Disney to cut number of movies
Plans to restructure company to improve shareholder returns
Disney announced Wednesday that it plans on cutting its movie making in half and eliminate jobs in order to improve returns to stockholders, according to a report in the Daily Variety.
The move comes on the heels of Disney's "Pirates of the Caribbean: Dead Man's Chest" large opening weekend. Variety said all movies would be branded under the Disney logo, posing a threat to the stature of smaller film companies.
"The internal rate of return (for the studio division) is not shareholder friendly," Sanders Morris Harris analyst David Miller told Reuters. "Obviously, even though 'Cars' or 'Pirates' were big successes, the internal rate of return was insufficient.
"It really comes down to how do you want to allocate your capital," Miller said. "Do you want to allocate that over 18 films, in which the films cost less, or eight films that cost more? It could be that Disney sees a higher rate of return from tent pole films than from smaller films."
