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Breakingviews: Disney's Pixar buzzkill

Monday, August 05, 2013 - 03:28

Aug 5 - The Magic Kingdom spent $7.4 bln in 2006 to buy the animation studio behind ''Monsters University,'' but Breakingviews editors say Pixar's value doesn't measure up to what Disney paid.

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Tuesday -- it's -- time for Disney's financial results overseas release their third quarter fiscal results. But Jeff Goldfarb is taking a look at some of the acquisitions they've done over the past couple years and whether asking whether or not they've paid their due the most important one of the courses Pixar. They bought a few years back. They have a big monsters university is out this summer they hit planes coming out later in the air but you're going to say that they haven't actually fulfill their promises. -- -- -- And a question of people always suspected that the seven point four billion dollars that they paid to buy Pixar which was run by Steve Jobs back to the back in the day 2006. Whether or not it really you know was worth the price they -- 45 times earnings for which sounded crazy but the idea was. Disney is the master at taking a character taking a movie. And kind of -- are excellent all. You know others -- our theme parks movies and cool -- cable that or cubicle TV shows out of that all the stuff that is streaming there's tons of ways. And really does mean no one does better than Disney. So we kind of crunched a few numbers we try to figure get to the bottom it's hard to do because not all these numbers are released but -- kind of used copper goals and they're dissected. It how much as they -- how many movies have they done it's they've got a -- universe is the chief since the acquisition started with cars back in 2006 up -- now -- had very even. Off and some other ones. And you analyze them you've you've you've applied to what you think our profitability analyses to grab businesses so you look at the box office star with a box office -- -- -- here with the margins might -- -- that. I mean we actually gave Disney a little bit of a premium to what most people get on and we figured maybe they do little -- -- -- keep costs down. So that's one big chunk of it. Then you can go to the merchandise which is of course a huge huge expenditures are able to pass code yet epic about a covered him in a movie like up. Doesn't rid of it doesn't lend itself to teachers resolve what -- big -- revenue but certainly things like cars planes are if you can make tons of money off of so it kind of neutralizes. But at the same time you look at Disney stores. You know crystal salt lots of princesses and pirates and some drug Mickey and his friends so. Within the context about you have to kind of carve a tiny little piece of that for Pixar at the standard margins. He got another piece of it. You can kind of think about you know obviously you're out of all these components up. And it basically looks like Pixar has been worth. If you put it on the -- -- you took it -- sort of burning like a huge piece of strip out the taxes. Put it on the same multiple to Disney trade that -- 120 tests -- smoker and you get to value Pixar is basically at a value of five point two billion. Compared -- -- seven point four billion they picked right okay so I don't not a very value created the Bob -- is that the chairman chief executive done quite a few deals and deaths Pixar was his pick one he did marvel. Marvel Comics and the Yeltsin did Lucas the star or stuff so we know the the price on the on marvel was also over forty times or -- So you know again it makes you question make you have an -- -- looked into it tends to get a pass on these things. Because people have this idea that an equal rate at leveraging all of these great characters right right but are they really doing it to full effect are getting too much credit market is really the question is that so we will look for that story justice this news about -- Report its fiscal third quarter. -- -- -- We've got more breaking news tomorrow.

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Breakingviews: Disney's Pixar buzzkill

Monday, August 05, 2013 - 03:28