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Is Disney/Pixar the sequel to Apple/NeXT ?
Posted By Barry Ritholtz On January 30, 2004 @ 12:57 am In Current Affairs,Film,Finance | Comments Disabled
Pixar to Disney: Buh-Bye !
The WSJ  called it a “stunning blow.” CNN/Money  quoted an analyst who said “It makes it look like Eisner did something wrong again.” And of course, former chairman of Disney’s animation Roy Disney piled on (I’m paraphrasing here): “The breakup would be bad for Disney shareholders long-term; Eisner failed to nurture the relationship with Pixar.”
But here’s the money quote — from Jobs:
“After 10 months of trying to strike a deal with Disney, we’re moving on. We’ve had a great run together — one of the most successful in Hollywood history — and it’s a shame that Disney won’t be participating in Pixar’s future successes.”
While everyone is chatting about likely suitors — Viacom, Warner Brothers, Sony and MGM are said to be interested — the larger story is being overlooked: It was Jobs who broke off the negotiations, catching Disney execs unaware. The timing of the Pixar announcement was impeccable, and certainly not coincidental, as it was reported Thursday that senior Disney management’s had again taken hefty pay raises — despite the company underperforming.
Its no coincidence these came out the same day – This is Jobs attempt to embarrass Eisner; the Disney CEO is considered by some to be amongst the most overpaid / underperforming CEOs in recent corporate history.
The more interesting aspect of this story is the probability that Jobs is angling for Eisner’s gig. And not passively either. This is hardly a “Hey, if you ever decide you need a new CEO, you know my number.” This was more of a “When are going to throw da bum out?” move by Jobs.
And why not? The Apple / Pixar chief craves the accolades given to execs like Bill Gates or Eisner. He does not think that Wall Street or the public appreciates his contributions — and he may be somewhat correct in that assessment. Capturing the Disney CEO position would be Jobs’ coup de grace.
Given his success with iTunes, iPod and the Apple Music Store, he already is a power player in the entertainment side of things. Pixar would be his backdoor entry into the Disney executive suite. Like at Apple, he might work for $1 a year — after trading his Pixar holdings for about $2.25B worth of Disney stock. Disney is a $50 billion company, while the much smaller Pixar has a market cap of about $3.5B (Jobs owns about half).
UPDATE: 1/30/04 1:39EST
Will wonders never cease: We actually discussed this very subject only last month  (“Jobs to become Heir Apparent at Disney?”). Here was our take, all the way back on December 3rd:
With a market value more than 10X that of its important partner — Disney’s cap stands at $43.99 Billion to Pixar’s $3.81 Billion — DIS should just get it over with and buy PIXR outright. That would resolve the future of the lucrative animation business, and solve the issue of who’s gonna replace Eisner, in one fell swoop.
Eisner, who’s already sucked out over a billion dollars in compensation from the entertainment giant’s coffers over the past decade, could make a graceful exit. The alternative may be an ugly ego driven battle with the company’s largest shareholders (Walt’s heirs) that would make Carly Fiorina’s battles with the Hewlett heirs look like a mah-jong scrum.
That turns out to be prescient — and its even more true today . . .
UPDATE 2: 1/30/04 2:49EST
A hardy hello to all you readers from Pixar. Appreciate y’all stoppin’ by to read these humble musings. Feel free to tell me whether I’m smokin’ crack or perhaps if I am on to sumpthin’.
Love your work . . .
UPDATE 3: 1/31/04 7:49am
Kudlow & Cramer  weighed in on this very issue at the end of the show Friday nite. Mad props go to Larry for mentioning the Big Picture  and this very discussion. (Too bad they ran out of time for a fuller discussion).
I love this angle of the story and would like to expand on it; Anyone interested in 750 – 1500 words as to why Disney must do this (or its toast!), you know where to find me.
The End: Pixar Breaks Up With Distribution Partner Disney 
By BRUCE ORWALL and NICK WINGFIELD
WALL STREET JOURNAL, January 29, 2004
Disney Discloses Chief’s Raise and Some Details of U.S. Inquiry 
By LAURA M. HOLSON
NY Times, January 28, 2004
Pixar dumps Disney 
CNN/Money, January 29, 2004: 7:20 PM EST
Pixar Says ‘So Long’ to Disney 
02:47 PM Jan. 29, 2004 PT
Article printed from The Big Picture: http://www.ritholtz.com/blog
URL to article: http://www.ritholtz.com/blog/2004/01/is-disneypixar-the-sequel-to-applenext/
URLs in this post:
 Image: http://www.pixar.com/featurefilms/nemo/index.html
 WSJ: http://online.wsj.com/article/0,,SB107541081328315628,00.html
 CNN/Money: http://money.cnn.com/2004/01/29/news/companies/pixar_disney/
 Image: http://www.pixar.com/featurefilms/inc/index.html
 last month: http://bigpicture.typepad.com/comments/2003/12/jobs_to_become_.html
 Kudlow & Cramer: http://moneycentral.msn.com/content/CNBCTV/TV_Info/P12129.asp
 Big Picture: http://bigpicture.typepad.com/comments/
 Disney Discloses Chief’s Raise and Some Details of U.S. Inquiry: http://www.nytimes.com/2004/01/28/business/media/28disney.html?ex=1390712400&en=11b3dcec24ca815f&ei=5007&partner=USERLAND
 Pixar Says ‘So Long’ to Disney: http://www.wired.com/news/business/0,1367,62104,00.html?tw=rss.TOP
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