Will Disney Take Lucasfilm and “Star Wars” To the Next Level?

With its recent acquisition of Lucasfilm, Ltd., the Walt Disney Company has wagered $4.05 billion that it can increase the worth of the formidable “Star Wars” franchise.  Included in the sale are the copyrights for “Star Wars”, producer shares in the “Indiana Jones” movies, as well as Lucas’ Industrial Light and Magic (ILM), an awards-winning special-effects operation.  Additionally, the transaction allows Lucas to retain ownership of some of the nation’s priciest real estate, the Skywalker Ranch.  The 4,000-acre residential and work spread is located in Marin County, CA, and worth an estimated $100 million.  Lucasfilm employees will continue to work at the Skywalker Ranch production facility.

The real story here is whether Disney offers a superior distribution network for Lucas’ intellectual property.  Disney’s consumer-products division – which earned more than $3 billion in 2011– is a powerful technology-driven platform for distributing content globally.  According to Disney CEO Robert Iger, “Technology has proved more friend than foe to great storytelling.  It allows us to distribute in ways we never thought would have been imaginable.”  For example, if released today, the last three “Star Wars” movies would have generated $1.5 billion each when adjusted for inflation, the growing international market and the popularity of 3-D.  Related merchandise sales would have earned an additional $215 million in 2012.  By contrast, Lucasfilm earned $550 million in operating in profit when the last “Star Wars” movie was released in 2005.

According to the Forbes 100 List, Lucas was worth an estimated $3.3 billion as of September, 2012, and ranked # 120 among the world’s wealthiest individuals.  Reports are that Lucas will donate most of the proceeds from the sale to education-focused groups.  Although Lucas has not yet specified who will be the beneficiary, a likely choice is Edutopia, which empowers innovative coursework in schools. Lucas currently serves as Edutopia’s chairman.