Disney Announces Investment of $645 Million in Star Wars Series 'Andor'
Disney has revealed that the expenses for creating the Star Wars streaming series Andor have escalated to an astounding $645 million (£504.8 million) after spending a mind-boggling $290.9 million (£232.1 million) last year on filming its second season, set to premiere in April 2025.
This represents the highest-ever annual expenditure on a Star Wars production, as detailed in Disney's public financial reports. This exorbitant sum surpasses the $280.7 million (£211.8 million) spent on Star Wars: The Last Jedi over a duration of almost 11 months up to March 16, 2019. It also surpasses the $243.8 million (£193.6 million) cost of Disney's inaugural Star Wars entry, The Force Awakens, in the year ending November 15, 2016.
Intriguingly, the expenses for Andor's second season are poised to escalate further, as this $290.9 million was spent between the years to November 22, 2023. This amount does not even cover the entire filming, as principal photography commenced in November 2022 but was temporarily halted in summer 2023 due to the SAG-AFTRA strike. Filming resumed in January of this year and concluded the following month, but this was far from the end of the project.
Following primary photography, a year of post-production ensued during which many of the show's lavish effects were added to the footage. Diego Luna, a Mexican actor, stars as the titular spy who works for the heroic Rebels as they strive to challenge the might of the Empire, led by the legendary villain Darth Vader.
Andor is set five years before the beloved original Star Wars trilogy and retains a comparable level of realism due to its extensive use of practical effects and physical sets. This realism is one of the primary reasons for the series' substantial production cost. It presents a significant challenge for Disney, which is investing heavily in Andor after several other Star Wars spinoffs failed to resonate with fans as this report suggests.
On the other hand, the first season of Andor was a force to be reckoned with. Its audience score of 87% on the review aggregator Rotten Tomatoes is higher than any other Star Wars series on the Disney+ streaming platform, justifying the greenlight for a second season. In fact, its score is even higher than any of Disney's Star Wars movies, excluding the 2016 spinoff film Rogue One: A Star Wars Story, which also starred Luna. The success of Andor came at a substantial cost.
The budgets for streaming shows produced in the United States are typically considered confidential information, as studios consolidate their spending across all productions in their overall expenses and do not disclose them separately in their financial reports.
Disney does not disclose the costs of individual productions and did not respond to a request for comment. However, the data regarding the costs of Disney's Star Wars shows and movies is readily available from its financial statements.
Productions filmed in the United Kingdom, however, are subject to a significantly higher level of financial disclosure than their counterparts in the United States. The leading Hollywood studios film in the U.K. due to the fact that the U.K. government reimburses up to 25.5% of the money spent on filming there. This reimbursement is contingent upon the shows passing a points test based on factors such as the number of U.K. production team members and the amount of post-production work done in the U.K. In addition, at least 10% of the core production costs must relate to activities in the U.K., and studios must establish a separate high-end Television Production Company (TPC) for each picture they make there to demonstrate this to the government.
The terms of the reimbursement state that the TPC must be responsible for pre-production, principal photography, and post-production of the television production, as well as delivery of the completed programme. Studios are prohibited from hiding costs in other companies, as the terms also specify that there can only be one TPC associated with a programme.
The funding mechanism varies slightly from production to production but generally follows a similar structure, beginning at the inception of production. A Hollywood studio acquires a script from a screenwriter and approves a show based on it. If the studio opts to film the show in the U.K., it then establishes a subsidiary company there which acquires the script from its U.S. parent. Acquiring the script grants the U.K. company the rights to produce a show based on it, and the Hollywood studio usually compensates it with a small production services fee. As per the rules, the U.K. company must be responsible for all aspects of production, from pre-production and principal photography to post-production, delivery of the finished show, and payment for goods and services associated with it. Then comes some financial magic.
If the U.K. company makes a profit, the financial benefit from the government takes the form of a reduction to its tax bill. However, if the company incurs a loss, it receives a cash reimbursement. Studios fund the companies in such a manner to ensure that they finance losses, making it possible for the companies to receive cash reimbursements.
As illustrates the following diagram, the studio buys the rights to the show from the U.K. company but only provides it with approximately 74.5% of the estimated production cost. The remaining 25.5% is provided by the studio in the form of a loan. The loan, along with the revenue from the sale of the rights, gives the U.K. company 100% of the production budget for the show, thereby setting the stage for the cash reimbursement.
Investments are not classified as income due to the necessity of repayment, resulting in a loss for the U.K. company equating to approximately 25.5% of the series' budget. This scenario prompts intervention from the U.K. government, who compensate this loss. The compensatory amount matches the loan the company is indebted to its parent, enabling the payment to be forwarded to the Hollywood studio, effectively reducing the studio's financial commitment. To decipher this complexity requires extensive investigation.
British companies often adopt pseudonyms during the permit application process for filming locations to prevent drawing attention from fans. Recognizing and associating these alias names with their responsibilities necessitates extensive knowledge of the industry, a skill my colleague and I have honed over a decade-and-a-half. As the primary journalists worldwide focusing on the financial analyses of U.K. production companies for national media, we have reported on this subject for over a decade across 10 prominent titles, such as The Times of London, The Guardian, The Daily Telegraph, The Independent, and the London Evening Standard.
The production companies release their annual financial reports which offer transparency into the financial aspects of streaming shows. These statements not only disclose the reimbursement but also provide data on overall spending, personnel counts, salaries, and employee benefits.
Marketing expenditures are omitted from financial statements, as the studio assuming these costs is a common practice. Similarly, income from streaming subscriptions and merchandise is directed to the studio without being reported.
The financial reports pertain to the production company responsible for the series, specifically Disney's subsidiary E&E Industries (UK). Initially established in October 2018, its intent was to produce a film centered around the beloved Star Wars character, Obi-Wan Kenobi.
Following the underperformance of Solo, another Star Wars movie featuring a legendary character, Disney reconsidered its approach. As revealed in this report, Solo experienced financial losses exceeding $90 million at the box office, leading Obama-Wan Kenobi's transition into a streaming production. Following a summer 2020 filming schedule plan, production was postponed mid-January 2020 due to Disney's reported concern over the similarity of the storyline to another Star Wars streaming series, The Mandalorian.
The delay served as a lucky break as the pandemic shutdown suddenly ensued, providing time for the Obi-Wan Kenobi series to be revised. By May 2021, the cast gathered in Los Angeles and filming commenced.
The E&E Industries (UK) reports reveal a total expenditure of $7.2 million (£5.6 million) by October 31, 2019, just before the production halt for Obi-Wan Kenobi. Other costs for the series undoubtedly incurred in the intervening period will likely surface in the October 31 filings.
Rather than focusing entirely on Obi-Wan Kenobi, E&E Industries (UK) transitioned its role to producing Andor, filming at the renowned Pinewood Studios outside London and on location across the U.K. A London subway station transformed into the Imperial Security Bureau's headquarters on the alien planet of Coruscant, while a seaside town in Northern England served as the resort planet Niamos.
In an interview with ComicBookMovie.com, Andor's special effects supervisor Neal Scanlan revealed that around six weeks of pre-production work had been completed for Andor before the U.K. went into lockdown at the end of March 2020.
The filming process encountered multiple delays due to the pandemic, ultimately securing the U.K. government a $1.6 million (£1.2 million) grant, and a further $2 million (£1.5 million) in insurance compensation.
Upon completion in late September 2021, a total of $271.6 million (£202.9 million) had been invested in Andor's initial season, including the $7.2 million of expenses on Obi-Wan Kenobi. The subsequent year saw an additional $82.5 million (£69.8 million) spent on post-production as the show premiered in September 2022. While pre-production for series two presumably contributed to some of this expenditure, Disney invested $290.9 million in it over the following year.
However, the reimbursement of $129.3 million (£101.2 million) for filming in the U.K. brought Andor's spending down to $515.7 million. The financial statements indicate that the "final cost was forecasted to be within the production budget." Additional costs incurred during the last stages of filming and post-production may slightly increase the total, but given the premise of the show's second season as its "long-awaited conclusion," the spending is not expected to significantly rise beyond its current levels. Disney will likely be hopeful that it culminates in a highly successful and spectacular finale.
- The highly anticipated second season of 'Andor' on Disney+, a 'Star Wars' series produced by Lucasfilm and Disney, has seen its production costs escalate to a staggering $290.9 million after an initial investment of $645 million for the entire series.
- Despite the exorbitant costs associated with 'Andor', the series has garnered critical acclaim, with its first season boasting an audience score of 87% on Rotten Tomatoes, making it the most successful 'Star Wars' series on Disney+ to date.
- 'Andor' is one of several expensive 'Star Wars' productions, with Disney investing heavily in the franchise following the less than stellar performance of other spinoffs, such as 'Solo'.
- Filming for 'Andor' takes place in the United Kingdom, a country known for its generous filming incentives, with the production company, E&E Industries (UK), benefiting from significant reimbursements from the U.K. government.
