Dick Clark Productions Sale to Dalian Wanda Is Dead

Dalian Wanda’s $1 billion purchase of Golden Globes producer Dick Clark Productions is dead, two individuals familiar with the matter told TheWrap.

The deal has fallen apart over problems getting currency out of China — and passing regulatory muster with the Chinese state, the insiders said.

Speculation that Donald Trump’s administration would not approve the deal was not the primary reason for its breakdown, according to both individuals.

Top brass at DCP owner Eldridge Industries still expect the deal to close, however, one insider close to the Todd Boehly-owned company said.

Eldridge Industries declined to comment on the matter. Representatives for Wanda did not immediately return TheWrap’s request for comment.

“The Chinese government now has a system in place for evaluating the price being paid,” one of the insiders said of the eyebrow-raising valuation of DCP.

“It was just too high,” the person said, adding that the real reason DCP won’t be leaving its home country is over currency controls.

In early February, TheWrap reported the sale was in jeopardy and that Wanda had not made a final payment to close the acquisition — though an insider at Eldridge Industries told TheWrap all parties expected payment to go through.

Chinese regulators have taken a stricter approach to the country’s stock markets in recent months after a Wild West period marred by wild speculation and rollercoaster price swings.

Though increased scrutiny eventually created a somewhat more stable situation for traders, some big cross-border Hollywood deals have been tripped up. Wanda acquired Legendary last January and tried to fold the entity that owned the production company into its publicly-traded theater chain, Wanda Cinema Line, but Shenzhen Stock Exchange regulators put the kibosh on that, expressing concern about the dozens of entities with ownership and Legendary’s lack of profitability.

Wanda abandoned that attempt in August. News of the defunct deal comes at a time when Eldridge Industries is also attempting to offload its pricey prestige holding The Hollywood Reporter-Billboard. 

Sharon Waxman contributed to this report.

Brad Grey's Paramount Exit and Studios in Turmoil

by Stephen Galloway

Paramount's Brad Grey is merely collateral damage in an industry that’s figuring out how to survive.

It’s one of the worst-kept secrets in journalism that most public figures play a role in creating their obituaries. They don’t decide the wording of the stories or even the angles such final assessments take; but prominent people usually grant major newspapers interviews about their lives and careers, often multiple times over the years, and in doing so subtly shape how they’ll be perceived.
Such luminaries as Bill Clinton and Barack Obama, not to mention local heroes like Steven Spielberg and Meryl Streep, probably have already had conversations with The New York Times and other publications about their work and experiences — exit interviews, as it were, long before their exits ever take place.

Now might be a good time for Paramount CEO Brad Grey to consider such a move. I don’t mean to suggest the 59-year-old’s career is over, but clearly an important part of it is winding down. It would be good to learn what he’s thinking as talks move forward for him to leave the studio, as well as his ideas on the underlying causes, the peculiar way in which an individual’s fortunes brush against those of an entire industry.

Because it's obvious that far more is at play here than one man’s successes and failures. The film business is going through a remarkable upheaval, leaving its workers at a strange intersection where broad trends and personal trajectories collide.

Look around town, and you’ll notice that one major studio executive after another has been sent spinning, like so many skittles scattered by balls larger and faster than any they could ever block. 

Amy Pascal, Jim Gianopulos, Jeffrey Katzenberg, Michael Lynton — they’re just a few of the towering figures who’ve left their jobs after years, or are about to do so. And there is no indication that their successors will last as long.

There was a time when you could measure studio eras by the people who ruled them: There was the age of MGM’s Irving Thalberg and Louis B. Mayer; the age of Universal’s Lew Wasserman and Sidney Sheinberg; the age of Warners’ Bob Daly and Terry Semel. Not any more. Executives’ careers are briefer now, and they’re likely to become briefer still.

Forget three strikes and you’re out; these days, a studio chief is lucky to get to bat. As technology shifts at the speed of light, Hollywood will be forced to shift just as fast. We’re not passing from one age to another; we’re entering a time of perpetual change. How odd that this most capitalist of industries might be America’s foremost exemplar of permanent revolution.

That’s been apparent in film for some time, where flux and fluidity have replaced stability and security. Fox, Warners, Sony and Paramount have all gone through rounds of musical chairs, and you can bet more will follow. Now it’s Paramount’s turn. With Rob Moore and Philippe Dauman having been given their walking papers, it was inevitable Grey would follow. All that remains to be seen is when, where and how he finally says goodbye.

The last time I can recall such turmoil was in the mid-1990s, when a host of people moved in and out of top jobs. But that was easier to explain. Back then, you could boil it down to one fundamental cause: the death of Frank Wells. When the Disney president died in a 1994 helicopter crash, his death unleashed a struggle for power. Michael Ovitz stepped in and Katzenberg stepped out, the former to resign within a year, the latter to create DreamWorks.

Looking back, subterranean shifts were also taking place in the business that nobody really understood: If Hollywood had been dominated by production people, it was now being dominated by the dealmakers — hence Ovitz and Ron Meyer (previously the founders of CAA) became the kings of this new country.

Still, the turbulence of the 1990s was mainly the result of one man’s death, while the current chaos seems to be caused by something far greater. The movement we’re seeing at the top isn’t so much about any individual’s performance as it is about an industry struggling to survive.

Profits are less than they should be, given the growing worldwide population and all the new technologies providing ways to reach it. Instead of riding the wave of change, most executives are drowning beneath it. Rather than chart a new course, they’ve kept doing things the old-fashioned way, following the truism that bigger means better. But bigger can also mean a quick way to go bust.

Rivals long to emulate Disney’s Robert Iger, who’s bet his empire on branded product from the likes of Marvel, Pixar, Disney Animation and Lucasfilm (as well as in-house product developed by production president Sean Bailey). But Iger benefits from Disney’s toy stores, theme parks and TV channels, while most of the other studios can only pray for that kind of pipeline.

Without such outlets, their way forward is unclear. Go small, and there’s the risk of being dwarfed by the competition; go big, and there’s the danger of toppling over altogether.

One day, we may have a clearer take on all this. We may smile fondly at the executives trying to navigate their way to success, just as we do at the silent screen honchos who refused to come to terms with the impact of sound. But for now, it’s all murky. The future is hidden, the present hard to understand.

Given this, Grey did well to last as long as he did. Now he’s collateral damage in an industry that’s in the midst of a revolution — and as we all know, revolutions have an awful tendency to chop off monarchs’ heads. 

For more Galloway on Film, please check the archive.

How Much Is The Walt Disney Company Worth?

photo by Ray Tharaldson all rights reserved 2017

The entertainment giant has been a pioneer in its industry, but just how big is Disney's net worth?

Sep 8, 2016 at 11:18AM 
Entertainment giant Disney (NYSE:DIS) has built itself up from its historical start in movies to become a huge media conglomerate, encompassing television, cinema, theme parks, retail outlets, and interactive entertainment. Much-loved characters from its foundation still remain popular, but Disney has also worked hard to buy up sources of new content, with acquisitions like Pixar, Marvel, and Lucasfilm dramatically bolstering its media library. Long-term investors have profited handsomely from owning Disney stock. Yet some of those who follow Disney want to know if its stock accurately reflects its actual worth. Below, we'll take a closer look at the net worth of Disney by several different measures to see whether the current share price is consistent with the entertainment conglomerate's true value.

The simplest measure of Disney's worth

The first place to look for a simple valuation of a company is the price that the stock market puts on it. Disney currently has about 1.61 billion shares outstanding. With a share price of around $94 per share, that puts Disney's market capitalization at roughly $150 billion.

As an alternative to market cap, some investors prefer to account differently for the cash and debt held within a company's capital structure. Enterprise value looks only at the value of the actual business assets that go toward bringing in revenue and net income for a company. In Disney's case, when you take into account the cash on its balance sheet and its outstanding debt, you'll get an enterprise value that puts Disney's worth at $165 billion.

What the accountants see as Disney's true value

The stock market gives one perspective of a company's value. When you look at financial statements, you can get a much different picture of the net worth of a company. For Disney, a look at the balance sheet shows some disparities between the market's perception of the stock and what accountants would focus on in their analysis.

Disney's most recent financial statements put a value of about $91 billion on its assets. That includes roughly $5 billion in cash and short-term investments, another $9 billion in accounts receivable, and about $3 billion in inventory and other current assets. In addition, Disney's plants, property, and equipment make up almost $27 billion after taking accumulated depreciation into account. Goodwill and other intangibles account for roughly $35 billion, and the remaining $12 billion is made up of long-term investments, receivables, and other assets.

Against those assets, Disney has large liabilities. Debt amounts to about $20 billion, of which $15 billion is long-term and the rest either short-term borrowings or the current portion of longer-term obligations. Accounts payable and unearned revenue add another $13 billion, and deferred tax liability and other longer-term liabilities contribute more than $9 billion to the total. In all, Disney has almost $43 billion in liabilities on its balance sheet.

That leaves $48 billion in total shareholder equity. Roughly $4 billion of that is attributable to Disney's minority interests, leaving the remaining $44 billion for common shareholders. When you divide by the number of shares outstanding as of June 30, Disney's book value comes out to $26 per share. That's barely over a quarter of the company's stock price, showing the premium that investors put on the company above its accounting-based value.

Part of the reason for the difference is that Disney has value that its accounting doesn't entirely reflect. For example, Disney has built up a huge asset in its brand. In its most recent annual survey of major global brands late last year, Interbrand ranked Disney No. 13 in the world, and the report valued the brand alone at $36.5 billion, up 13% from year-earlier levels. Disney has to keep spending in order to support its brand value, but past marketing efforts have already paid off with name recognition and customer loyalty that will serve as a strong foundation for future growth efforts.

Is Disney worth its share price?

Finally, one way to look at Disney's value is to compare it to its peers. High-quality companies trade at higher valuations, but sometimes, differences in valuation expose potential dangers or reveal opportunities.

For Disney, the stock's current valuation looks very similar to some of its peers in the media business, as you can see below:

Earnings Multiple
Dividend Yield
Anticipated Growth Rate
Data source: Yahoo! Finance.

For the most part, these three companies have similar characteristics. They all trade with earnings multiples in the mid-teens, and they have similar dividend yields. Disney has the slowest anticipated growth rate of the three, but it's also the largest of the companies, making it harder to produce high-speed growth.

Given the high regard and strong reputation that the company has, Disney's net worth accurately reflects the fact that it is the leader in its industry. Despite some concerns about trends that could challenge its position in the cable television arena, Disney's efforts to capture as much high-value content as possible should pay off for decades to come.


Disney Q1 Revenue Weighed Down By ESPN Struggles

The Walt Disney Company began its fiscal year with a whimper, as the entertainment giant was unable to successfully fend off headwinds facing its cable business, reporting revenue that fell short of expectations.

After the close of markets Tuesday, Disney reported revenue of $14.8 billion and earnings of $1.55 a share for the three months ended Dec. 31, which the company classifies as the first quarter of its fiscal year. The Mouse House reeled in $15.2 billion in revenue and earnings of $1.63 a share for the corresponding period a year earlier, which included one of the biggest movies ever, “Star Wars: The Force Awakens.”

Analysts had estimated $15.3 billion in revenue and earnings of $1.50 a share on average for the most recent quarter.

“We’re very pleased with our financial performance in the first quarter,” Disney Chairman and CEO Bob Iger said in a statement accompanying the earnings. “Our Parks and Resorts delivered excellent results and, coming off a record year, our Studio had three global hits including our first billion-dollar film of fiscal 2017, ‘Rogue One: A Star Wars Story.’ With our proven strategy and unparalleled collection of brands and franchises, we are extremely confident in our ability to continue to drive significant value over the long term.”

Cable networks, particularly ESPN, have been an albatross on Disney’s stock price even as the company’s two other major prongs, movies and theme parks, continue to perform well. As cheaper TV alternatives began to proliferate, ESPN hemorrhaged subscribers during the course of 2016 and is now at less than 88 million, compared with a peak of 100.1 million in 2011. At an estimated $7 per subscriber, that dip has been a substantial hit to Disney, especially considering media networks made up 49 percent of Disney’s profits during fiscal 2016.

At the same time, rights fees for the live sports ESPN specializes in broadcasting continue to go up, as there’s plenty of competition for one of the few pieces of programmed television that still delivers monster ratings. ESPN will pay $7.3 billion for content this year – the biggest price tag among all media companies. Operating income at Disney’s cable networks division — primarily ESPN — plunged 11 percent compared with the same time the previous year. Disney attributed that drop entirely to lower ESPN revenue.

The timing of this year’s college football playoff games — always among ESPN’s highest-rated broadcasts — also wasn’t favorable. Three of the games occurred during the company’s fiscal first quarter compared with six last year, accounting for part of the drop. However, Disney also identified declining subscribers as a contributing factor in its earnings report.

On the other hand, Disney’s film division had a record 2016, becoming the only studio in history to gross more than $7 billion in a single year at the international box office and $3 billion domestically. 

Disney also had four of the five highest-grossing films at the domestic box office last year. After a mid-year lull, which was reflected in its last earnings report, Disney regrouped for the holiday season behind “Rogue One: A Star Wars Story,” which has already blasted its way past $1 billion worldwide — but the studio couldn’t match its banner haul from last holiday season.

Parks and resorts was the Mouse House’s best-performing division, and the only to report year-over-year gains in revenue and profit. Behind new attractions at home and the opening of Shanghai Disneyland Park in June, the division reported a 6 percent increase in revenue and a 13 percent jump in profit.