July 2 (Bloomberg) -- Johnny Depp’s “The Lone Ranger,” opening in theaters tomorrow to negative reviews and tough competition, looks poised to become Walt Disney Co.’s biggest flop since last year’s $200 million loss from “John Carter.”
The movie, based on the 1930s radio show and 1950s TV series, is the type of project that’s worked well in Hollywood of late. It features well-known characters and a proven star in Depp, with potential for sequels and merchandise sales.
Still, Disney will struggle to turn a profit, after the budget climbed to $225 million and the film earned mostly unfavorable early reviews. The task is more challenging because “The Lone Ranger” opens on a competitive summer weekend, against Universal Pictures’ animated “Despicable Me 2” and holdovers that include “Monsters University,” from Disney’s Pixar, and the zombie thriller “World War Z.”
“It is a huge gamble,” said Doug Creutz, an analyst with Cowen & Co. in San Francisco, who predicts a $100 million write-off for Disney. “You need the film to be really good.”
Critics have been harsh. Of 62 reviews compiled by the website Rottentomatoes.com, 79 percent were labeled negative. That compares with 49 percent “rotten” out of 218 reviews of “John Carter,” Disney’s March 2012 sci-fi fantasy about a Civil War veteran transported to Mars.
“‘The Lone Ranger’ is a drag as an action movie,” wrote Alonso Duralde, critic for the industry website The Wrap.com. “It’s not funny in its attempts at self-parody, and it feels like a Western made by people working off a checklist of tropes.”
BoxOffice.com predicts three-day weekend sales of $37 million in the U.S. for “The Lone Ranger,” just $7 million more than “John Carter.”
The film will benefit from the long July 4 holiday weekend in the U.S. It is projected to take in $135 million in its domestic theater run, a sum the studio splits with cinema owners. “John Carter” generated $73.1 million in U.S. cinemas.
“The Lone Ranger” reunites Depp with the team from the “Pirates of Caribbean” films, which overcame initial skepticism to become a top franchise. Producer Jerry Bruckheimer generated a combined $3.7 billion with four “Pirates” movies, according to researcher Box Office Mojo, the first three led by “Lone Ranger” director Gore Verbinski.
Depp, who was Captain Jack Sparrow in the “Pirates” series, plays Tonto, the trusty Native American partner of “The Lone Ranger.” The title character is portrayed by Armie Hammer, who starred as the Winklevoss twins in “The Social Network.”
“There’s a reason why people have relished these characters and genres for decades,” Bruckheimer said in a press release. “We knew that if we reintroduced them in a fresh and exciting way, they would fall in love with them all over again.”
A Disney spokesman declined to comment on the film’s prospects.
“The Lone Ranger” budget was an obstacle for Disney, which announced plans for the film in September 2008. Work was halted by the studio in 2011 until Bruckheimer cut costs. The producer, whose credits include “Beverly Hills Cop” and the TV series “CSI,” eliminated special effects, including a scene with computer-generated werewolves. He also sought out locations with tax subsidies, such as New Mexico, he told Variety.
“If the figures are right, that the film cost in the $200 millions to make, there’s a big nut there to overcome,” said Martin Pyykkonen, an analyst with Wedge Partners in Greenwood Village, Colorado. “It looks like a very well-done movie, but the fact is it’s a western and Depp hasn’t really been lighting a fire with the last few movies he’s been in.”
While Depp’s 2010 release “Alice in Wonderland” grossed more than $1 billion worldwide for Disney, 2011’s “The Rum Diary” had $24 million and failed to recoup its $45 million production budget while in theaters. Warner Bros.’ “Dark Shadows,” made for $150 million, generated $245 million in worldwide sales last year.
Receipts are split about 50-50 with U.S. exhibitors, although the studios’ share can be larger on bigger films. In international markets, the studios generally receive less than half of ticket revenue.
According to Creutz, westerns are a gamble with today’s audiences, while an early trailer left it unclear whether “The Lone Ranger” was an action-adventure or a comedy.
“Cowboys & Aliens,” the 2011 DreamWorks Studios SKG tale of cowboys battling invaders from space, cost $163 million and took in $174.8 million globally. “Wild, Wild West” cost $170 million and had sales of $222 million in 1999.
The exception was “True Grit,” the 2010 release from Paramount that cost $38 million to make and took in $251 million in worldwide ticket sales, according to Box Office Mojo.
Disney is deploying its typical big-budget marketing for the film. The company lined up sponsorships including Subway Restaurants Inc., Time Warner Cable Inc. and Kawasaki motorcycles. The consumer-products division has licensed merchandise for release, including $18 Lone Ranger and Tonto action figures, masks for $15 and hats for $17.
The reintroduction of “The Lone Ranger” tells the story more from Tonto’s point of view and introduces comedic elements, such as a stone-faced Depp dodging bad guys on a speeding train. Hammer, 26, is out to avenge his brother’s murder as the masked ranger.
Coveted product placements were difficult in film’s 19th century setting, so in its promotions Time Warner Cable links the speed of its Internet service to the Lone Ranger’s fast white stallion “Silver.”
“What these partners have done is take that idea of riding for justice, take those icons -- the mask, the silver bullet, riding the white horse -- and made those themes relevant in new ways,” said Asad Ayaz, a Disney marketing executive.
Kawasaki opted for commercials mingling scenes of the ranger racing along on horseback with shots of off-road enthusiasts riding dirt bikes or four-wheelers. A voiceover compares Old West heroes with Kawasaki owners riding their “steeds forged of steel,” according to Chris Brull, the company’s U.S. director of marketing, who declined to put a dollar value on the company’s campaign.
On the biggest movies, tie-ins can provide marketing punch worth $100 million or more.
“We are in the range of some of the biggest campaigns we’ve done,” said Don Gross, Disney’s vice president of promotions.
Those benefits, along with government film subsidies for the movie, shot in New Mexico, Utah and other locations, lower the risk for Disney on “The Lone Ranger” -- if not the voices of critics.
“Verbinski and his writers have taken a promising idea and put a silver bullet in its head,” TheWrap’s Duralde wrote.
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