DEAR BOB IGER…

. . . I’ve been meaning to write you for some time. As a Disney shareholder, I want to pass along an idea that I feel will add to Disney’s profits to the shareholders while also providing more value to Disney’s loyal customers.

There was a time when Disney re-released its animated features to the theaters every seven years or so in order that a new generation of children could experience these classics. This practice ended shortly after VCRs and other home video players became popular. The feeling was that since the movies were available to watch in one’s home, releasing the movies in the theaters wouldn’t generate enough revenue to be worth the effort. However, I disagree and humbly suggest that the Walt Disney Company renew this practice and begin re-releasing its library of animated classics into theaters.

There’s no doubt that the home video market has been a financial boon to Disney. My family alone has probably invested several thousand dollars in Disney VHS videos and DVDs. But I don’t think that we’re unusual in that we like to see Disney’s new movies in the theater, and then get the DVD of the movie when it’s released several months later. Contrary to the thinking at the time that the decision was made to discontinue theatrical re-releases, it’s not an “either-or” equation. For many families, including mine, buying the DVD or Blu-Ray is a way to relive the magic of first seeing the picture in the theaters.

But don’t just rely on a hunch based on my personal experience, Mr. Iger. Let’s take a look at some of the limited theatrical releases Disney has undertaken since home video took over. Most recently, in the fall of 2009, to gear up for the next summer’s release of Toy Story 3, Disney and its subsidiary Pixar re-released the first two Toy Story films in theaters in 3D as a double feature. Personally, my family was thrilled. While both of my children had seen Toy Story and Toy Story 2 on DVD many times, this was the first opportunity they had had to see them in the theater. The re-release was the number three film at the box office its opening weekend . Over the course of the five-week limited release, these films grossed over $30 million in additional revenue for Disney. Not too shabby for movies that had already been available in the home video market for years.

It may not be fair to use a 3D double feature to rate the potential of theatrical re-releases, though. So let’s take a look at another, more traditional theatrical release. This is the model I have in mind. In November 1997, Fox Studios was releasing its animated feature, Anastasia. Disney didn’t have an animated film ready for release to counter its competition. So it re-released its classic, The Little Mermaid. I vividly remember this because it was the first movie my then three-year-old daughter saw in the theater. Over a two-week limited release, The Little Mermaid grossed nearly $20 million dollars . It was number three its opening week, and most importantly for Disney, it soundly beat Anastasia.
So you can see, the home video market has not significantly reduced the demand for theatrical releases of Disney classics. And as impressive as these box office returns are, it’s important to remember that they’re gross figures. Profits are determined by net, the amount the release makes over its cost of production. That’s the beauty of re-releasing the animated classics and why they’re almost sure to increase profits. Almost all of the costs of development have already been paid for. Disney’s costs would only be the amount needed to clean the films up and distribute them. Very little would have to be spent on marketing, as these films are already classics that most every kid and parent is familiar with. All you would have to do is let people know that the film was being re-released, when, and for how long.

Like I said, I’ve been meaning to talk to you about this for a while, but then I saw news last week that makes me wonder if you’ve been reading my mind. This September, Disney is re-releasing The Lion King in 3D in theaters for a limited two-week run prior to its Diamond Edition release on Blu-Ray and DVD. Brilliant, Mr. Iger! Thank you. I promise the company won’t regret this decision. Personally, I would prefer the animated films be released in their original format, not 3D. This would also decrease the costs of the release to Disney. But I can live with 3D.

Now Disney needs to continue to release its animated classics every year. The holiday season is when Disney traditionally releases its new animated film, and Pixar has its release every summer, so we don’t want to compete at those times. Fall or spring, however, would be ideal times to re-release an old classic. I’m not proposing that Disney re-release every one of its fifty animated films. I doubt any one is clamoring to see Make Mine Music, The Black Cauldron, or Treasure Planet back in theaters. But the true Disney classics—Pinocchio, Peter Pan, Cinderella, Beauty and the Beast—need to be seen on the big screen. I would also add the more recent classics, The Princess and the Frog and Tangled. In seven or eight years, there will be a new generation of children that should have the opportunity to see these in theaters.

That’s the true reason Disney needs to take my advice. I know that you’re the CEO, responsible to the Board of Directors and shareholders to maximize profits. I hope I’ve shown how theatrical re-releases can achieve that. But more importantly, think of the generations of children (and even some young parents) who have never had the chance to see Snow White and the Seven Dwarves or Sleeping Beauty in the way Walt envisioned. It saddens me when I consider it. The Walt Disney Company is more than a mere corporation. It’s an integral part of the American experience. As such, it owes a duty to the public as much as it does to its shareholders. Fortunately, re-releasing Disney’s animated classics would allow the company to meet its duties to both constituencies.

Sincerely,
Mark Jeffries

P.S. While I have your attention—can you also attach an animated short to the beginning of every Disney animated theatrical release? There was one at the beginning of Meet the Robinsons a few years ago. My family thought that this was the beginning of a trend, and were sorely disappointed to find out we were wrong. Pixar begins each of its features with a short, and I don’t think you can dispute the commercial or critical success of their practice. Thanks.

Contributed by:Mark Jeffries (NDD#102) Mark is the DDL Finance Blogger.