Disney Studio Climbs Ladder

The Village wasn't it. Neither was Home on the Range. And King Arthur unfortunately wasn't up to the gauntlet either.

I'm talking about Disney's (NYSE: DIS  ) prolonged trouble at the box office. The company is experiencing a downturn in its ability to snare the imaginations of the moviegoing public and translate such fascination into increasing profits for its studio operating segment. Hey, it happens -- the celluloid business is cyclical and, most assuredly, fickle. Viacom's (NYSE: VIA  ) Paramount pictures certainly knows the disappointment of an unlucky slate.

Maybe things are changing for the better for the Mouse. Over this past weekend, Touchstone Pictures property Ladder 49, starring John Travolta, came in with a pretty strong second-place showing. The gross was slightly more than $22 million, and for this time period, the figure should be considered satisfactory.

However, I won't necessarily say that it is overwhelmingly satisfactory, the primary reason being that Disney has a ways to go in regaining its footing in the movie marketplace. Plus, I'm greedy and would have liked an unambiguously resounding victory, like north of $30 million. But cold streaks can be broken as easily as hotter ones, so I'm taking the optimistic viewpoint that the performance of Ladder 49 will signal an upturn in the movie fortunes for Disney. One project on the horizon that will no doubt have audiences lining up is The Incredibles, by Pixar (Nasdaq: PIXR  ) ; we're nearing the release date of that film, which now has a lot of pressure on it in light of Dreamworks SKG's recent success in the computer-animation field.

Steve Jobs thinks he doesn't need Disney, right? Probably doesn't. Yet Pixar, to me, is no longer the monopolist that lords over films generated by software algorithms. Shark Tale was the big fish that swam past Travolta and his firefighting brethren to earn more than $47 million; when one couples that with the Shrek2 home run this past summer, it's easy to see why Pixar's moat of advantage may not last forever (as well as why Dreamworks may have a little IPO in the offing, one meant to float the burgeoning value of its animation section). See Rick Munarriz's commentary for more relevant information on the competitive relationship between Dreamworks and Pixar.

The next weekend for Ladder 49 will be telling. I'm looking for the drop to be no more than 40% to ensure that good word of mouth has taken hold. An unscientific and extremely cursory check on my part of postings around the Net indicates that word of mouth so far is decent and has in fact been kinder than some professional reviews. I hope the film will retain some momentum and help fuel the operating income of Disney's studio segment. There's a lot of competition out there from Time Warner (NYSE: TWX  ) , Fox (NYSE: FOX  ) , and others. Disney needs to get out there and be the shark once again, as opposed to merely jumping over it (will the Fonz ever live that down?).

Both Time Warner and Pixar areMotley Fool Stock Advisorrecommendations.To learn more about Tom and David Gardner's market-beating newsletter, subscribe today with a six-month, money-back guarantee.

Fool contributor StevenMallas owns shares of Disney but none of the other companies mentioned.


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