Are Disney and George Lucas Hiding Something?

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There are only a few reasons why, if you're Disney, you announce that you're buying George Lucas's film studio for $4 billion today, in the middle of an impenetrable news cycle surrounding a major natural disaster, and when U.S. stock markets are closed:

1. You want to cheer up the citizens of storm-damaged cities on the East Coast by giving them a new Star Wars film to look forward to.

2. You were going to announce the deal this week anyway, and somewhat callously decided not to delay the release just because Hurricane Sandy happened.

3. The deal is a financial dud, and you want to get the news out with minimum scrutiny.

Based on what little we know of the finances of Lucasfilm (which was private, and 100 percent owned by George Lucas, until today), I'm guessing that something closer to option 3 is happening.

George Lucas, now 68 years old and entering the twilight of a long and successful career, clearly had incentives to sell out. He'll get half of the $4 billion purchase in cash, and will be able to hand the Star Wars franchise over to Disney, who will have the energy and the wherewithal to milk it for all it's worth. (On a conference call today, Disney executives said they planned to release a new Star Wars movie every two to three years, beginning in 2015.) Disney will also get the Indiana Jones franchise out of the deal.

Compared to its other acquisitions (most notably, its 2006 purchase of Pixar for $7.4 billion), Disney is buying LucasFilm for a steal. And at a glance, $4 billion does look low for an iconic movie series. Earlier this year, 24/7 Wall Street ran some back-of-envelope calculations and estimated that the Star Wars franchise alone was worth upwards of $30 billion.

But there's no way a $30 billion valuation is even remotely accurate, given that George Lucas was willing to sell his entire company for roughly one-eighth of that.

It's true that Star Wars has sold many, many billions of dollars worth of merchandise, video games, movie tickets, and licenses. But Disney isn't buying LucasFilm for what Star Wars has already made — it's buying it based on what it believes the franchise can earn in the future. And that is much, much less certain.

Disney called Star Wars an "evergreen" media property today. But the prospect of keeping the Star Wars series going ad infinitum, and expanding it to regions and age groups in which it isn't already well known or loved, is far from a sure bet with consumers. It essentially amounts to wagering that die-hards will continue to flock to anything with the Star Wars name on it, while also betting that new movies will draw a younger generation that didn't grow up on Millenium Falcon references.

Disney can't rely on old intellectual property — it needs Lucasfilm to keep throwing off cash to justify its $4 billion price tag. But with aging cultural cachet (the first Star Wars came out 35 years ago) and a consumer base that has lots of other popular franchises clamoring for its attention, it's hard to think that the marketing machine of a decade ago can keep chugging along at pace. As this chart from Box Office Mojo points out, recent Star Wars movies (adjusted for ticket price inflation) have generally underperformed older ones. Why would newer versions, released by Disney, fare any better?

George Lucas, who has seen the Star Wars franchise go from revered cultural touchstone to virtual punchline, may have accepted a lowball bid in an effort to wash his hands of the series altogether. But I doubt it. We won't know for sure until Disney reports LucasFilm's financials, but it seems to me that Lucas may have gotten the better deal here.

If Disney can't keep a parade of Star Wars sequels from suffering diminishing returns, its "evergreen" acquisition may be more like a wilting flower. And if Disney knows it overpaid, or even senses it might have, then burying the news makes all the sense in the world.