Steve Jobs to Sell Pixar and Join Disney Board?

mikeisme77 writes "According to the Washington Post, Pixar Studios is in discussions with Disney for a possible merger/buy out. Disney would own Pixar in exchange for $6.7 billion worth of stock in the Walt Disney Corp. Speculation has also arisen that such a deal may lead to Steve Jobs earning a position on Disney's board of directors. He would likely become Disney's largest individual share holder. Further speculation sees Jobs using his new found power to leverage Disney into releasing more content to the iTunes media service." Details also available from the Time Magazine site. We touched on this issue near the end of last year as well.

Comments

Another reverse takeover?

[chriss]

It's funny that most speculation is about how well Apples digital media distribution would fit to Disneys movie and merchandising franchise, when Disney is considering Pixar, not Apple. And there are a number of interesting things Disney could gain from Pixar besides the movie franchise. People.

When Apple went looking for a new operating system to replace the classic Mac OS, they ended up (after looking inhouse and at BeOS and even WinNT) with NeXTSTEP from Steve Jobs new company NeXT. They did not license NeXTSTEP (or the OpenStep Specification NeXT developed in corporation with Sun), instead they bought NeXT for $US 400 million. Steve Jobs came onboard as a consultant, but shortly after that replaced Gibert Amelio as CEO of Apple. He was not the only one, NeXTs Avi Tevanian became President of Software technology (I think), in charge of Apples OS development, other NeXT employees (Jon Rubinstein, Bud Tribble etc) got top positions at Apple. A lot of people considered this Apple paying money NeXT to take over Apple.

Disney is worth about 60 billion. If they buy Pixar for seven, the new Disney + Pixar should be worth about 67 billion (mind my non-existent knowledge about company evaluation), about 5% of which would belong to Steve Jobs (he owns 50% of Pixar). Apple was worth more than 20 times the $400 million they payed for NeXT when they bought it, they had seven billion in cash reserve alone, and they payed in cash, not stocks.

So maybe we will see another reverse takeover. I do not believe that Steve Jobs would want to become CEO (but will most likely join the board), but Edwin Catmull could become head of the animation and feature film branch or John Lasseter could become Disneys "creative director". He already worked there before joining Pixar (than Lucasfilm Computer Graphics Group). The quality of Disneys productions could only go up.

Re:Another reverse takeover?

[Otter Escaping North]

The quality of Disneys productions could only go up.

Or Pixar could go way down. I hope you're right, and that the Pixar folks will run wild into Disney - but it's a hell of a beast to tame. I'd actually fear that Disney would feel a need to "ensure Pixar's ongoing creative success" and then screw it up.

Just like when Dinsney's second golden age of animation was born (Little Mermaid, Beauty and the Beast, Lion King) - it became a valuble commodity, and the suits felt the need to 'protect' it. The next think you know, the creative guys are jumping ship, and you're left with drek like "The Hunchback of Notre Dame."

Re:Another reverse takeover?

[PortHaven]

I believe the set-up is as follows:

- Disney gains Pixar (the vast majority of hit (bread & butter) Disney films in the past decade have been from Pixar).

- Steve Jobs loses control of Pixar but gains a seat on the board + becomes #1 share-holder.

- Steve negotiates sweet deal with Disney (and don't ABC or something), for said movies to be made available on Apple iPod. (And you know that Yuppieville will start filling their 8 yr old's iPods with with Pixar films before every road trip). Lots of $$$ for Apple and even more cash for Disney.

- Disney's stocks increase, meanwhile Steve jobs acquires additional stock 5% to approx. 6-8%. The increased success of Disney stock builds near unanimous support for Steve Jobs to be CEO of Disney. (If you know anything about Steve Jobs his IDOL is Walt Disney! So this has likely been his life dream/goal since being young.

- Steve Jobs as CEO re-vitalizes Disney. Disney theme parks return to being places full of wonder, awe, amazing new technologies on Display for the common people to see. (And yes, all the displays have little rainbow colored Apples on them.)

In truth, I think Disney greatly needs an eccentric visionary like Steve Jobs to return it back to "dreams". To Steve Jobs, Disney is not just about $$$. It's about dreams. And for the past few decades Disney's dream has solely been $$$. The end result, no vision, no dreams. Nothing to stir up the human sole. Less interest and love for Disney. Equating to less $$$. Steve Jobs has the philosophy the $$$ will come as a by-product of the vision. And I believe he's right. In truth, I think there is an opportunity to see Disney re-vitalized in a kinda second birth. Steve Jobs loves show-casing. Loves grand-standing (in the style of a circus leader). A revitalized Disney allows him to do such. And would bring back a central character for the first time since the passing of Walt Disney himself.

I actually hope this all goes thru....

- Saj

Re:Another reverse takeover?

[IAmTheDave]

and you're left with drek like "The Hunchback of Notre Dame."

Quite a legitimate fear. One of the reasons that Pixar does so well is the culture of the shop, developed by Jobs and run by Jobs. Take his somewhat psychotic nature out of the mix and allow Pixar to become just another Disney department overseen by the Disney corporate machine, and the brilliance that launced Toy Story, Finding Nemo, and The Incredibles may be lost forever.

Re:Another reverse takeover?

[jordandeamattson]

Hi Chris -

While I agree with you, that Steve has an incredible ability to come out on top (I was there at ground zero when Apple bought NeXT), and it is likely that a post-acquisition Jobs would have tremendous influence over Disney, there are some errors in your analysis.

1. Disney is currently worth just show of $50 billion (look at market capitalization at http://finance.yahoo.com/q?s=DIS>).

2. Jobs only controls approximately half of Pixar, with Pixar valued at just show of 7 billion http://finance.yahoo.com/q?s=PIXR> as you said.

3. The deal would likely be a stock swap, not a cash deal, for various tax reasons. The new entity would likely be valued at between $55 and $60 billion, with Jobs controlling a $3 billion slice, or as you said 5%, of Disney.

4. While owning 5% of Disney is nothing to sneeze at, realize that Roy Disney controlled close to 17 million shares of Disney (close to 1%) as well as popular backing and wasn't able to get what he wanted.

Disney is a much different company from Apple in early 1997. It has plenty of money in the bank (Apple had closer to $2 billion in cash vs. the $7 billion you describe), has strong free cash flow (wheras things were quite shakey at Apple), and is on a rebound vs. heading downward. Remember it was only at MacWorld in the summer of 1997, that things started to turnaround with the famous investment of Microsoft in Apple and the promise to keep Office on the Mac for 5 years.

For Apple, Jobs was - rightfully - viewed as a savior, the only one who could turn this company around. At Disney, Jobs will be just another person at the boardroom table. Will he be a first among equals? Definitely! Will he be able to call all of the shots? No.

And in that fact, that he won't be able to call all the shots, is the truth that Jobs would not likely stay long on the board. Jobs is one who has to control things completely. If he can't, then he will walk away.

I firmly believe that if Pixar is sold to Disney, that Steve will not be long with Disney. Will he leave his mark on the company? Definitely. His people - like John Lasseter - will be in senior positions prior to his leaving. But he won't be around for long.

And that is a shame. Disney - based on our family's latest experience at Disneyland - really could use someone with Steve's drive for quality and attention to detail to bring back the fabled "Disney experience".

Yours,

Jordan

That would be great

[Anonymous Coward]

I bet Disney will be 4 times faster with Steve inside(tm).

SCNR! :D

Welcome

[shamowfski]

I welcome our new media overlord! Hail Jobs!

Would be a great move.

[Mahkno]

Open up Disney's huge catalogue of short animations pieces, sell em for a $1. Nice... When is the last time you saw a short Mickey Mouse cartoon? Exactly.

Re:Would be a great move.

['nother poster]

But the issue is that copyrights were never meant to be used that way. They were meant to be a mechanism that would allow authors and artists a mechanism to attempt to recoup the costs of creation, and a profit from their creative endevours while causing them to have to continue to be creative. That means that the limited nature of the copyright meant that if the cration was a smashing success, you would still need to create new content in seven or fourteen years if you wanted to get paid more. It was a mechanist to foster CREATION of new materials, not protection of old.

Re:Would be a great move.

[richie2000]

I like to think about extending copyright to 500 years.

Retroactively.

After all of Disney's execs had a massive group-orgasm, one of the brighter ones would crawl out from under the sea of cum and realize the implications, ruining the party. They'd have to find each and every living heir to the guy who wrote Cinderella and negotiate the movie rights for the derivative work. For millions and millions. Per heir.

Add Snow White, The Hunchback and even Buster Keaton's Steamboat Bill to the mix and you'd be looking at an instant bankruptcy.

After that's done, we could revoke copyrights altogether.

But, first you need to read this book: Lawrence Lessig - Free Culture. You'll love it.

Jobs will never be a successful number 2.

[Futurepower(R)]

Difficult individualists like Jobs are never successful taking a number 2 position at a company like Disney. Consider for example Turner at Time Warner.

Consider the man Eisner hired, who didn't last long. I forget his name.

The Mouse

[Nom du Keyboard]

Steve Jobs at the next MacWorld wearing mouse ears. Now there's a sight I can't wait to see.

The Steve Jobs Factor

[nuckin futs]

Steve Jobs is known to be a control freak. He controls Apple and Pixar. Unless he's able to control Disney if and when they merge, I don't think he'll be selling.

Awesome!

[ChePibe]

Now Disney movies will be sleek, easy to interface with, and pleasing to the eye! Disney toys will contain no small parts that could be snapped off! Disney rides will be stable, boring, and free of malfunction!

Sadly, Disney's video games will now suck - they'll all be stupid puzzles. And all Disney characters will be required to ditch the fancy costumes and go with oversized jeans and black turtlenecks.

That's the business world for you. It's all about compromise...

The mouse!

[everphilski]

http://money.cnn.com/2006/01/19/news/companies/dis ney_steve/

You can't buy talent

[nagora]

Disney can buy Pixar and have the rights to their back-catalogue to rape in the straight-to-video market alongside "Disney Buggers Winnie the Pooh Yet Again" and the rest of their tat but the last 15 years has shown that Disney can't recruit talent capable of making a good movie.

So, if Disney buys Pixar and Lassiter etc. walk out and start their own company Disney ends up with nothing more than a brand which they'll screw up as badly as they have their own.

TWW

Yeah, but will Disney destroy Pixar?

[jupiter_ganymede]

Pixar succeeds because they have the freedom to do things differently. I could see Pixar loosing that freedom and falling into the same trap Disney's animation branch did. Unless they could remain somewhat autonomous I can't see them continuing to innovate under Disney's control.

Re:Yeah, but will Disney destroy Pixar?

[WebGangsta]

Pixar succeeds because they have the freedom to do things differently

The LATimes article released this morning is the only one to mention that John Lassiter - major Pixar honcho, creative driving force, etc -- would head up the entire Disney animation division as part of the deal.

My guess is that Disney knows that Lassiter is the heart and soul of Pixar (as does Jobs), and they want to ensure that Pixar remains as devoted to creating quality work as possible along with reinvigorating the Disney animation arm as well with a new regime that Eisner so sadly dismantled over the years. As long as Pixar remains independent with Lassiter majorly involved in the merger-end-result, then all will be good in the end.

So-called "synergy" never works

[OnTheWay]

We'll all lose out if Jobs sells Pixar to Disney. Here's one reason: I heard Albert Brooks talking about his new movie "Looking for Comedy in the Muslim World" on the radio. Sony was his original distributor, but they wanted him to avoid using the word "Muslim" in the title, probably because they didn't want to offend any potential buyers of their cameras, TVs, AV Gear, etc. So he took his film to another distributor, one who didn't have to worry about TV/camera sales etc. So much for "synergy" - just shows the bigger you are, the *less* you can do, 'cause you're always worried about how one subsidiary's actions will affect the biz of all the other subsidiaries. That's what's going to happen to Pixar if Disney englobs it. "Toe the line and cover all of our sizeable asses!"

Not gonna happen.

[DysenteryInTheRanks]

Guess what -- If this was going to happen, no one would be leaking it.

Now, to figure out what is really going on, think about who is incentivized to leak. Disney? Well, considering how incredibly weak this makes them look, and considering how expensive their supposed acquisition of Pixar just got due to this news breaking, I think we can safely rule them out.

On the other hand, Pixar in general and Steve Jobs in particular come off looking pretty great. There are all kinds of inflated numbers being thrown around about how much Disney will pay, which helps Pixar win concessions from other suitors who want to distribute its movies. Also, Jobs is practically crowned new king of Disney in these stories, which helps his public image.

Most importantly, all this chatter brings Pixar even with or above Disney in the public mind in terms of brand quality. If Disney is offering so much, Pixar must be their creative equal or superior, the thinking goes.

Only slightly less important, any big Pixar executives of shareholders (*cough*Jobs*cough*) just saw their stock options get even more valuable.

So by a wide margin, this leak appears to benefit Pixar and hurt Disney.

I wonder if Steve Jobs has the sort of media access and pull to do a leak like this? /sarcasm.

Jobs To Take Eisner Job?

[randomErr]

I can see this happening. Jobs has a much better name in both the consumer and business world. Jobs has several companies that have been producing original products(iPod, Airport, The Incredibles) and making money(Apple and Pixar of course) for years.

Can Eisner say that (Home on the Range, Beauty and the Beast Princess Collect 2 Special Edition, Disney Land)?

I think it depends on access

[Dark Paladin]

If you're Steve Jobs, you have to be thinking "OK, if I own 5% of Disney, what will that get me?"

Better opportunities for Pixar movies and resources? Check.
Better control to keep Disney from making Toy Story 3 horrible? Check.

But more importantly, will this really give him what he really wants at this stage: media control. I think his goal now is to set up iTunes and Apple as the next Sony - make itself the "one stop portal" for all things music/tv/movie, so no matter what you want, you click iTunes and for over that credit card number to get it, then play it on your iPod/computer/Apple TV (or whatever they may call the rumored "Plasma TV's with OS X").

In this way, Apple can truly become the next Sony, including a strong movie/music lineup in its back pocket.

On the other hand, will 5% of Disney really get him there? It's a hard question. It will get him influence, but my bet it that he would want control of the whole pie so he can say "We *will* be putting these movies on iTunes at $9 a pop, and if you don't like it, go form your own animation studio".

It might also buy more problems with Sony, which has its own music/movie center. Right now, Apple is independant enough that it can go to Sony and say "Look, let us sell your music and movies on iTunes - we're not your competitor in the movie space". But if Jobs teams with Apple, how long until Sony decides its better to cut off its own nose rather than allow their entertainment rival to make money off of their products?

He may hold out for a little more, as in "5% of stock plus extra voting powers", and some control over the technology (which would let him walk into the software development area and say "See this stuff? Make it Mac compatible before the next version of 'Disney Horse Adventures' ship.").

I'm betting he won't take it - he's got what he wants on both sides of technology and entertainment, he has control, and it keeps him just independant enough where he can work with either side.

Of course, that's just my opinion - I could be wrong.

On Balance, Not a Nice Idea

[ewhac]

The idea of Steve Jobs as the biggest single shareholder on Disney's board is certainly entertaining to think about but, on the whole, I think Pixar is better off remaining an independent animation studio (and, to a lesser extent, graphics research company).

Among people in the entertainment industry, Disney is not well thought of. They have a reputation of being the most ruthless and shameless exploiters of talent. They are one of the loudest and most shrill voices in support of pervasive media copy protection (DRM), and have been instrumental in ram-rodding regressive copyright statutes through Congress. Frankly, I can't see Jobs doing much to change that. (It's also not clear that's something he would want to change.)

Schwab

ohhhh!

[Anonymous Coward]

The "imouse"

*sorry, had too*

Re:Ask a question if you don't mind

[99BottlesOfBeerInMyF]

What makes all these stories about Steve Jobs worthy of being on the front page of a webpage for geeks/nerds?

Yeah articles about a guy who runs one of the biggest and most innovative computer companies and one of the most well regarded computer graphics production houses has nothing to do with nerds. Computers and what happens with computer graphics and their affect upon the computer industry is more of a jock thing. I'm sure they're covering it on ESPN right now.

Re:This Is Why Mac Hardware Doesn't Matter Anymore

[Overly Critical Guy]

Wow, nobody's heard that prediction before. Apple--proudly going out of business for 30 years.

same way "NeXT bought Apple"

[peter303]

In 1996 Apple ostensibly acquired NeXT, but in reality it was the reverse. Jobs became a large shareholder again (he had sold all but one share after he was fired from Apple). The Jobs gang took back control from Apple.

Ten years later Jobs could effectively control Disney, if he thought it was worth his time.

Re:Walt Disney is not dead...

[Reverend528]

No, congress is easily bought. That's why disney has perpetual copyright.