If you're an investor in The Walt Disney Company (NYSE:DIS), it's likely you've noticed the company has underperformed the market in recent years as concerns about its television business have taken center stage. Yet it's the company's conglomerate business model that allowed it to tread water while the media networks division continues to struggle amid increasing content costs, notably sports, and smaller affiliate fees from an increase in cord-cutters and cord-nevers.
Early in his tenure, CEO Bob Iger wisely started on an acquisition spree, buying up key film and studio assets like Pixar in 2006, Marvel in 2009, and Lucasfilm in 2012. It has been the performance of Disney's studio division that has allowed the company to weather weaker television performance. Disney's newest blockbuster confirms the studio is just getting started.
Black Panther is in great company
With an estimated $27 million in domestic box office gross, Disney's Black Panther finished No. 1 in the box office on the weekend ended March 18. This marks the fifth consecutive weekend Black Panther has led the box office, a feat not accomplished since Twentieth Century Fox's Avatar, the highest worldwide-grossing film in history, accomplished the feat in 2009. In the last 19 years, only three movies (Black Panther, Avatar, and The Sixth Sense) have led the box office for five consecutive weeks.
Black Panther's streak was aided by its release schedule. Although the movie was released in February to coincide with Black History Month, February is traditionally known in the film industry as a dump month, a period when studios don't release blockbusters due to lower movie attendance. For example, out of the top 20 months by box office gross, 12 are in July and zero are in February.
While Black Panther benefited from lack of strong competition, it also had to contend with historically low attendance. So its level of success is surprising: With $1.2 billion worldwide box office gross as of this writing, Black Panther is the highest-grossing film released in February.
Broadening Disney's geographical base
More recently, Disney appears to have doubled down on expanding its geographical reach by telling stories and using settings to attract foreign audiences. Before Black Panther, Disney's Coco outperformed expectations by pulling in a worldwide box office gross of $760 million.
More importantly for Disney, approximately 75% of Coco's box office gross was from foreign theaters, including breaking movie records in Mexico. It's likely Disney will follow-up with a sequel or spin-off to continue to engage Latin American audiences.
To date, Black Panther's foreign/domestic split is approximately equal, partially because of its strong domestic showing; this will most likely shift as foreign box office sales have longer tails. The movie been highly popular in Africa, due to its setting -- the fictional Kingdom of Wakanda -- in East Africa.
Companies are shifting more focus to Africa because of growth projections alongside increases in disposable income and middle-class attainment, similar to Central and South America. Black Panther and Coco help Disney broaden its worldwide audience, giving it a foothold in higher-growth countries that will pay off for decades.
Disney's success is America's success
Trade has become a hot-button topic lately, and movies are one industry where America has far more exports than imports. As previously noted, Black Panther and Coco are earning millions of dollars abroad, and in 2014, the Motion Picture Association of America noted, "The film and television industry registered a positive balance of trade with nearly every country in the world with $16.3 billion in exports worldwide."
It's encouraging to note that Disney is both broadening its geographical reach and producing films that are succeeding in traditionally slow months. Pressures in the television division will eventually ameliorate and Disney will continue to grow its film revenue, both home and abroad.