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Technology Stocks : Pixar Animation -- Ignore unavailable to you. Want to Upgrade?

To: Linda Kaplan who wrote (2024)	12/21/1998 2:19:00 PM
From: Adam Nash	Read Replies (1) \| Respond to of 3261

Adam: Could you explain? I'm no good at numbers. If there's only 200M box office, how can Pixar have a 200M profit? They don't get all 200M and still have costs to deduct. Thanks. Linda It has to do with the fact that box office revenues are a small portion of the total revenues for an animated movie in the modern film industry. In fact, the common multiplier that was mentioned at the shareholders meeting that Disney uses is "4x", So, basically, that means that if ABL does 200M Box Office in the US, that you can expect with international sales, video sales, merchandising, TV showings, etc, that ABL will actually pull in revenue closer to $800M. So, since total costs of production, marketing, and distribution for all that might total $400M, you would be left with $400M profit, which is 50/50 split with Disney. I am grossly simplifying the issues of how film companies determine "costs" and "profits" for individual films (it is a subject of ongoing debate). However, this does explain why the profits appear to ramp up so quickly. The movie has a large fixed cose (~$70M production, $100M promotion, etc), so that once they clear that hurdle, the money rolls in. Like anything, you can significantly change the projection by changing the multiplier or the net margins for the movie.