John Carter and the Gods of Hollywood

by Sellers, Michael D.

  Sparky Santos: I literally knew nothing about ERBs books or the John Carter character prior to viewing the movie. On opening day I convinced a coworker to go see the film with me and we were both blown away. There are few films that have pulled me in, tugged at my heart strings and made me feel excited like JC did. It's kind of hard to describe really. I immediately took friends and family to see it and all enjoyed it......Then I started to see that immense negativity in the press and how it was failing at the box office and I became indignant.

  Shari Armstrong: I almost missed the movie because I hadn't seen that it was opening earlier, I hadn't seen any trailers or ads. I saw someone post online that they saw it opening weekend. I took our two older kids (10 and 7) and one of their friends to a matinee. The kids were mesmerized and our 7 year-old son's first word when it was done was simply an excited, "Again!" It was fantastic. So, I started making plans to see it again, this time when my husband could join us. My husband enjoyed it as much as I did. John Carter has something for everyone, action, adventure, humor, friendships, and a non-sappy love story (for someone who doesn't like chick flicks, this is important). I pre-ordered the DVD, and we haven't bought a full price DVD in years, since getting Netflix.

  Beyond affection for the movie, the unfolding of events that weekend spurred an additional level of emotional reaction in many of the viewers -- a fan’s sense of indignation at what seemed like an injustice. A film which to many seemed to be “special” in so many ways, was having its reputation destroyed before their eyes in a media savaging that, in the view of many fans, took on the characteristics of a lynching.

  Erik Jessen was one of the senior members of Eric Zumbrunnen’s John Carter editorial team. Jessen had been attached to the Paramount John Carter of Mars project, so his history on the project was among the longest of any of the crew, and as an editor his engagement with the story was intimate and intense. He knew all the twists and turns that had resulted in the finished product, and he was proud of what had been accomplished. He had also been the author of the “sizzle reel” released to favorable reviews on February 24th.

  On the morning of March 14th, Jessen started a Facebook group with the long and grassroots sounding name: Take me Back to Barsoom! I Want a John Carter Sequel! He added fellow crew member Sarah Smith as a fellow administrator, then sent an email to me via The John Carter Files “Contact Us” feature:

  Would you mind mentioning a Facebook group that I started? It's called Take Me Back to Barsoom! I Want John Carter to Have a Sequel! People can just enter Barsoom or John Carter, and it should pop up. Most of the Emeryville crew are members already. THANKS!

  When I received the email, I was intrigued. “Emeryville Crew” referred to Pixar and the production crew of the movie, and in reflecting on it, this seemed like a further evolution of the fan/filmmaker alliance that had started with Stanton tweeting about the fan trailer.

  Could this amount to something?

  I checked out the group on Facebook and joined.299 There were 60 members, and as Jessen had said, most were from the film’s “working level” production team. I announced it on The John Carter Files:300

  John Carter may have encountered serious headwind in its opening weekend at the US Domestic box office (foreign sales were better, though), but that has only served to motivate a group of fans and members of the John Carter production team to form a Facebook Group called “Take Me Back to Barsoom! I Want John Carter to Have a Sequel!” The purpose of the group — as the name states — is to provide a venue for fans looking for a sequel to Disney’s John Carter to let their voices be heard. If you are logged in to Facebook, this link will take you there. Or within Facebook, just type in Barsoom and it should pop right up. We’ll report more on this as we learn more about it — but want to get the link out there without further delay. Sign up an show your support for John Carter!

  After tweeting the story and posting it to social bookmarking sites like Reddit, Stumbleupon, Digg, and a half dozen others, I went back to the original post on John Carter Files and saw that it was being tweeted by others now, and reposted on Facebook. Plus on Twitter, Jessen and company were tweeting the existence of the group as well. A few hours later Forbes blogger Mark Hughes picked up the story:301

  Fans of the new John Carter film take heart — there is a new Facebook group calling on Disney to have faith in the franchise and move forward with a sequel. The group is spreading their message on Twitter, encouraging fans of the film to retweet the message and to join the Facebook group.

  Over the next 24 hours several dozen media outlets picked up the story and by the time Germain Lussier at Slashfilm reported on it the next day, membership had reached 2,000 and was climbing quickly.302

  Curious about context, I researched to see if group such as the one that was now blossoming on Facebook had sprung up after other movies which had questionable starts, as John Carter had. My research turned up that in the case of Prince of Persia, which was comparable to John Carter in terms of appeal and box office outcome,303 a Facebook page calling for a sequel had been started but had fizzled with only 419 “likes” achieved.304

  Another comparable, Van Helsing ($300M Global Gross), had a group calling for a sequel that fizzled at 167 members.

  With 2,000 members in a day, it was clear that something was afoot in the fan sector.305

  Could fans actually make a difference?

  The Firefly/Serenity Browncoats group on Facebook had played a key role in resurrecting the series and getting a movie made, and research showed that this group had grown to 50,000 after three years, and that had been sufficient to become a factor in studio decision to make Serenity. And of course there was the fabled history of how Star Trek fans, long before there was internet or social media, had achieved success.

  Given the beating that John Carter had taken, and was continuing to take in the media, the fact that a fan movement seemed to be coalescing was, if nothing else, one bit of good news in a sea of misery -- misery that was about get substantially worse in a matter of days.

  The Doomsday Sentence

  For the Edgar Rice Burroughs community and fans of John Carter, Monday, March 19, 2012 is a day that will live in infamy -- the day that Rich Ross broke with longstanding Hollywood and Disney practice and, with John Carter only 10 days into its run and the film still unreleased in major foreign territories including China and Japan, announced that Disney was taking a $200M write-down due to the poor performance of the film. The early statement of the write-down was released minutes after the stock market closed:306

  In light of the theatrical performance of John Carter ($184 million global box office), we expect the film to generate an operating loss of approximately $200 million during our second fiscal quarter ending March 31. As a result, our current expectation is that the Studio segment will have an operating loss of between $80 and $120 million for the second quarter. As we look forward to the second half of the year, we are excited about the upcoming releases of The Avengers and Brave, which we believe have tremendous potential to drive value for the Studio and the rest of the company.

  That the announcement was a shot heard round the world. Within hours of the announcement, the labeling of John Carter as the “flop of the century,” “greatest flop in Hollywood history,” was complete. It took John Carter from the status of “just another high profile box office failure” to “epic flop of the century” all in the space of twelve hours.

  By the afternoon of March 20th, according to Google News there had been more than 2,000 articles released in the United States alone. Every television channel and most radio stations carried a story about the debacle. The New York Times wrote of “science fiction megaflop John Carter,” and added that the film “will go down as one of the biggest flops in Hollywood history.”307 CBS led with: “John Carter is now officially a flop of galactic proportions.”308 Hollywood Reporter wrote of the “catastrophic performance” and labeled the movie officially as what amounted to a money wastin
g debacle.309

  Social media exploded, spiking to a level that three times higher than at any other point in the history of the John Carter campaign. John Carter finally had “buzz” -- only it was toxic, radioactive buzz that would effectively kill off any chance the film might have had to gain momentum during the remainder of its theatrical run -- a run which at the time of the announcement had only completed 10 days out of a typical 100 day theatrical journey, with more than 50% of theatrical revenues and all revenues from all other sources still to be collected, and thus vulnerable and negatively impacted by the announcement.

  Some journalists raised an eyebrow or two at the tactic of making such an unprecedented announcement so soon after the release. Veteran entertainment journalist Sharon Waxman at the respected outlet The Wrap wrote:310

  I can’t think of a similar announcement for a single movie in recent history. In fact, most studios try to bury losses for individual pictures in their financial statements. And they always argue that long-tail revenue streams mitigate a weak box office.

  Waxman’s comment highlights the fact that John Carter was getting special treatment -- as in special negative treatment -- by its own studio. It is standard practice among studios when dealing with box office disappointments to refrain from making any statements that will damage either the immediate box office performance or the longterm asset value of the film -- recognizing that a film’s longterm value is worthy of protection, as is its legacy. Was such an early, unprecedented, and devastating (to the film) announcement necessary?

  Did it make good business sense?

  Was it required?

  First, there can be little doubt that such an announcement about any film made 10 days into its release would have a chilling effect on theatrical revenue over the remainder of the theatrical run. Other than morbid “stare at a car wreck” fascination -- who would want to invest $12 or $15 in seeing the movie now firmly labeled “biggest flop of all time?” Avoiding stigmatizing a film as a mega-flop helps the studio earn as much revenue as possible from the film.

  As Waxman noted, it is hard to come up with a “similar announcement for a single movie in recent history.”

  Given the lack of precedent, what was the justification for such an early and devastating announcement?

  No explanation was offered by Disney. Arguments broke out among fans and Schadenfreudists and those attempting to defend the decision cited the notion that the John Carter box office performance was so devastatingly bad that it rose to the level of a “material event” which, as a public company, Disney was required to disclose without delay.

  The question arises -- was there precedent for the announcement?

  What has Disney announced in similar circumstances during the Iger years?

  The most obvious comparison is 2011’s Mars Needs Moms, also a fiscal Q2 release -- and a film whose total global gross of $39M (against a budget of $150M) was far worse than John Carter’s $280M global theatrical gross. Interestingly, that announcement -- made “normally” at the routinely scheduled quarterly investor conference call on May 9, 2011, created an awkward rearrangement of the call. Normally on the quarterly calls, investor relations chief Lowell Singer introduces Disney CEO Bob Iger, who gives a broad brush “state of the company” overview before turning the call over to Chief Financial Officer Jay Rasulo to go through the numbers. But on the Q2 2011 call, with Mars Needs Moms as the ‘800 pound gorilla in the room,’ the call began with Singer introducing Rasulo first, before Iger, so that Iger could be spared the ignominy of having to deliver the news about Mars Needs Moms.311 The transparency of this maneuver, with Iger letting his CFO do the squirming, was a solution of sorts, but not a satisfactory one, and suggests part of the motivation for making the announcement early.

  A second corollary is Disney’s The Sorcerer’s Apprentice, which carried a price tag of $150M and opened disastrously at $17.4M en route to a domestic total of $63M and global total of $215M. No special announcement of a write-down was made; the only reference was to an “unspecified write down” included in subsequent earnings reports.312

  To find a valid corollary it is necessary to go back to 2002, when Disney’s Treasure Planet opened at a dismal $12.1M on the weekend and earned a write-down announcement 11 days later. But that was Michael Eisner’s Disney - Disney Corp under Bob Iger had never made such a flop announcement.

  What factors did Disney top management have in mind in making an announcement that they had failed to ever previously make under the Iger administration?

  One factor was that, clearly, Disney CEO Iger did not want to have a repeat of the previous year’s uncomfortable situation on the quarterly earnings conference call. An early statement would remedy that by getting the bad news out of the way early, effectively resetting the bar for quarterly earnings expectations so that when Iger and Rasulo would face analysts and investors in May, the likely outcome would be a report that exceeded analysts’ expectations--expectations that would have been reset by the May 19 announcement.

  But there was another factor.

  Ten months earlier Iger had begun a dialogue with George Lucas for the acquisition of Lucasfilm and the Star Wars franchise. That dialogue had largely been on hold -- nor specifically because of John Carter, to be sure, but on hold nonetheless. Iger was eager to make a deal with Lucas and saw Lucasfilm and Star Wars as everything that John Carter was not--a ready-made, off the shelf franchise that would play to Disney’s strengths as an optimizer of value, and eliminate the risk and heavy lifting associated with a “grow your own” franchise.

  Disney’s acquisition would be announced in October 2012, and Iger would at that time say that the earnest phase of negotiation began “six months ago” -- placing it in the timeframe of the John Carter announcement. Iger would say of Lucasfilm and Star Wars:313

  We just announced a pretty big acquisition last week from Lucasfilm, and it's not often that we're working on two big ones at a time. . . . we have received feedback and in put from just about every sector of the ... of society on this, which is actually something that we've taken note of, because what it does is it confirms what we believed when we announced the acquisition, and that is that this is an immensely popular franchise, not just in the United States, but for the world, not just for kids but for generations, it's something that remains relevant and of interest to so many people, and that makes us feel great.

  Meanwhile -- regardless of whether the Lucasfilm acquisiton was a prime consideration in the timing of the unprecendented “doomsday pronouncement” about John Carter -- the March 19th announcement definitely had the effect of smoothing Iger’s path for the May 8th quarterly earnings conference call. By the time that call came, precisely because of the early announcement, John Carter was “old news” and Iger was able to speak in the normal order with no need to even mention John Carter. Instead, even though Avengers was not technically part of the quarter being reported (it had just been released on May 4, 2012, part of fiscal Q3, not Q2), it allowed Iger to lead with:314

  There are many exciting things happening across our businesses, starting with The Avengers, which as all of you know shattered industry box office records, achieving the biggest domestic opening weekend of all time, with $207.1 million. The movie set new opening weekend records in several other countries as well, bringing its worldwide box office gross to more than $700 million to date.

  Apart from smoothing the way for the quarterly earnings call, the early announcement arguably minimized any impact on the stock price by “getting out of the way” the bad news as early as possible. Impact on Disney stock was in fact minimal.

  Third, it got the announcement of the write-down done on Rich Ross’s watch, which Iger knew was about to end. It would not be a burden that Ross’s successor would have to bear.

  Thus from a purely “corporate” perspective (which, Iger could argue, is the only perspective that mattered) sacrificing John Carter arguably made sense.

  True, it would stigmatiz
e the film, diminish its earnings, and extinguish any remaining hope for the film to gather momentum in the remainder of its theatrical run, especially overseas where it had yet been released in the second and third largest markets, Japan and China. But corporate considerations trumped any quaint concern for the film itself or its constituents -- including royalty participants such as the Edgar Rice Burroughs Family, Edgar Rice Burroughs, Inc., and the key filmmakers.

  As for whether the John Carter performance truly was, or was not, a “material event” requiring immediate disclosure, it is an undeniable fact that at the same time that the announcement was being made, Disney’s CFO Jay Rasulo was privately assuring the financial analysts who follow Disney financial performance that it was not an event that would substantially effect the bottom line or posture of the company, specifically conveying:

  Disney Corp is a huge corporation. 93% of operating revenues come from something other than films (TV, theme parks, travel) and only 7% come from Walt Disney Studios.

  The $200M write-down is meaningful only within that 7%, not the overall 100% equation. To the larger Disney Corp, it is nothing more than a pinprick and will be quickly absorbed.

  The analysts dutifully replayed these talking points. Influential Harold Vogel told the L.A. Times that the company could easily absorb the loss. “It’s the equivalent of a ding on the side of your car. You wish it didn’t happen, but at the end of the day the car drives fine.”315

  Other analysts:316

  Drew Crum (Stifel Nicolaus) Rating: Buy. While discouraged by another large film loss (last year it was Mars Needs Moms) we’re not deterred and continue to focus on the positives including Media Networks + Parks.”

  Barton Crockett (Lazard Capital Markets) Rating: Neutral. Change to FY 2012 EPS: -15 cents to $3.04. “While the loss over the life of the movie is larger than the $140M we had been anticipating, we were not overly surprised by this news.” But the projection that the Studio unit will end up with a loss of between $80M and $120M this quarter “suggests to us that the balance of the studio performance was worse than we had modeled.”