Disney and Pixar: The Power of the Prenup
Photo illustration by The New York Times
Pixar, co-founded by Steve Jobs, left, and Disney, run by Robert A. Iger, have a Hollywood marriage that works. Starring in their newest animated film is a robot named Wall-E.
By BROOKS BARNES
Published: June 1, 2008
IN April, the
Walt Disney Company summoned movie theater executives for a rare audience before its reigning king of animation,
John Lasseter. A co-founder of Pixar and director of “Toy Story,” Mr. Lasseter was unveiling the roster of films that an aligned Pixar and Walt Disney Animation Studios planned to release over the next four years.
Walking onstage wearing one of his trademark Hawaiian shirts — this one with yellow and green palm trees — Mr. Lasseter was greeted by giggles and pointing from a smattering of audience members.
“What did you think I’d wear?” he asked amid the titters. A business suit and a pair of mouse ears, most likely.
When Disney bought its rival, Pixar, in 2006 for $7.4 billion, many people assumed the deal would play out like most big media takeovers: abysmally. The worries were twofold: that either Disney would trample Pixar’s esprit de corps (turning Mr. Lasseter into a drone, chanting “Hi Ho” en route to Mickey’s animation mines) or that Pixar animators would act like spoiled brats and rebuke their new owner.
Both companies had a history of acrimony, and
Robert A. Iger, the new chief executive of Disney, was a mystery. Could he manage the megawatt personalities Pixar would bring into Disney’s fold? Some analysts, investors and media pundits also questioned the hefty price Disney paid for a small studio that released only one movie a year.
But two years into the integration of Pixar — and as the company rolls out “Wall-E,” a risky love story about robots that is estimated to cost at least $180 million — the merger is notable for how well it’s faring. Indeed, in an industry where corporate marriages often create internal warfare (Paramount and
DreamWorks SKG are the most prominent example) Disney and Pixar have found a way to make it work.
“Most acquisitions, particularly in media, are value-destroying as opposed to value-creating, and that certainly has not turned out to be the case here,” said David A. Price, author of a newly published book from Knopf, “The Pixar Touch: The Making of a Company.”
The smooth ride — so far, at least — also seems to be pleasing Wall Street, where grumbling about Pixar’s price tag has died down. Disney’s stock has climbed 28 percent since its 52-week low on Jan. 22, in large part because of investor confidence that the company can overcome a difficult economy by leveraging Pixar’s computer-generated characters across its vast empire. In recent months, Disney’s shares have significantly outperformed those of most of its competitors.
“Cars” tells the story. The film was regarded by some critics as one of Pixar’s weaker storytelling efforts, and it generated soft foreign sales when compared with hits like “Finding Nemo.” But “Cars” has pumped billions in profit into Disney via a wide range of ancillary businesses.
The film racked up over $460 million in global ticket sales and has sold 27 million DVDs. Related retail products have generated $5 billion in sales. A “Cars” virtual world is opening on the Internet, a “Cars” ice-skating show will begin touring the nation in September, and work is under way to bring an entire “Cars” experience to the
Disneyland Resort in California.
“You can accomplish a lot more as one company than you can as part of a joint venture,” Mr. Iger said in an interview. “It makes a big difference when everyone is working for the same set of shareholders.”
IN a subtle but important shift, Pixar has matured, allowing its strategic thinking to evolve inside a sprawling corporation. For instance, some of the studio’s executives once resisted sequels and direct-to-DVD efforts, arguing that quality and the brand could suffer. While sequels were not out of the question, they said Pixar’s hot streak hinged on pushing boundaries with original material.
But at Mr. Lasseter’s presentation in April, Disney’s first such event in 10 years, he announced “Cars 2,” a 2012 sequel that will take Lightning McQueen and his pals on a tour of foreign countries. Also in the works are four direct-to-DVD movies built around Tinker Bell.
“We are definitely planning on doing more sequels, just as we are more originals,” Mr. Lasseter said in an interview. “We talk with Bob Iger about which ones make sense to do from a business perspective. But each movie has to be absolutely great or you will snuff out a franchise.”
And the Pixar team, which also has oversight of Walt Disney Animation Studios and the DVD-focused DisneyToon Studios, decided that it was O.K. to outsource some direct-to-DVD animation to an Indian company, a departure from its rigid stance that outside animators could not deliver the necessary quality. (Mr. Lasseter will still closely monitor the efforts, however.)
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Disney and Pixar: The Power of the Prenup
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