Disney's Acquisition of LucasFilms Ltd.

When the news about Disney acquiring LucasFilms happened today everyone was like "What?", "Really?", "Are you joking?", "Is that website you're reading a credible source?" It turns out that it really has happened.Disney has continued their buying spree (Pixar in 2006 for almost $8 billion and Marvel in 2009 for around $4 billion) with their acquisition of LucasFilms Ltd. for over $4 billion. As George Lucas is the sole owner of LucasFilms, he is getting that nice little sum all to himself, half in cash and half in stock.

Under the LucasFilm umbrella that Disney bought, Disney now has ownership of Skywalker Sound, ILM, LucasArts, Lucas Licensing, and Lucas Animation. What Disney really wanted though is the Star Wars franchise. It's a very popular franchise and it sells a lot of toys. Disney really could care less about Skywalker Sound and ILM as they're not really in that field but as everything is about money and Disney wants Star Wars, they are buying everything bundled together.

Similar to the "outrage" when Disney bought Marvel, people have made naive comments about how Disney characters, such as Mickey, will suddenly cross over into the other world. In their statement, Disney has said that LucasFilm will remain a separate entity, will retain their management, and keep their own current model. Just like how Pixar isn't making Marvel movies, Pixar or DisneyAnimation isn't going to start taking over and making Star Wars movies. They can, since it's in their legal rights to do so, but they won't.

However, something to worry about is that Disney doesn't quite have the best track record for keeping companies afloat if they see that the company isn't doing well. An example is Dream Quest Images, a VFX company started in 1981, that Disney bought in 1996 and then later renamed to The Secret Lab in 1999. Dream Quest Images has worked on movies such as Abyss and Total Recall but ultimately it closed in 2001. Another example is Imagemovers Digital, a animated film company dealing with motion capture, and is known for the movies such as Christmas Carol and Mars Needs Moms. With the movies doing poorly in box office, Disney cut them out. In addition, as the business model is all about money, it will be interesting to see how Disney reacts to the VFX model. ILM is a big VFX house, but like all VFX houses, the margin is very low. The VFX model is a service industry, the VFX houses don't own or create anything themselves. With Disney's announcement of the upcoming Star Wars films, 7, 8, 9, and then one every 2 or 3 years, it ensures that there will be a steady amount of work. As ILM has been largely involved with all the previous Star Wars films, it can be assumed that the work will largely go to them. It is possible that Disney may send it elsewhere but it is arguable that without ILM there is no Star Wars. Another minor point is the Indiana Jones franchise. The Indiana Jones movies have been distributed by Paramount which is a big competitor to Disney. It may or may not be an issue. The Marvel movies were distributed through Sony and that hasn't been a problem yet.

As to the reason why George Lucas decides to sell his company there may be many reasons but they may be largely conjecture. One thing that is happening is that many of the people that Lucas has worked with are getting older or has passed on, and feeling his own sense of mortality has passed down his legacy to be continued by others. Lucas has been planning to retire for awhile now and has brought Kathleen Kennedy to take over his company. Lucas may just have gotten tired and he has expressed his wish to do more personal films. Lucas hasn't directed any major motion pictures since Star Wars III - Revenge of the Sith and his last produced Film, Redtails, was a flop. Additionally, LucasArts hasn't made a game in 2 years. Another possibility is that the acquisition may not even be Lucas' idea. Similar to Disney's acquisition of Pixar, Robert Iger may have called up Lucas and offered to buy LucasFilms from him. As Lucas is already planning on retiring, walking away with $2 billion in cash and $2 billion in stocks can be a very alluring. Just like how Pixar has become a brand name and Disney makes a lot of money from selling various toys, the Star Wars franchise would be too valuable to not own it. Disney may even see this acquisition in competition to Dreamwork's announcement of putting out 12 films in 4 years. More box office, more money.

One final thought; I always felt that it was strange that in Disneyland there was a Star Wars themed ride and a gift shop nearby filled with Star Wars merchandise. Now with the acquisition of LucasFilms it won't be so out of place and Disney won't have to pay royalties to Lucas anymore.