Disney buys Lucasfilms in latest push for movie-making dominance

Is George Lucas -- the man who gave birth to Han Solo, Luke Skywalker and Princess Leia 35 years ago -- an entertainment-industry Jedi? We'd have cause for thinking so.

The sale of Lucasfilms to Disney netted Lucas, already worth some US$3.3 billion, another $4.05 billion ($2 billion in cash, plus 40 million shares). According to the release announcing the deal, Lucas was the sole owner of the company. The deal makes the 68-year-old Disney's second-largest single shareholder (2.2 per cent), behind the estate of Steve Jobs.

Why is Lucasfilms worth so much? It owes, in large part, to Star Wars' rare standing in the hearts and minds of successive generations. In the late 1970s, kids hit the Halloween streets in dark robes with light sabres in hand. Thirty-five years on, the scene is eerily similar -- only now they're joined by Anakin and Jar Jar Binks (Compare: The top-selling album in 1977 was Fleetwood Mac's Rumors; good luck finding a Grade 5 humming "Gold Dust Woman" today.)

Between 1977 and 2005, Lucas produced six Star Wars movies, earning US$4.54-billion at the box office. After Harry Potter, the movie franchise is the most valuable ever created.

In buying Lucasfilms, Disney not only gets the complete Star Wars catalogue -- as well as all accompanying merchandise rights, a US$214-million a year asset -- it now controls the future of the franchise.

Indeed, the release announcing the deal makes clear Disney believes the series has a future. According to Lucas, Revenge of the Sith (2005), was the final chapter of the Star Wars saga. Now, with the Disney at the helm, a new episode is set for release in 2015, with future installments planned.

Talks between Lucas and Disney are said to have begun a year and a half ago in Orlando, while the two sides were re-opening a Stars Wars attraction at Universal Studios. The deal includes his live-action production house as well as his cutting-edge special effects unit, Industrial Light & Magic. Industrial has made its technological mark on Hollywood by figuring out ways to integrate actors seamlessly into pre-existing footage, a trick that turned heads in Schindlers' List and Forrest Gump.

If the deal is the end of Lucasfilms, it is the opposite for Disney, which has now spent US$15-billion in six years, snapping up production houses in a bid to own the animation industry and superhero market. The acquisition spree, spearheaded by CEO Bob Iger, started in 2006 with Disney's purchase of Pixar Studios for US$7.4-billion; the deal that made Jobs Disney's largest non-institutional shareholder. Iger followed that deal up four years later with his US$4-billion purchase of Marvel Entertainment, makers of The Avengers.