We're heading into the weekend that Marvel fans have been waiting for, as Avengers: Infinity War opens on Thursday night. The star-studded release is going to dominate box office tallies over the weekend -- and beyond -- but a strong springtime run for the superhero flick could come with some complications down the line.
Disney (NYSE:DIS) is in the process of trying to finalize its $54.2 billion deal for key Twenty-First Century Fox (NASDAQ:FOXA) (NASDAQ:FOX) assets. Disney is a lock to be the studio behind the country's highest-grossing movie for the fourth year in a row, and the bigger it is now, the harder it will be for regulators to justify handing it valuable Twenty-First Century Fox franchises when that deal is expected to close come early next year.
To Infinity and beyond
BMO Capital analyst Daniel Salmon is upgrading Disney on Wednesday morning. It's not a ringing endorsement. He's lifting his rating from "underperform" to "market perform." He's bumping his price target from $95 to $100, essentially where the stock is trading now. Avengers: Infinity War isn't the official catalyst for the boost, but the timing of the upgrade -- on the eve of the film's debut -- is more than a little curious. Even a former bear on Disney stock doesn't want to be on the naysayer side ahead of an inevitable blockbuster.
The new Marvel movie will be a smash hit. The only thing open for debate is the magnitude. The rub is that if the film is too successful, it's going to smoke out sentiment that regulators may not want Disney to get too powerful.
Through 4/15, Disney and Fox (including Searchlight) represent ~42% of domestic box office, prior to this weekend's release of Disney/Marvel's Avengers Infinity War— Rich Greenfield (@RichBTIG) April 23, 2018
via @boxofficemojo pic.twitter.com/9NjZOAVofI
The 42% year-to-date share that BTIG's Rich Greenfield noted was before last weekend's tally, when films not put out by Disney or Fox dominated the box office. The two companies now combine for just 37.5% of this year's haul, but that's before Thursday's release catapults Disney even higher.
The runaway success of Black Panther earlier this year accounts for more than half of the combined sum. If Avengers: Infinity War comes even close to Black Panther's success, as it should, the two companies will be north of 50% of the domestic box office receipts. It shouldn't stay that way, as other studios put out their heavy hitters in May and June ahead of what should be a robust summer season for multiplex operators. However, Disney also has plenty of movies of its own to stay on top.
Between next month's Han Solo spinoff keeping Star Wars fans close, and sequels or reboots of The Incredibles, Mary Poppins, Mulan, and Wreck-It Ralph all on tap for theatrical releases in 2018, it's going to be a big year for Disney. The slate of upcoming movies at Twenty-First Century Fox isn't as impressive outside of next month's Deadpool 2, but if antitrust regulators have concerns about Disney growing even more powerful in the entertainment realm, they're only going to be more worried after this weekend plays out.