October 30, 2012
In a surprise announcement today, Disney said it is buying George Lucas’s Lucasfilm Ltd and its “Star Wars” franchise for $4.05 billion in cash and stock.
Lucasfilm was wholly owned by George Lucas, so until now, the only way to own any of the Star Wars franchise was to buy the movie trilogy or hexology – or any of the myriad cartoons, video games, and other random merchandise – at the store.
Once the sale of Lucasfilm is completed (and it still requires regulatory approval), investors including TSP participants can buy into the franchise itself, albeit indirectly through Disney stock.
If you invest in the C Fund, you own a little bit of Disney. “The Walt Disney Co.” is the 31st largest holding in the S&P 500 index, on which the C Fund is based. As of October 26th, the C Fund held about 0.71% of Disney stock.
Thus if you had $50,000 invested in the C Fund right now, you would own about $355 worth of Disney stock. (At about $50 a share on Friday, that would equal about 7 shares of Disney stock.)
Further breaking it out, Disney as a company is valued at about $90 billion. The $4 billion price tag for Lucasfilm would equal about 4.5% of the total value of the company. That means that of the $355 of Disney stock in that original $50,000 invested in the C Fund, the “Star Wars” portion comes to about $15.98, or about the price of the original Star Wars Episode IV DVD.
The difference is that being part-owners, we now get to enjoy some of the profits when others buy the DVDs, video games, merchandise, etc. in the form of dividends and appreciation. We get to enjoy the products, and we get to enjoy the profits from those products, too.
How can you not love free markets?