Pixar exec sketches new vision at Disney
Steve Jobs is now the biggest shareholder in Disney and a member of the board, but he won’t be chairman.
His chief lieutenant at Pixar, prexy Ed Catmull, will be president of the newly combined Pixar and Disney animation studios — reporting directly to Disney CEO Bob Iger and Walt Disney Studios chairman Dick Cook.
He replaces current Walt Disney Feature Animation prexy David Stainton, who’s ankling his post. It’s unclear whether he’ll find a new job at the Mouse House or leave the company.
Pixar resident guru John Lasseter, director of both “Toy Story” pics and the upcoming “Cars,” will be chief creative officer at the animation studios, giving him a hand in every Disney toon going forward. He’ll also become principal creative adviser at Walt Disney Imagineering, designing attractions for Disney theme parks and reporting to Iger. His current contract runs through 2011.
That’s the lineup so far as Disney on Tuesday revealed its widely anticipated acquisition of Pixar for $7.4 billion in stock. Deal marks the end of Pixar’s run as perhaps the most successful independent studio ever. It also promises a renaissance at Disney’s animation division that will provide a stream of new content to pipe through TV networks, theme parks and digital outlets.
It spells a reduction in status or possible end, however, for Circle Seven, the 100-person-plus Disney animation unit that has been working on sequels to Pixar films for about a year. In a conference call with investors, Iger and Jobs made clear that Pixar will be intimately, if not exclusively, involved in new iterations of its existing properties.
“One of the great things about this combination of Disney and Pixar is that if there are sequels, we’ll get a chance to make them,” Jobs said. “I feel very strongly that if sequels are going to be made, I want the people involved in the original films involved in the sequels.”
Neither Jobs nor Iger elaborated, however, about what will happen to “Toy Story 3,” which is already in production at Circle Seven, or several other sequels still in the script development stage.
“There are a lot of issues that have to be resolved, and (Circle Seven) is one of them,” Cook told Daily Variety. “It’s very clear that when you have the opportunity for John Lasseter to do ‘Toy Story 3,’ you certainly jump at that. But there is a lot of talent at Circle Seven. We want to have an opportunity to think about that.”
It’s possible “Toy Story 3” could be put on hold until Lasseter can take over as director, at which point the project could move to Pixar.
A source at Circle Seven on Tuesday said employees at the Glendale-based unit haven’t been told anything about their fate and only learned about the Pixar deal through news reports.
Pixar and Disney Animation will retain their current names, operations and locations. With Catmull and Lasseter still working primarily out of Pixar’s headquarters in Emeryville, the Bay Area city will become a nexus for the Mouse House.
Jobs and Iger both promised to preserve Pixar’s unique identity.
“I am really deeply committed that Pixar be allowed to exist in the form in which it has existed,” Iger said during a conference call.
“We think we understand how to keep Pixar being Pixar, and how to spread some of that around, and maybe spread it around to other parts of Disney,” Jobs said.
The pact blazes a new and dynamic trail for Disney under the leadership of Iger, who took the reins Oct. 1. Since then he’s stressed many times the importance of content and of reviving Disney’s animation tradition. He also made a point in recent months of paying homage to Pixar topper Jobs, a hard-charging visionary who clearly felt disrespected by former Mouse CEO Michael Eisner. The clash between Jobs and Eisner nearly scuttled the companies’ 15-year partnership.
Just two years ago, talks between the two companies broke down; they remained in disrepair through last winter, when Jobs and Eisner were trading barbs in the press. After Iger took over, however, relations warmed, and it wasn’t long until the Pixar topper was heaping praise on Disney’s new chief exec.
“This is about Pixar buying into Bob Iger’s vision of where Disney is going,” said Jobs, whose only full-time position will be CEO of Apple Computer, which has a deal with Disney to distribute TV shows online via iTunes. “I couldn’t have imagined this happening a year ago or two years ago. But when I had a chance to hear Bob and see he understood the importance of animation, that he understood Pixar… We’re really buying into Bob’s vision, not the other way around.”
Pixar talked to every major studio about a deal under which it would take on all the risk, and get all the rewards, of film production and pay a studio partner a distribution fee.
“As we explored Lucasfilm-type deals, we saw a lot of attractive things,” Jobs explained. “We ended up doing this deal because we can get rid of all of the stuff that has nothing to do with making these movies and focus on making the movies, which is what Pixar does best. It lets us stay focused on (movies) and yet have the entire leverage of the Disney Co. and move these characters and stories out into the culture through their unique collection of assets.”
Pixar was clearly considering taking on all those other duties, however, as it built up a cash reserve of more than $1 billion and signed its own videogame licensing deal with THQ.
With the $250 million worldwide grossing “Chicken Little” recently bringing Disney animation into the digital age, studio is now in the enviable position of having two toon houses with successful track records.
Both units are on track to release one film per year, starting with “Cars” in June from Pixar and “Meet the Robinsons” in December from Disney.
Many in the industry and on Wall Street felt the love and suspected a deal was on the way in October, when Disney became the first media company to pact with Apple in providing several hit ABC series for download on the new video iPod.
The pricetag for the Pixar deal, some Wall Streeters say, is steep. But strategically, most are for it.
Deal is worth $6.4 billion net of Pixar’s $1 billion in cash on its balance sheet. Terms call for 2.3 Disney shares to be issued for each outstanding share of Pixar. The rate is fixed, with no collar.
It’s a very small premium over Pixar’s closing share price Tuesday of $57.57. Stock has seen a dramatic run-up from around $45 in October, however, when rumors of an acquisition first popped up.
Jobs will join Disney’s board as a non-independent director. He owns 50.6% of Pixar and will become Disney’s single largest shareholder, with about 7% of the company’s outstanding shares.
Exec gets a only a slight boost in his stock holdings from about $3.87 billion at Pixar to $3.9 billion in Disney shares. Since Pixar stock started its spike in October, however, Jobs has seen his net worth increase by around $750 million.
Some on Wall Street have wondered how it will go for Iger to have such a hard-hitting and vocal addition to the board — so soon after the exit of hard-hitting and vocal Eisner. But Iger said he’ll be glad to turn to Jobs “as an adviser, a board member and a shareholder” given the tech wizard’s wide-ranging experience and the fast pace and intense competition in the media biz.
When the acquisition closes early this summer, it will mark the end of Pixar’s independent run that started when Steve Jobs bought the company, which was then a computer graphics division of Lucasfilm, for $10 million in 1986.
Company went on to launch the CGI animation market in 1995 with “Toy Story.” After a successful partnership on that film, Disney and Pixar signed a five picture distribution deal that included four straight hits : “A Bug’s Life,” “Monsters, Inc.,” “Finding Nemo,” and “The Incredibles.” Pact expires with “Cars.”
Two companies split production costs and profits on the movies under that deal.
Disney plans to repurchase shares equal to the some 273.5 million it will issue as part of t
he Pixar acquisition.
Deal was announced after markets closed Tuesday. Pixar stock was up 2.5% at $59 in after-hours trading, while Disney shares were down a fraction at $25.90.