Disney's (NYSE:DIS) Alice Through the Looking Glass, the sequel to the 2010 Alice in Wonderland, grossed just $34.2 million domestically during the four-day Memorial Day weekend -- a dismal opening for a film with a production budget of $170 million. As of June 1, global box office sales have only reached $107.2 million.
How badly will this hurt Disney?
After deducting the 20% to 50% cut paid to theaters and for marketing expenses, the House of Mouse will likely take a big writedown on this bloated sequel, which was also critically panned with a 30% critics score at Rotten Tomatoes.
This breaks Disney's recent streak of box office hits, which include Star Wars Episode VII, Captain America 3: Civil War, and The Jungle Book, casting doubt on the bankability of Johnny Depp, whose own personal problems overshadowed the movie's release. Disney already made a bad bet on Depp with The Lone Ranger in 2013, yet rumors suggest that he could still earn $95 million to star in the fifth Pirates of the Caribbean film.
Forbes recently ranked Depp as the most overpaid Hollywood star of 2015, returning just $1.20 for every $1 of his average salary. Depp's bankability was also questioned last year when Lions Gate's Mortdecai bombed critically and financially, generating just $47 million in worldwide ticket sales on a production budget of $60 million. But unlike Disney, which shoulders most of the financial risks of producing its movies, Lions Gate minimized its financial exposure to the film by selling off its foreign distribution rights prior to its release.
The key takeaway
Alice Through the Looking Glass' poor box office returns won't doom Disney, but the flop will likely offset some of the impressive box office gains that it has enjoyed at its studio entertainment segment over the past few months.
It's also disappointing to see Disney produce such expensive non-franchise disasters (like Mars Needs Moms, John Carter, The Lone Ranger, and Tomorrowland), especially when its impressive portfolio of Marvel, Pixar, Star Wars, and first-party properties can produce much more reliable box office returns. Investors can take a closer look at Disney's theatrical slate and see if there are any other bloated films which could fail as badly as Alice did.