What’s Next for Disney as John Lasseter’s Exit Looms?

John Lassiter Ousted from Disney

On June 5, Disney hosted a lavish premiere bash for “Incredibles 2” at the El Capitan Theatre in Hollywood. There were jugglers and acrobats, balloon-making stations, performers on stilts and waiters circulating with snow cones and candy apples. Disney chief Bob Iger was there, as were director Brad Bird and voice stars Craig T. Nelson and Holly Hunter. But one powerhouse figure was conspicuously missing in action — John Lasseter, the creative guru credited with making Pixar a household name and reinvigorating Disney’s animation division.

Three days later, in a classic Friday-afternoon news dump, Disney announced that Lasseter would be leaving the company at the end of the year. He had been exiled for months in the wake of complaints of sexual harassment, including claims of kissing female employees on the lips and drunkenly pursuing them at wrap parties.

Lasseter’s forced departure had a feeling of inevitability. In the #MeToo/Time’s Up era, the allegations simply could not be managed away. Iger recently signaled that no one is above accountability by axing “Roseanne,” ABC’s top-ranked sitcom, within hours of star Roseanne Barr’s racist tweetstorm.

And yet, the Lasseter decision seemed unusually protracted, stretching for weeks past the May 21 expiration of his six-month “sabbatical.” In a sign of Lasseter’s clout, the announcement avoided any mention of his conduct. And in a further concession, he was given seven more months to serve as a “consultant” — though he will not have an office.

With Lasseter now out of the picture, the question becomes who steps in to fill his shoes at both Pixar and Disney. Insiders suggest that Pete Docter, the director of “Up” and “Inside Out,” will replace Lasseter at Pixar, while Jennifer Lee, director of “Frozen,” appears in line for a promotion at Disney. People at Pixar describe Docter, who currently serves as vice president of creative at Pixar, as a collaborative leader. “He’s very good with people,” says Tom Sito, a professor of animation at USC. “I would equate him with Ron Howard. People like working with him.”

Some believe that Lasseter’s departure was overdue, and that the company’s recent taste for sequels — particularly the “Cars” franchise — has shown diminishing returns. The challenge at Pixar will be preserving a culture that remains distinct from Disney.

“I think it does open up a great opportunity for competition among themselves,” says Jerry Beck, who teaches animation history at CalArts. “That will only make
for better movies.”

However, Lasseter’s departure comes at a perilous time for Disney. The company is locked in a white-knuckle bidding war with Comcast for the right to buy most of 21st Century Fox’s film and television assets. It’s the kind of deal that could reshape the entertainment landscape, giving the victor an arsenal of talent and franchises unrivaled in Hollywood history. Comcast, which owns NBCUniversal, is expected to submit a formal bid this week that tops Disney’s current $52 billion all-stock offer.

The company is said to be waiting for U.S. District Court Judge Richard Leon’s ruling on AT&T’s purchase of Time Warner on June 12 before it submits its proposal. Disney has signaled it will sweeten its offer, but the protracted fight for Fox could be costly, and ultimately one company will be denied its prize.

Lasseter’s exit takes place as Disney is facing a number of strategic and other management questions and has been buffeted by additional staffing shake-ups. The company is still grappling with the exit of ESPN chief John Skipper, who stepped down after revealing he was the target of an extortion plot that threatened to reveal his cocaine use. The studio is also digging out from the financial failure of “Solo: A Star Wars Story,” a surprising miss that raises concerns that one of the studio’s most valuable film franchises may be sputtering.

Jeff Bock, a box office analyst at Exhibitor Relations, argues that Disney’s rivals smell blood in the water. Universal has bet heavily on animation in recent years, with a great deal of success largely thanks to Chris Meledandri’s Illumination. Under Meledandri, a creative force known for his keen attention to keeping costs low, Universal has launched the successful “Despicable Me” and “Secret Life of Pets” franchises. It has also purchased DreamWorks Animation, which bolsters its library. Other studios are following suit — both Warner Bros. and Sony Animation have moved aggressively into the animation space, upping the number of films they plan to release each year.

Fox, which could soon be part of the Disney universe or a piece of the Comcast empire, has been one of the more active animation players. Its ownership of Blue Sky, the producer of “Ice Age” and “Ferdinand,” has resulted in the studio offering up a new animated project every year or so. It’s unclear what will happen to Blue Sky if the Fox sale moves forward, but most observers believe the pending merger will leave a lot of talented artists and animators looking for a new home. It’s the kind of disruption that could benefit other studios.

“There is going to be a great fire sale and a lot of restructuring and reorganization no matter what happens,” says Bock.

For now, however, Disney Animation and Pixar seem well positioned. “Incredibles 2” is on pace to open to more than $125 million this weekend, and expectations are high for next fall’s “Ralph Breaks the Internet: Wreck-It Ralph 2.” Despite the fact that Lasseter, with his Hawaiian shirts and wide grin, was the public face of the company, Pixar and Disney are brands that are more powerful than any one person.

“They’ve got a good bench of folks who can hit the ground running,” says Tuna Amobi, an analyst at CFRA Research. “[The loss is] unfortunate, but I think the company will continue to go in the same strategic direction.”

The Lasseter legend at Pixar and Disney is extensive. In dozens of profiles over the years, he has told the story of being cast off from Disney in the early 1980s. He joined Pixar in its earliest years, and alongside Ed Catmull and others, he reinvented animation. Lasseter, who is frequently referred to as the Walt Disney of his day, infused computer graphics with heart, emphasized storytelling that didn’t simply involve princesses and sorcerers, encouraged narrative risk taking and was rewarded with an unprecedented string of hits.

“You’re making huge bets at the corporate level. And those bets are in the hands of a couple people to come up with the results,” says Joseph Graziano, who served on the Pixar board. “John proved himself over and over and over again. He proved himself so many times that there became no more question about his talent.”

When Disney bought Pixar in 2006 for $7.4 billion, Lasseter took over the beleaguered Walt Disney Animation Studios, helping to breathe life into the moribund division with hits such as “Frozen” and “Big Hero 6.”

“Lasseter saved Disney animation in totality,” says Bock. “What he did at Pixar cannot be overstated. Under Lasseter it became the gold standard, and Disney Animation was revitalized after years of mediocre output.”

But in recent years, employees have begun to chafe under Lasseter’s control. He lives in Sonoma County, where he has a winery, and would split his time between Pixar in Emeryville and Disney in Burbank, giving notes via iPad.

“He had the final word on everything,” says one former Pixar employee. “He became an autocrat without being a real jerk. It became a bit much.”

It doesn’t appear that Lasseter is going to fade into the distance.

In his departure announcement, Lasseter alluded to pursuing “new creative challenges.” It’s possible that he could get backing to launch a rival venture, and could poach talent that is still loyal to him. He may also get scooped up by another company looking to find a competitive edge over Disney, barring some kind of non-compete stipulation in his exit agreement.