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Disney's deal for Pixar snares "Animation Inc."
Seattle Times news services
LOS ANGELES — The Walt Disney Co. said Tuesday it is buying longtime partner Pixar Animation Studios for $7.4 billion in stock in a deal that could restore Disney's clout in animation while vaulting Pixar CEO Steve Jobs into a powerful role at the media conglomerate.
Jobs will become Disney's largest stockholder with the purchase of the maker of "Toy Story," "The Incredibles," "Monsters, Inc." and "Finding Nemo." Jobs, who owns more than half of Pixar's shares and also heads Apple Computer, will also join Disney's board.
"With this transaction, we welcome and embrace Pixar's unique culture, which for two decades, has fostered some of the most innovative and successful films in history," Disney Chief Executive Robert Iger said in a statement.
Disney has co-financed and distributed Pixar's animated films for 12 years, splitting the profits. But that deal expires in June after Pixar delivers "Cars," and it once appeared the companies would not renew it amid friction between Jobs and former Disney CEO Michael Eisner.
But the talks revived under Iger. Disney, the theme-park owner that also owns the ABC and ESPN TV networks, and Pixar have been talking for months about a new relationship.
Pixar Executive Vice President John Lasseter will become chief creative officer of the animation studios and principal creative adviser at Walt Disney Imagineering, which designs and builds the company's theme parks.
Pixar President Ed Catmull will serve as president of the new combined Pixar and Disney animation studios, reporting to Iger and Dick Cook, chairman of The Walt Disney Studios.
"Disney and Pixar can now collaborate without the barriers that come from two different companies with two different sets of shareholders," Jobs said in a statement. "Now, everyone can focus on what is most important, creating innovative stories, characters and films that delight millions of people around the world."
Like Walt Disney in his day, 50-year-old Jobs is a perfectionist known to fuss over the number of buttons on a computer mouse. Jobs is a college dropout; Disney never finished high school.
And with Pixar's mastery of computer-generated movies such as "The Incredibles," Jobs has taken the animation that Disney first popularized in the 1930s and not just re-energized it, but made it box-office gold.
"Larger than life"
At present, "Disney doesn't have a guy who shakes the walls, a larger-than-life character like Walt," said Jeffrey S. Young, co-author of the Jobs biography "iCon Steve Jobs: The Greatest Second Act in the History of Business."
Jobs has the brash confidence to assume that role. If he does, the man who once shaved his head and begged for alms in a search for enlightenment stands to inherit more than the mantle of Disney's lionized founder.
People who know Jobs and analysts who have tracked his companies for years say the deal is notable less for what it would mean for Disney than for how it will expand the reach of Jobs.
"Let's be clear: Steve's not in this for the money," said analyst Tim Bajarin, who watched Jobs unveil the first Macintosh computer in 1984. "It's his original vision of doing something that would change the world that's important. This is another step in seeing him influence that vision and goal."
Jobs declined to be interviewed, as did several of his closest friends.
Venture capitalist Michael Moritz once commented: "Almost everybody has an opinion of Steve Jobs, but very few people know him." That's because Jobs is a master at controlling his own image.
Often featured on magazine covers wearing a trademark black turtleneck, Jobs has long been more famous than the market share of his companies would seem to justify. His products are innovative but they don't always sell.
A savvy marketer with a keen eye for design, Jobs nevertheless has had to fight to rebuild Apple's share of the personal-computer market, now slightly less than 4 percent. And with big technology competitors lining up to challenge the iPod, he cannot afford to assume his company's must-have gadget of the moment will remain top-of-mind forever.
Selling Pixar to Disney gives Jobs two things he dearly wants, say those who have made it their business to study him.
First, it shows the world the entertainment empire needed his scrappy animation house to compete. Second, it frees him up to concentrate on the company that will cement his legacy as an innovator: Apple.
"His interest is in either power or cultural impact," said Alan Deutschman, author of the biography "The Second Coming of Steve Jobs." The sale would give him a little more of both.
Analysts said Jobs' instincts as a tech guide could help Disney navigate the digital media landscape to find new ways of distributing its movies and television shows.
"Historically, you have a lot of great content minds at Disney and Viacom and all the media conglomerates," said Anthony Valencia, a media and entertainment analyst at TCW Group.
"But there's also been a big hesitation to try new things, and there's been a lot of inertia at the big media companies. One thing I don't think anyone has accused Steve Jobs of is inertia," Valencia said.
Since taking the reins from Eisner in October, Iger has been vocal about Disney's need to embrace technology, particularly where it can boost profit.
Under Tuesday's deal, Disney said it will issue 2.3 shares for each share of Pixar stock. At Tuesday's closing price of $25.99 for Disney, Pixar shareholders would get stock worth $59.78, a 4 percent premium over Pixar's closing price of $57.57.
The deal was announced after the markets closed.
Pixar has served as Disney's de facto animation unit for a decade. Two Pixar movies, "Finding Nemo" and "The Incredibles," have won Academy Awards for best animated feature film.
By contrast, Disney's own animation unit has struggled, producing some modest successes, such as 2002's "Lilo & Stitch," and many flops, including "Treasure Planet" and "Home on the Range."
Its first fully computer-animated effort, "Chicken Little," grossed more than $100 million domestically since its release last year and will likely be profitable. But that figure falls well short of the more than $200 million domestic gross of 2004's "The Incredibles."
Detail on the deal provided by The Associated Press. Background on Steve Jobs provided by the Los Angeles Times.
Copyright © 2006 The Seattle Times Company