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Disney-Pixar deal reported
$7 billion deal would make Steve Jobs No. 1 stockholder in Disney
Originally published January 24, 2006
LOS ANGELES // Walt Disney Co.'s directors have tentatively agreed to buy Pixar Animation Studios, although the two sides late yesterday continued working on the final price, according to one person close to the matter.
A proposal is nonetheless expected to be presented to Pixar directors this morning, with an announcement of a deal planned later in the day.
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Disney is expected to pay close to $7 billion - about $59 a share - for the pioneer in computer-generated animation responsible for such blockbuster films as The Incredibles, Finding Nemo and Toy Story.
In doing so, the Burbank, Calif., entertainment giant would reclaim its perch as Hollywood's top animation studio, a position it ceded in recent years as Pixar and DreamWorks Animation SKG tapped into the growing popularity of computer-animated movies.
Neither Disney nor Pixar would comment.
For more than a decade Disney has marketed and distributed Pixar's films, sharing profits and costs. While Wall Street has been generally enthusiastic about an outright acquisition, some analysts warned that Disney directors should closely scrutinize the deal given the potential risks.
"They have to be careful and deliberate," said independent media analyst Harold Vogel. "They have to look at the balance sheets, the projections, the financial statements and understand how the future of Pixar releases fit into the Disney structure."
Vogel also said that Disney's board should clarify the future role of Pixar Chief Executive Officer Steven P. "Steve" Jobs, who would become Disney's largest shareholder and join the company's board.
"It may be a fairly lengthy adjustment process," Vogel added. "Steve Jobs is known to be quite active in everything he does - he won't sit back quietly."
Analysts have listed several risks that both companies face with the acquisition.
The deal is widely viewed as a way to revitalize Disney animation and freshen its parks, consumer products and cable networks with new characters.
But combining a big media corporation with the maverick Pixar presents its own challenges.
SG Cowen & Co. analyst Lowell Singer wrote in a report last week that benefits of the acquisition could be "undone" by a potential clash of the companies' cultures.
"Integration could be the largest risk for Disney in acquiring Pixar," he wrote. He noted that preserving Pixar's artist-friendly culture could prove daunting. He also said that retaining Pixar talent could be difficult because many of its artists thrive in a smaller, free-spirited environment where staff compete in paper airplane contests.
Pixar's creative guru, John Lasseter, is the only employee in the Emeryville, Calif.-based company with an employment contract.
If the deal goes through, Lasseter is expected to have an expanded role overseeing the combined animation operations of both Disney and Pixar.
In Hollywood, employment contracts are standard for high-level studio executives.
Pixar artists have historically received a significant portion of their compensation in stock options tied to the success of the company's films. Compensation based on Disney's stock, which has been flat in recent years, might not be as attractive.
Acquiring Pixar is viewed as a big bet for Disney chief executive Robert A. Iger, who is just four months into his job. Iger has worked hard to mend fences with Jobs, who repeatedly clashed with former Disney chief Michael D. Eisn
$7 billion deal would make Steve Jobs No. 1 stockholder in Disney
Originally published January 24, 2006
LOS ANGELES // Walt Disney Co.'s directors have tentatively agreed to buy Pixar Animation Studios, although the two sides late yesterday continued working on the final price, according to one person close to the matter.
A proposal is nonetheless expected to be presented to Pixar directors this morning, with an announcement of a deal planned later in the day.
Advertisement
Disney is expected to pay close to $7 billion - about $59 a share - for the pioneer in computer-generated animation responsible for such blockbuster films as The Incredibles, Finding Nemo and Toy Story.
In doing so, the Burbank, Calif., entertainment giant would reclaim its perch as Hollywood's top animation studio, a position it ceded in recent years as Pixar and DreamWorks Animation SKG tapped into the growing popularity of computer-animated movies.
Neither Disney nor Pixar would comment.
For more than a decade Disney has marketed and distributed Pixar's films, sharing profits and costs. While Wall Street has been generally enthusiastic about an outright acquisition, some analysts warned that Disney directors should closely scrutinize the deal given the potential risks.
"They have to be careful and deliberate," said independent media analyst Harold Vogel. "They have to look at the balance sheets, the projections, the financial statements and understand how the future of Pixar releases fit into the Disney structure."
Vogel also said that Disney's board should clarify the future role of Pixar Chief Executive Officer Steven P. "Steve" Jobs, who would become Disney's largest shareholder and join the company's board.
"It may be a fairly lengthy adjustment process," Vogel added. "Steve Jobs is known to be quite active in everything he does - he won't sit back quietly."
Analysts have listed several risks that both companies face with the acquisition.
The deal is widely viewed as a way to revitalize Disney animation and freshen its parks, consumer products and cable networks with new characters.
But combining a big media corporation with the maverick Pixar presents its own challenges.
SG Cowen & Co. analyst Lowell Singer wrote in a report last week that benefits of the acquisition could be "undone" by a potential clash of the companies' cultures.
"Integration could be the largest risk for Disney in acquiring Pixar," he wrote. He noted that preserving Pixar's artist-friendly culture could prove daunting. He also said that retaining Pixar talent could be difficult because many of its artists thrive in a smaller, free-spirited environment where staff compete in paper airplane contests.
Pixar's creative guru, John Lasseter, is the only employee in the Emeryville, Calif.-based company with an employment contract.
If the deal goes through, Lasseter is expected to have an expanded role overseeing the combined animation operations of both Disney and Pixar.
In Hollywood, employment contracts are standard for high-level studio executives.
Pixar artists have historically received a significant portion of their compensation in stock options tied to the success of the company's films. Compensation based on Disney's stock, which has been flat in recent years, might not be as attractive.
Acquiring Pixar is viewed as a big bet for Disney chief executive Robert A. Iger, who is just four months into his job. Iger has worked hard to mend fences with Jobs, who repeatedly clashed with former Disney chief Michael D. Eisn
Good Mojo might be waiting, eh?