Rupert Murdoch and his team have claims on all six existing episodes in the space opera, including a perpetual claim on Star Wars: Episode IV -- A New Hope. The other five films come up for renewal in 2020, at which point it's a fair bet that Disney will take over. In the meantime, every re-release, remastering, or TV airing of the previous films creates high-margin revenue to Fox.
The split surely creates headaches for accountants, but it's no more than a minor annoyance for Disney investors. Why? The House of Mouse retains all rights to new Star Wars properties and other assets worth a great deal more than $4 billion, in my view.
5 ways Disney will cash in
Shareholders are already seeing profits. Last summer, Disney and Hasbro (NASDAQ:HAS) struck a comprehensive $225 million deal for the right to make toys based on Marvel and Lucasfilm properties. Several of the resulting pieces made their way to this summer's San Diego Comic-Con.
For Hasbro, the license is a growing yet still relatively minor catalyst. Entertainment and licensing accounted for just over $60 million in revenue in this year's third quarter, up 9.6% over last year's Q3.
"Revenues continued to grow in Marvel properties this past quarter," Hasbro CEO Brian Goldner said in prepared remarks to analysts, according to a transcript of the latest earnings call that was supplied by S&P Capital IQ. "Supported by both film and animation, products based on the Avengers and Spider-Man franchises grew revenues in the quarter. Additionally, Marvel's Guardians of the Galaxy contributed to the quarter's year-over-year results."
For Disney, the deal amounts to an incremental boost and one of several channels for cashing in on its Star Wars empire. Here's a tour of what the company has planned:
1. A rebellion millions can get behind. Star Wars has been a transcendent franchise from the very beginning. From fan fiction to rich licensing deals, there has always been a way for us enthusiasts to express our love for the Star Wars universe as Lucasfilm collects licensing checks.
In 2008, two years after Star Wars: Episode III -- Revenge of the Sith completed the "prequel" trilogy, Lucasfilm released an animated movie to continue the story. Star Wars: The Clone Wars would go on to box office riches and five successful seasons on Cartoon Network. Last year, Netflix became the exclusive home for a sixth and final season.
But the story doesn't end there. In October, Disney released an animated prequel titled Star Wars Rebels on its Disney XD channel. Fan reaction appears to be overwhelmingly positive, with 85% of viewers scoring the series as "fresh" on Rotten Tomatoes. Toys based on the series' characters and adventures are already available from Hasbro, which just means more licensing revenue for the House of Mouse.
2. Marvel is the model. If investors are overlooking Rebels, it's only because of rabid enthusiasm for Episode VII. Actors Mark Hamill, Harrison Ford, and Carrie Fisher will reprise their roles. Kenny Baker (R2-D2), Anthony Daniels (C-3PO), and Peter Mayhew (Chewbacca) are also slated to appear. The Force Awakens could out-earn Avengers: Age of Ultron at the box office, and I've pegged the latter to take in at least $2 billion.
Disney, for its part, is treating Episode VII as a jumping-off point. Josh Trank (Chronicle, the Fantastic Four reboot) and Gareth Edwards (Monsters, Godzilla) are already signed to new, untitled Star Wars movie projects. The setup is reminiscent of the Marvel Cinematic Universe, in which solo films feed and reinforce a greater whole.
3. New comics will support the upcoming films. For decades, the team at privately held Dark Horse Comics held the license to make comics set in the Star Wars universe. No longer. In January, Disney and Marvel announced plans for new comic books set in a galaxy far, far away. Star Wars No. 1 from creators Jason Aaron and John Cassaday is due in stores in January 2015.
We've seen this strategy work before. Writer Brian Michael Bendis -- a member of the creative committee that unifies Marvel properties across movies, TV, and comics -- rebooted the Guardians of the Galaxy comic book in April 2013 to help reintroduce fans to the little-known team. The new series has since sold hundreds of thousands of copies, while the film adaptation starring Chris Pratt remains 2014's top U.S. box office earner. Star Wars comics could have a similar impact.
4. Video games should be a catalyst -- in a few years. Not even six months after announcing plans to acquire Lucasfilm, Disney decided to shutter the gaming division, ending three decades of in-house development of new and expanded Star Wars games. Electronic Arts has since been appointed the task of developing Star Wars: Battlefront for major consoles.
5. Both Han Solo and Indiana Jones were part of the deal. While Lucasfilm is best known as the studio that created the Star Wars universe, Disney's purchase also included a loose claim on the Indiana Jones character. A subsequent deal with Viacom's Paramount Pictures has since put all rights to Indy's adventures in the Disney portfolio. Variety initially reported that a fifth film was already in development but has since backed off that claim. Even so, Indy's history of unearthing box office treasure practically ensures that Disney will revive the franchise at some point.
Call it icing on a rich and delicious cake. Disney's $4 billion deal for Lucasfilm was by no means perfect, but as its history handling Marvel shows, the House of Mouse is the best in the business at cashing in on iconic pop culture brands -- and none come bigger than Star Wars.
Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple, Netflix, and Walt Disney at the time of publication. Check out Tim's Web home and portfolio holdings, or connect with him on Google+, Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.
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