The Atlantic Magazine is owned by Laurene Powell Jobs. She also owns 4% of Disney's stock and has an estimated net-worth of about $10B.
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| Since March 1, Walt Disney stock lost about $20B in market cap. That impacts a lot of 401-k and IRAs and insurance company portfolios and public sector pension balances. |
So, The Atlantic Magazine doesn't have to be profitable. It is an avocation or a hobby for Mz Jobs. Sort of like breeding Carrier Pigeons or French Bulldogs. It doesn't have to be practical.
The reason a movie that was expected to make money but loses a projected $110M can have a $20B impact on the market cap is twofold.
The first is that there is a multiplier involved. If you were buying an apartment building, for instance, you might pay 15X the projected earnings (revenue-costs). For a company with proven growth prospects, you might have to pay 40X earnings.
The second factor is that Disney makes a lot of money licensing the images of its various characters. It is still generating very large sums of money for Mickey Mouse's image, for instance. Those licenses are perpetual, money-printing machines that operate at almost zero expense to Disney. Unless something drastic happens, the latest incarnation of Snow White will not generate anything like the licensing revenues of Lion King or Frozen.
The second factor plays into the first. As long as Disney kept churning out movies that were successes in the theater, its earnings kept accelerating and it commanded a higher multiplier in the stock market. As soon as it falters, i.e. proves it is not infallible, then the multiplier wilts. Two major duds in-a-row totally guts the glittery image of an unstoppable growth company and the Price/Earnings ratio falls off of a cliff.
Steamboat Willie has entered the public domain at long last and the rest of the Disney characters will be joining him over time. The days of Disney getting extension after extension for the express purpose of keeping Mickey out of the public domain are over, I wouldn't be too surprised if Congress reverted copyright protection closer to the original intent (max of 56 years), not this obscene Life + 70 situation we have now.
ReplyDeleteI wouldn't be surprised if Disney was also Trade Marking their intellectual property. Trade Marks can be re-registered every ten years into infinity. While other companies might be able to sell images similar to Mickey Mouse after the copyright expires, they would still not be able to advertise or sell their merchandise as "Mickey Mouse" sleepers, or diapers or hats...
DeleteThink Disney would have to trademark each image, frame by frame, in a film. This would be prohibitively expensive and probably be rejected by USPTO.
DeleteThe bigger problem is that they can afford to tank the economy with whatever communistic/woke/progressive ideology they want. They can afford the haircut on their stock portfolio. After they reach the first billion, they'll never suffer. Lose 50% of their net worth? They're still filthy rich.
ReplyDeleteWhereas regular middle class people with a standard 401k? Different story entirely. I plan to retire in 2 years. If my 401k takes a 10% hit, that means working an extra year or two. 20% or 30% hit? My ability to retire starts to evaporate. 50% or higher? I probably work until I die. They can kill the middle class pretty easy and still not suffer.
I'm still hoping Trump's policy will help the economy, but the damage already inflicted might be more than we can handle. I have to think some of that is intentional and treasonous.
I think we NEED a short, severe recession to kill off the zombie companies that will NEVER make a profit. That needs to happen to free up the accountants, the salesmen, the skilled-trades, the IT people...and all of the other human-capital that they have sponged up.
DeleteThose companies also absorb huge amounts of capital (i.e. credit) and it comes from the same markets that productive companies compete in. It is pretty hard to compete with a wind-farm when .gov is underwriting the venture. So the net result is that enterprises that are competitive and would thrive are strangled and starved so the weak-sisters can continue to support armies of entitled and resentful "activists".
The local gas station is offering $17/hour to stand at a cash register...and getting no takers.
Trump pushing the illegal aliens out of the country makes that problem worse. Cleaning up the fraud for Disability will make that better.
Fred in Texas, @ Don Curton, it is intentional. Cloward Piven plan is a real thing. Apply Occam's Razor...
Delete@ ERJ, a recession will help but not enough. At this point a financial collapse is baked into the cake. The good news is that it will level the playing field. The ones that know how to get by on less will date better. The ones that have a broad skill set will also do ok if they're in a rural area. The ones in or near an urban area are probably gonna suffer some before becoming a statistic. If the world doesn't enter a new dark ages it will be a major historical event.
Me? I'm practicing not going to the store. Your fiction made me stop and think about my supply chain. I'm trying to wean myself off of coffee. It's not growable in North America... Build good fences and good relationships. Maybe we'll see Jesus return. Wouldn't that be cool? It'll be an epic "I told ya so!" Stay the course.
ERJ - I don't disagree that the market needs a severe correction, but there's a big difference between a "correction" and the Cloward Piven intentional destruction. I can survive a correction.
DeleteAnon @ 3:26. Coffee? I'll eat squirrels and stray dogs to survive, but I will literally kill someone for one more cup of coffee. Assuming the jittery withdrawals don't ruin my aim.
https://www.bing.com/search?q=was%20Laurene%20Powell%20Jobs%20a%20jew&qs=n&form=QBRE&sp=-1&ghc=1&lq=0&pq=was%20laurene%20powell%20jobs%20a%20jew&sc=12-29&sk=&cvid=34D0A13778834837BB616E5A7460B8D2&ghsh=0&ghacc=0&ghpl=
ReplyDeleteI personally don't think Disney and the Atlantic are mere hobbies for these people. I don't care how rich you are... nobody shrugs off an $800 million dollar hit.
You only take losses like that if you are driving an agenda that will allow you to recoup elsewhere. Given the money laundering, the people in involved and the politics involved... I am suspecting gov't involvement in underwriting these ventures through misappropriation and grift.
But whadda I know?
A paper loss is just that, paper. If you are actively buying or selling the stocks the current price vs. your purchase price is an interesting bit of trivia, nothing more.
DeletePlus, if she did sell the stock for a loss she now has a long-term capital loss to offset other capital gains for the year WITH the ability to carry unused losses over to future years.
The finances of people with significant assets are very different from people without.
Edit to above: If you >>Aren't<< actively buying or selling a paper gain or loss is just that - on paper only.
DeleteI think she inherited the stock when her husband died, so the cost basis would be zero.
DeleteCost basis of inherited stock is the fair market value of the stock on the date of death. The industry term is "step-up in basis". All the Apple and Pixar and whatever stock that Steve Jobs owned on 10/5/2011 at essentially zero cost basis was reset to around $13 per share split-adjusted (split 4:1 in 2020 and 7:1 in 2014, so DoD value was $364/share). Current price of AAPL is $223. So cost basis is nearly zero (@6% of current price), but she also has 28 times more shares than she did when he died. Tax rate is 20% LTCG + 3.8% NIIT for 23.8% to IRS, if she still lives in CA add another 13.3% state tax for combined rate of 37.1%. Pretty good tax rate for a billionaire in the highest taxed state.
DeleteSupposedly she's the sixth richest woman in the world, worth between $20-$33 billion. Disney's market cap is $178B, so her 4% is worth @$7B (call it 70 million shares), plus she has other investments so let's say she has $18B in AAPL. That works out to about 80 million shares.
AAPL dividend is $1.00, DIS the same, so she's getting $150 million a year from these two positions by just sitting on her butt. Those are qualified dividends so they are taxed as above. Disregarding all other income and investments, she's clearing $100M just eating bonbons.
Plus, she married Jobs in 1991 so she has plenty of experience with market highs and troughs. Before marriage, she worked at Merrill Lynch and Goldman Sachs, so she also has some trading or research background. Think of how much she has already given to various philanthropic causes. I don't think she's going to be bothered one whit by paying whatever losses The Atlantic racks up. Bummer.
It should be noted that Snow White is not going to lose only $110 million, it will more likely be well over $200 million. Not only does Disney have a track record of underreporting budgets, but those numbers don't include any advertisement or marketing costs. In addition, the theaters get part of each ticket sale too, which tends to average out to the producer only getting a little more than half of the box office total back.
ReplyDeleteIf you're interested in these numbers, I recommend Valliant Renegade on Youtube. He's actually an accountant and knows far more than I do about this stuff.