as put by Wikipedia, “is an American diversified multinational mass media corporation.” We are talking about a public traded company with revenues of $40 Billion and over 150,000 employees. They are in the business of licensing programming primarily for TV and the movies. For them to put up 25% of their operating income to purchase a hugely profitable brand like Star Wars is really not that big of a stretch. The key though is that they get a little more than the Star Wars brand. Let’s take a quick look at LucasFilm Limited.
Although George Lucas is firmly associated with the Star Wars franchise as the writer, director, etc., let’s not also forget that LucasFilm is also the production company behind the Indiana Jones franchise. In addition LucasFilm is responsible for cult classics such as American Graffiti, Labyrinth, Willow, The Land Before Time and one of my personal favorites, Howard the Duck. This is a huge filmography with a ton of licensing and revenue generating opportunities. This is just the film side of Lucas, there is also the video game division LucaArts as well as Industrial Light & Magic and Skywalker Sound, among other subsidiaries. LucasFilm Limited is more than just Star Wars, it’s a full scale production company with multiple revenue centers. Although the company (prior to the Disney purchase) was private, I am sure that LucasFilm Limited was profitable. If you look at the box office revenues of the Star Wars movies alone, they are at $4.8B adjusted for inflation.
I think the more interesting story here is the story behind the story. It’s trying to get inside the psyche of George Lucas, and understanding his thought process for selling LucasFilm. I have not dug too much into the history of George Lucas, but there is a great article on tnr.com about the Disney purchase from the same author Dale M. Pollock who wrote the biography Skywalking: The Life and Films of George Lucas.
For a man that put everything on the line with a never say die attitude, why did he sell now. It is hard to think that he gave up. Perhaps his vision has been fulfilled to the best of his current ability and he is looking to start a new mission. Regardless of the reason, I look forward to studying more about George Lucas. Going from pipe dreams to $4 Billion and changing the world in the process, is something worth taking a closer look at.