Spread the Learn Week in Review – Jan. 30

2015 has already been a year of big news, so it was no surprised that the last week in January was chock-full of stuff to talk about. But you’re busy, I know. So here’s a round-up of the stuff you should have been reading when you were too busy to be reading. Enjoy the rest of your weekend:

NEWS

  • As anti-Semitic feelings make headlines more and more across Europe, the world paused this week to mark the 70th anniversary of the liberation of Auschwitz.”We survivors do not want our past to be our children’s future,” Roman Kent, born in 1929, told a memorial gathering at the death camp’s site in Poland.
  • The WSJ reported Wednesday that 2014 was a record year for donations to colleges and universities. Led by Harvard’s $1.16B in gifts, campuses across the country “received a record $37.5B in donations last year”.
WSJ Graphic, source: Council for Aid to Education

WSJ Graphic, source: Council for Aid to Education

 

BUSINESS

  • After US markets closed on Tuesday, Apple reported the largest quarterly profit for a corporation ever at $18B. Their 74.5 million iPhone units sold in FY Q1 equates to 30,000 iphones sold every hour between Oct. 1 and Dec. 31 of last year.
  • On Monday, we saw the first licensed U.S bitcoin exchange open for operation in 24 states including New York and California. “Coinbase counts about 2.2 million consumer wallets and nearly 40,000 merchants that use its services.” Backers include the NYSE, Vikram Pandit, former Citigroup CEO and Thomson Reuters former CEO Tom Glocer.

CULTURE

  • “Treatise on Tolerance.” a 250 year old Voltaire book has been surging to the top of the bestseller list in France weeks after the attacks by extremists. “The “Treatise on Tolerance” is a cry against religious fanaticism and stemmed from Voltaire’s conviction that religious differences were at the heart of world strife,” writes the New York Times.
Barnes and Noble's Voltaire Classics copy

Barnes and Noble’s Voltaire Classics copy

  • According to a Friday report by Box Office Mojo, “Through 15 days in wide release, American Sniper has earned $227.1 million. That ranks ninth among 2014 releases; by the end of the weekend, it will move up to sixth place ahead of Transformers: Age of Extinction.”

SPORTS

  • It’s the biggest sporting event of the year this weekend, as you undoubtedly know, unless you live under a very large rock. The Seattle Seahawks and the New England Patriots will face off today in the 49th SuperBowl. But how close did the other 30 teams in the NFL come to making it to the big game? This past week Pro Football Focus determined how many above-average players stood between your team and contending for this year’s Super Bowl.
  • Meanwhile, most of the weeks sports coverage was focused on “Deflate-gate” which former Rams defensive end Chris Long lent his perspective on in this Player’s Tribune article.

FEEL-GOOD READ

  • After a series of posts, a New York City photo-blogger has crowd-funded more than a million dollars for programming at an under-served school in Brooklyn. “Despite the immense challenge of running a school in such a tough neighborhood, Nadia Lopez works incredibly hard to make sure that her students not only stay in school and succeed academically, but also believe in themselves.”

Clickbait Article of the Week

  • The USA Today posted an article on a new study that says men who take lots of selfies aren’t just annoying, but they might also be psycopaths. The article was posted with the headline, “Men who take selfies may be psychopaths.” According to the new study led by Ohio State University Professor Jesse Fox, men who post a lot of selfies to the web tend to exhibit higher levels of narcissism and psychopathy but the subjects “were still all within the range of normal”. Swipe left, anyone?

Has Disney profited from the Marvel purchase yet?

On October 28th a special event was held at the El Capitan Theatre in Hollywood to announce the full slate of Phase 3 of the Marvel Cinematic Universe. Fans went nuts. Within the next five years there will be two Avengers Movies, another Captain America and another Thor movie. There’s also a few movies devoted to different Marvel characters like the Black Panther and Dr. Strange. You can click here to see the full list. Marvel has a juggernaut on their hands, of that there is no doubt. The two trailers for the newest Avengers movies have almost 90 million views combined on YouTube. All this excitement over the new Marvel superhero movies had me thinking though…has Disney’s purchase of Marvel paid off?

For those who need a refresher, Disney acquired Marvel in 2009 for $4 billion in a mixture of cash and stock. Ultimately, this gave Disney the rights to a library of over 5,000 characters including the stars of today’s films, Thor, Captain America, Iron-Man and the Guardians of the Galaxy crew. There’s an extensive history of rights swapping and distribution claims that you can read about here between Disney, Paramount and Universal. Adjusted for inflation into today’s dollar equivalent, this purchase is worth approximately $4.4B.

So I began researching global gross revenue for the Disney Marvel films. Using figures from Box Office Mojo, (owned by IMDB, which is owned by Amazon), I was able to quantify how the Marvel franchise has benefited Disney based solely off its films. You can see the results below.

Marvel-Disney Movie Profits

* – Production Budget as determined by Box Office Mojo refers to the cost to make the movie and it does not include marketing or other expenditures.

 

According to this data, Disney has already made $4.2 Bn off of the Marvel franchise on films alone. Considering the average Marvel film (from the numbers above) has a profit of $697 million, it’s safe to say with the release of Avengers: Age of Ultron (May 2015) and Ant-Man (July 2015) that Disney will easily reach the $5-$5.5 Bn in profit mark this year. Side note: I don’t have high expectations for Ant-Man, sorry Paul Rudd.

From here, I set out to find Disney’s profit on Marvel related toys and products. Within the Disney annual reports, this is classified as the Consumer Products segment. While big box office hits certainly can bring in lots of money, they also help to spur sales of anything from Halloween costumes to coloring books. This serve as a boon to earnings and can really increase a franchise’s net worth. Unfortunately, there is not a lot of public information on Marvel product sales, so in order to calculate the projected four year profits, we’ll have to use a little bit (read a lot) of guess work.

marvel_character_group-crop

After reading through the 2010-2014 Annual Reports, I found a line that might give us a reasonable number to rely on. In the 2011 Annual Report, I found this sentence: “The increase in licensing and publishing revenue reflected a 6% increase driven by the strong performance of Cars, Tangled
and Toy Story merchandise and a 8% increase due to higher revenue from Marvel properties.”

The Consumer Products segment is further broken down into Licensing and publishing (L&P) and Retail and other (R&O). From the information given we can see that $138 M ($1,725 x 8%) of the year over year (YoY) increase in the Licensing and Publishing sub-segment is because of the Marvel properties.

Capture

 

Now it’s time for some extrapolation. Assuming the same percent of the YoY increase from the L&P segment is seen in the R&O sub-segment (8/12 =75%); we would assume 12.75% (17% *75%) of the R&O sub-segment increase is because of the Marvel properties. This would result in $121 million increase in revenue from the R&O sub-segment. Therefore, combined, we can estimate that $259 million of the segment revenue increase is due to Marvel. The 2011 Consumer Products profitability is 26.8% (816/3,049). Finally, we can then estimate that $69 M (259*26.8%) of the Consumer Products segment’s income in 2011 is due to the Marvel assets.

Projected

Taking into account the YoY increase in Consumer Products Income we can project (OK, make a calculated guess) that since 2010, the Marvel assets have contributed $408 M to the Consumer Products operating income. Add this to the $4.2 Bn from the Marvel franchise films and you’ve got overall income around $4.6 Bn, already greater than the $4.4 Bn adjusted purchase price of the Marvel franchise. Assuming Disney has broken even on the Marvel purchase, all further gains are now being made off house money and as stated earlier, there seems like a large amount of money still left to bring in from this exciting and profitable franchise.

So while Disney appears to have broken through the adjusted purchase price with its net income from Marvel properties. I think it’s safe to say that they still have a lot more opportunities left to profit off this acquisition. I think they can easily bring in another $5 Bn alone from just films. What are your thoughts?