Disney has had its worst week leading into D23 Expo 2019. In the space of just a few days, Disney has seen its deal with Sony for Spider-Man blow up, faced a backlash, and had some potentially damaging whistleblower accounts, which adds up to a lot of bad news for the Mouse House.
2019 has been a huge year for Disney: Avengers: Endgame became the highest-grossing movie of all-time, and they've had four other movies pass the $1 billion mark, and that's not even including Spider-Man: Far From Home, the box-office for which is kept by Sony (and which has, in part, factored into their terrible week). On top of that, Disney also completed its takeover of Fox, gaining a vast number of properties with it.
Disney is a cultural giant, and one that is very much used to having success and getting what it wants, which has definitely been the case for most of this year, but things are turning. Earlier this month, CEO Bob Iger had to address the low attendance at the Star Wars Galaxy's Edge theme park, which has had some disappointing results so far, and last weekend Mulan received boycott calls after Liu Yifei provided support for Hong Kong police. However, in the past week, things have only gone from bad to worse for Disney.
Disney & Marvel Have Lost Spider-Man
Since 2015, Marvel Studios and Sony Pictures have had a special arrangement over the rights to Spider-Man, which has allowed Marvel to use Spidey in MCU movies like Avengers: Infinity War, and have creative input on new Spider-Man movies. Starting with his introduction in Captain America: Civil War and leading through to Spider-Man: Far From Home, Spider-Man has become a cornerstone of the MCU: he's one of its biggest and best characters, and it's on him they've pinned the legacy of Iron Man.
This week, the Disney-Sony Spider-Man deal collapsed in public fashion. Although talks are apparently ongoing, as it stands it looks like Spider-Man will definitely cease to be in the MCU. Sony is still going to make Spider-Man 3 & 4, with Tom Holland continuing as Peter Parker - although Jon Watts may not direct Spider-Man 3 - but they won't exist within the MCU, and other Marvel movies won't be able to feature Spider-Man either. The news was a big surprise, and Disney & Marvel are the biggest losers. Sure, Sony is losing Kevin Feige as a producer, but the former are losing one of the biggest superheroes in the world, and one who, heading into Phase 4, should've been a cornerstone of the franchise. There were big plans in place for him to continue as essentially being the new Iron Man (and beyond that), and now all that's gone.
Spider-Man's Rights Issues Are Disney's Fault
Unsurprisingly, the reason Disney-Sony talks about Spider-Man broke down is money. Under the current terms of the arrangement, Sony keep the majority of box-office revenue for Spider-Man films, with Disney taking a 5% cut. While that might sound very one-sided, it's not exactly bad for the Mouse House, who get 100% of merchandise for the character, and of course get the box-office boost that comes with having Spider-Man in their other films. Nonetheless, with Spider-Man clearly a big draw - Spider-Man: Far From Home made over $1bn - Disney reportedly wanted to change things to be a 50/50 split.
Sony has blamed Disney for the Spider-Man problems, and while the issue is multi-faceted, what will matter most is how things are perceived, and the idea of Disney moving the goalposts has taken hold. And in fairness, it's true that they did. There are reports they were also going to pay half of the production costs too, so it's not as though they wanted something for nothing, but at the same time there was a compromise reached for the Spider-Man movie rights, which did and still do belong to Sony, and Disney attempted to change things for financial gain.
Given the Disney-Fox merger has already seen concerns over the company's monopolization of Hollywood - and the superhero market in particular - then Disney isn't going to get too much sympathy over losing one of its increasing number of properties. Stan Lee's daughter has sided with Sony over Disney in the dispute. Although there are caveats to be made regarding past allegations about J.C. Lee, it's still nonetheless bad PR for Disney to be so strongly criticized by the family of Marvel's founding father, and will only contribute to the perception of Disney as being held responsible for what's happened - which, given they're the ones who made demands and changed things (whether reasonable or not), they are.
Disney Has Been Accused Of Falsifying Revenue
Disney's bad week isn't just about Spider-Man, as they've also been beset by another very public claim against them, with a whistleblower saying Disney falsified revenue. Sandra Kuba, a former senior financial analyst at Disney, has filed a series of whistleblower tips to the U.S. Securities and Exchange Commission (SEC), alleging the company has been repeatedly overstating its revenue for years, leading to an increase of potentially as much as $6 billion. The allegations revolved around the parks and resorts owned by Disney, rather than the movie side of things, with claims that employees report revenue for complimentary items and special promotions.
Disney has pushed back on these claims, denying Kuba's allegations and adding that she had been fired from the company. Whether true or not, the allegations have had a negative impact on Disney, with the company's stock value trading downwards after the news broke, and even if there has been no wrongdoing, it's more negative press for them.
All Of This Has Happened At The Worst Time For Disney
This weekend is the D23 Expo 2019, a fan convention that has become one of Disney's biggest events in recent years, operating like its own personal Comic-Con. While Marvel made some big reveals at SDCC 2019, the D23 Expo is another chance for Disney to show off its biggest properties, and is important not only in terms of building hype among fans, but also from a business perspective for pleasing shareholders. D23 Expo 2019 is expected to include lots of news about Star Wars and Marvel, and that includes - or rather, included - Spider-Man.
There was no announcement regarding Spider-Man at SDCC, but it was anticipated that we'd get something at D23. Unfortunately for Disney, Spider-Man even appears in the D23 marketing materials. The week leading up to D23 should've been spent hyping up the various panels and reveals to come, but instead it's been completely overshadowed by the Spider-Man news. At best, it's something of an embarrassment for them, but given that this has taken control of the news cycle away from Disney, likely forced them to drastically alter plans for D23, and reduced excitement for the Expo, then Disney's bad week is made even worse by the absolutely terrible timing of it all.
This Proves Disney (& The MCU) Isn't Infallible
Disney has lost Spider-Man, is facing various backlashes, and has been accused of serious financial wrongdoing, all on the eve of what is supposed to be a celebration of everything Disney, but the real kicker for the Mouse House is that, quite simply, this stuff isn't supposed to happen to them. Disney's brand is one that's been meticulously crafted and maintained; they're supposed to be untainted and untouchable, with full control of the narrative. This week's news has proved that Disney isn't infallible: it's the Hollywood equivalent of Rocky IV and the fight with Ivan Drago - the first sign that it can be damaged.
Disney - and Marvel - have had issues in the past, but they've rarely come off looking quite so bad. That's particularly true for the MCU, which, in the past 11 years, has hardly put a foot wrong. There have been some potential missteps, such as the departure of Edgar Wright from Ant-Man, but nothing that's really left a bruise. This is different, because it looks bad now, will continue to in the future, and even if Disney and Sony do reach a deal that sees Spider-Man stay in the MCU, it proves that the empire is even just slightly precarious, which might be the most damaging thing of all.