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Monsoon Wedding – The Walt Disney company WEDS Pixar Animation Studio

Trailer (Abstract)

In January 2006, the US based media and entertainment company Walt Disney
announced that it would acquire its animation partner Pixar for US$ 7.4 billion in stock Disney and
Pixar were already under an agreement to produce six animation movies. However, this partnership later
faced problems and Pixar started looking out for other partners in early 2004. The story primarily
examines the partnership agreement between Disney and Pixar and puts forth the incidents that led Pixar
to look out for other partners and also describes The Walt Disney Company to acquire Pixar Animation
studios in a situation where The Walt Disney Company was about to be taken-over by Saul Steinberg in
1984 and another time by Comcast in 2004 which bid for $66 Billion to become the largest media
conglomerate in the world.

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Monsoon Wedding – The Walt Disney company WEDS Pixar Animation Studio
Introduction

In the wake of a stagnating share price, Walt Disney Corporation (Disney) sought to revive its
animation capabilities as investors flocked to more successful animation studios such as Pixar
Animation Studios (Pixar) and DreamWorks Inc. Disney's efforts in animated films in recent years have
been disappointing. In an industry in which creative talent rules, Disney had simply not been able to
assemble the right combination of talent in an environment conducive to creating blockbuster animation
films. Disney and Pixar had been in a joint venture involving three pictures since 1991, in which Disney
shared the production costs and profits. Disney benefited from Pixar's success by co-financing and
distributing Pixar films. Talks to extend this arrangement disintegrated in 2004 due to the failure of
Pixar CEO Steve Jobs and Disney CEO Michael Eisner to reach agreement on allowing Pixar to own
films it produces in the future.

With the current distribution agreement set to expire in June 2006, Robert Iger, Eisner's
replacement, moved to repair the relationship with Pixar. Consequently, a deal that was unthinkable a
few years earlier became possible. Disney announced the acquisition of Pixar, one of the most
successful moviemakers in Hollywood history, on January 25,
2006. The move reflected Disney's desire to infuse the firm's
internal animation resources with those from a proven animation company. A key Disney strategy is to
use popular Disney movie characters across different venues (i.e., theme parks, merchandise, and
television). Disney exchanged its stock for Pixar shares in a deal valued at $7.4 billion for the Pixar
stock or $6.4 billion including $1 billion of Pixar cash that Disney would receive.

Despite near-term dilution of Disney's earnings per share by as much as 10 percent, investors
seem focused on the long-term impact to growth in Disney's shares. Disney's shares rose 1 percent on
news of the announcement. Nevertheless, the risk associated with the transaction can be measured in
terms of what Disney could have done with cash raised by issuing the same number of new shares to the
public. At $6.4 billion, Disney could make 64 sequels at $100 million each. Moreover, Disney was
probably paying top dollar for Pixar, as the filmmaker was coming off a string of six consecutive movie
blockbusters. Finally, revenue from DVD sales might have been maturing.

The long-term success of the combination hinges on the ability of the two firms to meld their
corporate cultures without losing Pixar's creative capabilities. Pixar president, Ed Catmull would
become president of the combined Pixar–Disney animation business. John Lasseter, Pixar's creative

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director, would assume the role of chief creative officer of the combined firms, helping to design
attractions for the theme parks and advising Disney's Imagineering division. In an effort to insulate the
Pixar culture from the Disney culture, Pixar would remain based in Emeryville, California, far from
Disney's Burbank, California, headquarters. As a condition of the closing, all key Pixar employees
would have to sign long-term employment contracts.

As part of the deal, Pixar chairman and chief executive Steve Jobs, holder of 50.6 percent of
Pixar stock, would become Disney's largest individual shareholder, at about 6.5 percent of Disney stock,
and a member of Disney's board of directors. Job's advice was hoped to rejuvenate the Disney board at a
time when the entertainment industry was scrambling to reinvent itself in the digital age. Job’s, who is
also the chairman and CEO of Apple Computer Inc. (Apple), is in a position to apply Apple's substantial
technical skills to Disney's animation efforts.

It was unclear if Disney could not have achieved many of these benefits at a much lower cost by
partnering with Pixar and offering Steve Jobs a seat on the Disney board. Ultimately, the opportunity to
prevent Pixar's acquisition by a competitor may have been the primary reason why Disney moved so
aggressively to acquire the animation powerhouse.

Industry analysts were of the view that, apart from gaining access to Pixar's technology, it was
important that Disney got a person of the caliber of Jobs on its board. Asserting this, Tim Bajarin,
President, Creative Strategies said, "His biggest impact will be to help guide Disney into the digital age
and be the mediator of this major media company's content to the world of next-generation digital
content delivery.

Pixar and the Animation Industry

Pixar began in 1979 as the Graphics Group, part of the Computer Division of Lucas film before
it was acquired by Apple co-founder Steve Jobs in 1986 shortly after he left Apple computer, Jobs paid
$5 million to George Lucas and put $5 million as capital into the company, Initially, Pixar was a high-
end computer hardware company whose core product was the Pixar Image Computer, a system
primarily sold to government agencies and the medical community. One of the buyers of Pixar Image
Computers was Disney Studios, which was using the device as part of their secretive CAPS1 project,
using the machine and custom software to migrate the laborious ink and paint part of the 2-D animation
process to a more automated and thus efficient method.
1
Computer Animation Production System

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Monsoon Wedding – The Walt Disney company WEDS Pixar Animation Studio
As poor sales of Pixar's computers threatened to put the company out of business, animation
department began producing computer-animated commercials for outside companies, In April 1990
Job’s sold Pixar's hardware division, including all proprietary hardware technology and imaging
software, to Vicom Systems In 1991, after a tough start of the year when about 30 employees in the
company's computer department had to go (including the company's president, Chuck Kolstad), Pixar
made a $26 million deal with Disney to produce three computer-animated feature films the first of
which was Toy Story, animation department, who made television commercials and a few shorts
for Sesame Street, was all that was left at Pixar animations. Despite the total income of these products,
the company was still losing money, and Jobs often considered selling it, even as late as in late 1994 he
contemplated to sell Pixar to other companies, among them Microsoft was also one. Only after
confirming that Disney would distribute Toy Story for the 1995 holiday season did he decide to give it
another chance. The film went on to gross more than $350 million worldwide. Later that year, Pixar held
its initial public offering on November 29, 1995, and the company's stock was priced at US$22 per
share. The initial public offering was a
strategic decision to increase the working
capital of the company, with $140 million.

A discussion after Toy Story revealed


that there was a growing rift with animators
feeling stifled by producers and producers
feeling animators thought of them as second
class citizens (a problem not too different from similar issues between “suits” and “coders” that
sometimes happens in software development). Catmull’s conclusion was that in enjoying success it was
easy to look at what works and focus on its replication but that for the health of the company it was
equally if not more important to ask “what isn’t working.” Since Toy Story, after every project Pixar
has a detailed, open dialogue to consider parts of the process, or areas of the company, that need
fixing. Catmull characterized the communication as “difficult” but valuable.

It’s partly for that reason that Pixar movies intentionally are made to appeal to both adults and
children are used to hearing things they don’t understand and they listen to things over and over again
because they’re trying to figure out the world. If you talk down to children, they know they’re being
talked down to, and adults can’t listen to it. So instead, we make films that we can enjoy. By the virtue
of the fact they’re animated, we do put in physical humor, which children love, and we don’t put in
things that would turn families off, clearly. But in terms of the dialogue, we put in things that adults

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understand. And by putting in things that we enjoy, that we want to see, and then having it for the
physical comedy that all of us like, then it has a, it touches people in a very broad way.” That broad
appeal expands the target market which is shrewd business but it’s also very attentive to the customer’s
needs; that is, needs of both parent and child.

At Pixar, the company’s logic seems to be that copying success exacts too high a price from
innovation. Instead, the company views each new project as “director driven” – guided by the vision of
the staff. They intentionally try to keep each movie fresh and distinct when compared to other films in
their library. This intent to innovate rather than replicate arguably is a big part of the company’s ability
to consistently reign at the top of the animation world.

Pixar was as busy as ever in the 21st century: the company was preparing to move into its new
225,000-square-foot headquarters in Emeryville, California, due for completion in mid-2000 and was
hard at work on its next full-length animated film in collaboration with Disney. The new feature was
scheduled for release in 2001, under the working title of 'Monsters, Inc.' The company's fifth film was
tentatively slated for release in 2002, was a top-secret project to be directed by Andrew Stanton, who
had worked on both Toy Story and A Bug's Life. Despite a slow, financially difficult beginning, Pixar
Animation Studios had landed on the fast track and was known throughout the world. With its
technological breakthroughs and brilliantly crafted animated films, the sky was the limit in the coming
decade and beyond. As stated in its 1996 annual report, Pixar succeeded because it was well aware of
the pitfalls of filmmaking: 'Though Pixar is the pioneer of computer animation, the essence of our
business is to create compelling stories and memorable characters. It is chiseled in stone at our studios
that no amount of technology can turn a bad story into a good one.'

The Evolution of Walt Disney

Unlike Pixar Animation Studios, Walt Disney was an eight decade old established entertaining
company dating back to the silent2 era. In 1923, Walt Elias Disney arrived in California from Kansas
City, bringing with him an animation film, Alice's Wonderland. On October 16, 1923, M.J Winkler
(Winkler), a distributor, agreed to distribute the Alice Comedies and bought each character for US$
1,500. This marked the beginning of Disney Brothers Cartoon Studio, with Walt's brother Roy Disney
sharing an equal partnership in the venture. Later, the name was changed to Walt Disney Studio. In
1927, after making Alice Comedies for four years, Walt created a new character called Oswald the

2
1923-1928

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Lucky Rabbit to start a new animation series. By this time, Winkler had handed over the business to her
husband Charles Mintz.

After a year, as Oswald gained popularity, Walt tried to re-negotiate his contract for higher
money. However, by that time, Mintz had poached Walt's employees to create an Oswald's series in his
own studio. Walt also learned that he did not legally own the rights for Oswald. When Mintz demanded
that Walt should work exclusively for him, Walt refused and parted ways.

After his break-up with Mintz, Walt wanted to create a character stronger than Oswald. He
visualized a new character in the form of a mouse and planned to name it 'Mortimer,' but on his wife's
suggestion changed it to 'Mickey.' This marked the birth of the world famous 'Mickey Mouse' (Mickey).
Initially, it was not easy for Walt to sell the new Mickey to the distributors as it had to compete with the
popular Felix the Cat11 and Oswald. Walt's first animation film featuring Mickey, Plane Crazy (released
in May 1928), failed to impress the audience who felt that Mickey resembled Oswald closely. Walt
created the second Mickey feature film titled The llopin' Gaucho, but couldn't find distributors, but
Disney's third Mickey short, Steamboat Willie, was produced with synchronized sound and became a
runaway success when it premiered in New York in late 1928. In 1929, the studio changed its name
to Walt Disney Productions; deciding to push the boundaries of animation even further, Disney began
production of his first feature-length animated film in 1934. Taking three years to complete, Snow
White and the Seven Dwarfs, based upon the Grimm Brothers' fairy tale, premiered in December 1937
and became the highest-grossing film of that time by 1939, then there was no turning back for Walt
Disney.

Using the profits from Snow White, Disney financed the construction of a new 51-acre studio
complex in Burbank, California. The new Walt Disney Studios, in which the company is headquartered
to this day, was completed and open for business by the end of 1939. The following year, Walt Disney
Productions had its initial public offering. Disney ended its distribution contract with RKO in 1953,
forming its own distribution arm, Buena Vista Distribution. In 1954, Walt Disney used
his Disneyland series to unveil what would become Disneyland Park, an idea conceived out of a desire
for a place where parents and children could
both have fun at the same time. On July 18,
1955, Walt Disney opened Disneyland to the
general public. On July 17, 1955 Disneyland
was previewed with a live television broadcast

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hosted by Art Link-letter and Ronald Reagan. After a shaky start, Disneyland continued to grow and
attract visitors from across the country and around the world. A major expansion in 1959 included the
addition of America's first monorail system. In November 1965, "Disney World" was announced, with
plans for theme parks, hotels, and even a model city on thousands of acres of land purchased outside
of Orlando, Florida.

Walt Disney after Walt

On December 15, 1966, Walt Disney died of lung cancer, and Roy
Disney took over as chairman, CEO, and president of the company. One of
his first acts was to rename Disney World as "Walt Disney World," in honor
of his brother and his vision. On October 1, 1971, Walt Disney World
opened to the public, with Roy Disney dedicating the facility in person later
that month. Two months later, on December 20, 1971, Roy Disney died of a
stroke, and the both had a very impending effect on the Walt Disney Company. The company remains
essentially a tightly knit family affair. The heirs of Walt and Roy O. Disney (who died in 1971) retain
the largest single block of the stock. President Walker, 57, and Chairman Don B. Tatum, 60, both joined
the Disney brothers in the '30s; Executive Producer Ronald W. Miller is Walt's son-in-law, and Roy
Disney's son Roy E. Disney heads T.V. projects.

While Walt Disney Productions continued releasing family-friendly films throughout the 1970s.
Disney CEO Ron Miller created Touchstone Pictures as a brand for Disney to release more adult-
oriented material. Touchstone's first release was the comedy Splash (1984), which was a box office
success. Disney launched Walt Disney Home Video to take advantage of the newly-emerging
videocassette market. On April 18, 1983, The Disney Channel debuted as a subscription-level channel
on cable systems nationwide, featuring its large library of classic films and TV series, along with
original programming and family-friendly third-party offerings. In 1978, Disney executives announced
plans for the second Walt Disney World theme park, EPCOT3 Center, which would open in October
1982, In Japan, the Oriental Land Company partnered with Walt Disney Productions to build the first
Disney theme park outside of the United States, Tokyo Disneyland, which opened in April 1983.

Despite the success of the Disney Channel and its new theme park creations, Walt Disney
Productions was financially vulnerable. Its film library was valuable, but offered few current successes,

3
Experimental Prototype Community of Tomorrow (concept)

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Monsoon Wedding – The Walt Disney company WEDS Pixar Animation Studio
and its leadership team was unable to keep up with other studios, particularly the works of Don Bluth,
who defected from Disney in 1979. In 1984, financier Saul Steinberg launched a hostile takeover bid for
Walt Disney Productions, with the intent of selling off its various assets. Disney successfully fought off
the bid with the help of friendly investors, and Sid Bass and Roy Disney's son Roy Edward
Disney brought in Michael Eisner and Jeffrey Katzenberg from Paramount Pictures and Frank
Wells from Warner Bros. Pictures to head up the company.

But this was the end for the hostile takeover bid for
Walt Disney On February 11, 2004; Comcast surprised the
media industry by announcing an unsolicited $66 billion bid
for The Walt Disney Company a deal that would have made Comcast the largest media conglomerate in
the world. After rejection by Disney and uncertain response from investors, the bid was abandoned in
April. The deal would have also required Comcast to sell off either the Philadelphia Flyers (which they
own through Comcast Spectator) or the Disney-owned Mighty Ducks of Anaheim, since they wouldn't
be permitted to own two NHL teams. It was later discovered that the deal was mostly for Comcast to
acquire one of Disney's most profitable operations, ESPN, in an attempt to expand its sports reach.
Comcast has since opted to rename OLN as versus and expand their sports coverage with the Tour de
France and the NHL. Comcast's NHL deal also obligated them to launch a U.S. version of NHL
Network by the summer of 2007. The network finally launched in October 2007. Disney later sold the
now-Anaheim Ducks to Henry Samueli in 2005 in an unrelated transaction.

The Disney-Pixar Alliance

Disney relationship with Pixar dates back to 1986, when we entered into a joint technical
development effort with Disney that resulted in the CAPS, a production system owned and used by
Disney in some of its two-dimensional cel-based animated feature films. In May 1991, Disney entered
into an agreement with Pixar for developing and producing three computer animated feature films.
According to the agreement, Disney agreed to produce movies to be developed and directed by Pixar's
John Lasseter. Disney agreed to market and distributes these movies. Pixar and Disney had
disagreements after the production of Toy Story 2. Originally intended as a straight-to-video release
(and thus not part of Pixar's three-picture deal), the film was eventually upgraded to a theatrical release
during production. Pixar demanded that the film then be counted toward the three-picture agreement, but

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Disney refused Pixar's first five feature films have
collectively grossed more than $2.5 billion,
equivalent to the highest per-film average gross in
the industry. Though profitable for both, Pixar later

Complained that the arrangement was not equitable.


Pixar was responsible for creation and production,
while Disney handled marketing and distribution.
Profits and production costs were split 50-50, but
Disney exclusively owned all story and sequel
rights and also collected a distribution fee. The lack
of story and sequel rights was perhaps the most
onerous aspect to Pixar and set the stage for a contentious relationship. The two companies attempted to
reach a new agreement in early 2004. The new deal would be only for distribution, as Pixar intended to
control production and own the resulting film properties themselves. The company also wanted to
finance their films on their own and collect 100 percent of the profits, paying Disney only the 10 to 15
percent distribution fee. More importantly, as part of any distribution agreement with Disney, Pixar
demanded control over films already in production under their old agreement, including The
Incredibles and Cars. Disney considered these conditions unacceptable, but Pixar would not concede.

Disagreements between Steve Jobs and then Disney Chairman and CEO Michael Eisner made
the negotiations more difficult than they otherwise might have been. They broke down completely in
mid-2004, with Jobs declaring that Pixar was actively seeking partners other than Disney. Pixar did not
enter negotiations with other distributors. After a lengthy hiatus, negotiations between the two
companies resumed following the departure of Eisner from Disney in February 2005. In preparation for
potential fallout between Pixar and Disney, Jobs announced in late 2004 that Pixar would no longer
release movies at the Disney-dictated November time frame, but during the more lucrative early summer
months. This would also allow Pixar to release DVDs for their major releases during the Christmas
shopping season. An added benefit of delaying Cars was to extend the time frame remaining on the
Pixar-Disney contract to see how things would play out between the two companies.

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A Strategic Acquisition

In March 2005, the Disney Board elected Iger as the company's CEO to succeed Eisner on
September 30, 2005. Iger got a call from Jobs who hinted at a possible discussion on working together
again. Analysts felt that Iger would find it difficult to strike a new deal as proposed by Jobs as it was
heavily loaded in favor of Pixar.

However, Iger adapted the proposal his own way. He asked for Disney's content to be distributed
over the Internet through Apple's online store - iTunes. In October 2005, Iger and Jobs signed a deal to
sell the past and current episodes of television shows of its ABC and Disney channels through iTunes. It
started with five shows which included the popular shows Desperate Housewives and Lost. Job’s was
pleased with the Igers suggestion of linking up to offer videos through iTunes. Iger said that the deal
with Apple was finalized in just three days. Meanwhile, Jobs also started re-negotiating on the Disney-
Pixar agreement. With this rapprochement, there was speculation that Disney might acquire Pixar

As it was thought the marriage happened when Disney announced on January 24, 2006 that it
had agreed to buy Pixar for approximately $7.4 billion in an all-stock deal. Following
Pixar shareholder approval, the acquisition was completed May 5, 2006. The transaction catapulted
Steve Jobs, who was the majority shareholder of Pixar with 50.1%, to Disney's largest individual
shareholder with 7% and a new seat on its board of directors. Jobs' new Disney holdings exceed
holdings belonging to ex-CEO Michael Eisner, the previous top shareholder, who still held 1.7%; and
Disney Director Emeritus Roy E. Disney, who held almost 1% of the corporation's shares. As a result of
the merger, each of your Pixar shares has been converted into the right to receive 2.3 shares of The Walt
Disney Company common stock.

As part of the deal, Pixar co-founder John Lasseter, by then Executive Vice President,
became Chief Creative Officer (reporting to President and CEO Robert Iger and consulting with Disney
Director Roy Disney) of Pixar and the Walt Disney Animation Studios, as well as the Principal Creative
Adviser at Walt Disney Imagineering, which designs and builds the company's theme parks. Catmull
retained his position as President of Pixar, while also becoming President of Walt Disney Animation
Studios, reporting to Bob Iger and Dick Cook, chairman of Walt Disney Studio Entertainment. Steve
Jobs' position as Pixar's Chairman and Chief Executive Officer was also removed, and instead he took a
place on the Disney board of directors.

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Strategic Rational – Integration & Operation

Analysts said this deal was more important to Disney than to Pixar. For Disney, the acquisition
gave it ownership of the world's most famous computer animation studio and its talent, with whom it
had teamed up to create block busters since the 1990s.

Company will form Pixar and Disney feature animation studios, Newly combined animation
division will share talents and best practices as each unit will retain current production facilities to
preserve creative cultures and capabilities and the changes would be Pixar President Ed Catmull will
serve as President of the combined Pixar and Disney feature animation studios, reporting to Bob Igerand
Dick Cook, Chairman of The Walt Disney Studios Pixar Executive Vice President John Lasseter will be
Chief Creative Officer at Pixar and Disney feature animation studios, as well as Walt Disney
Imagineering, reporting directly to Bob Iger.

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 those 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.

How Disney and Pixar are making the integration work holds lessons for other executives faced
with the delicate task of uniting two cultures. Tactics that have served the companies well include the
obvious, like effectively communicating changes to employees. Other decisions, including drawing up
an explicit map of what elements of Pixar would not change, have been more unusual. Mutual respect
was scarce at the two companies five years ago. Leadership and organization structured to preserve and
enhance creativity, culture and best practices New Pixar and Disney feature animation studios formed,
with production facilities retaining current operations and locations Pixar President Ed Catmull will
serve as President of the combined Pixar and Disney feature animation studios, reporting to Bob Iger
and Dick Cook. Pixar shall retain its existing compensation philosophies and practices, including not
using employment contracts, the granting of employee stock options, the maintenance of executive
employee bonus plans and employee medical benefits and other fundamental human resource policies
and practices for at least five years or such shorter period as the Committee may decide. Branding
agreements with Pixar will continue to be called “Pixar”. The branding of Pixar’s previous films and

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products will not be altered. Future films produced by Pixar will be branded Disney Pixar. Pixar’s
operations will continue to be based in Emeryville, California. The Pixar sign at the gate shall not be
altered. In fact, additional conditions were laid out as part of the deal to ensure that Pixar remains a
separate entity, a concern that many analysts had about the Disney deal. Some other points of interest
concerning the deal:

 If Pixar had pulled out of the deal, they would have been required to pay Disney a penalty of
US$210 million.
 John Lasseter has the authority to approve films for both Disney and Pixar studios, with Bob Iger
and Roy Disney carrying final approving authority.
 The deal required that Pixar's primary directors and creative executives must also join the
combined company. This includes Andrew Stanton, Pete Docter, Brad Bird, Bob
Peterson, Brenda Chapman, Lee Unkrich, and Gary Rydstrom.
 There will be a steering committee that will oversee animation for both Disney and Pixar studios,
with a mission to maintain and spread the Pixar culture. This committee will consist of Catmull,
Lasseter, Jobs, Iger, Cook and Tom Staggs. They will meet at Pixar headquarters at least once
every two months.
 Pixar HR policies will remain intact, including the lack of employment contracts.

Board Of Directors Management Team

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The Result of the Acquisition
At Disney Pixar, the functions of transformational leadership are well defined. In this
organization, creative power comes from creative leadership. Leadership builds the support structures,
the necessary resources, and access to an organization wide brain trust led by John Lasseter and other
directors on the Steering Committee. To successfully manage the changes resulting from the merger,
Disney wanted Steve Jobs, the head of both Pixar and Apple, to join Disney as a corporate, director and
Disney’s largest shareholder. Commenting on Jobs and the Disney Pixar merger, a director at the
Institute for the Future says: “He’s the only guy who has applied systems thinking to media, he’s the
only person who bridges both hardware and software.

This makes it possible to manage the increased complexity of economies of scale and scope in a
unique way, and making it more difficult for competitors to easily copy. Mergers and acquisitions
represent a means to accelerate this process. This process seems to be happening in the Disney-Pixar
merger where a formal team of leaders has been created to integrate Pixar with Disney. One result has
been the appointment of Pixar Vice President, Lasseter, as the chief creative officer of the Pixar and
Disney animation studios. He has the authority to “green light” films for both studios, although Disney
CEO Iger has the final approval. To ensure these two leaders can effectively work with each other, a
steering committee has been created which includes Iger, Jobs, and Lasseter. Their task is to oversee
feature animation at both studios, and to help maintain the Pixar “culture”. The partnership has grown
from strength to strength mainly due to the respectful relationship that has built over time. Iger agreed to
an explicit list of guidelines to protect Pixar's creative culture and prevent employees from becoming
Disney drones. “None of this has been easy,” said Richard Cook, chairman of Walt Disney Studios in a
piece featured in the New York Times, “but it helps when everyone has tremendous respect both
professionally and personally for one another.”

The hits kept coming in the form of Cars. Although some critics thought this the weakest of the
Pixar films to date - web site Rotten Tomatoes gives it an overall rating of 74 per cent, easily the lowest
of any Pixar film - it was the sixth most successful feature in overall takings worldwide in 2006. The
studio had nothing to worry about, though, as all three subsequent films won Best Animated Feature at
the Oscars. Ratatouille, WALL.E and Up (the second highest-grossing Pixar film worldwide) also
received typically glowing reviews from virtually every review portal and media available. As Toy Story
3 continues the almost flawless string of Pixar/Disney hits, the future looks even brighter. For the first
time, Since December 2005, Pixar has held exhibitions celebrating the art and artists of Pixar, over their first
twenty years in animation

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The Road Ahead

The Disney-Pixar combination seems to have the necessary ingredients for successfully
sustaining their merger for years to come. While there were several possible synergies that could arise
from the acquisition, there were also some potential trouble spots for Disney. The rise of Jobs to the
Disney board as the single largest shareholder could become a major worry for Iger as Jobs was slightly
unpredictable. The merger, in place of the partnership with Pixar, might make Iger second to the
powerful and experienced Jobs. An industry analyst termed the move bold but predicted that Iger might
leave Disney in a year, saying, "Iger just put a gun to his head." Analysts felt Iger had to be careful as he
was still trying to create his own identity after being under the shadow of Eisner, who had been at the
helm for more than twenty years.

Pixar is scheduled to deliver two movies in a single year in 2012, when Brave and the long-
awaited sequel to Monsters Inc are released. In June 2011, Cars 2 will also hit multiplexes, giving the
partnership a chance to improve on the one movie in the 15 years of partnership that got mixed reviews.

The Studio Entertainment division's revenues are subject to conditions in the larger movie
industry, including the rate of movie attendance. In recent years, the advent of online video and a rising
amount of piracy has led to slow or flat growth in movie attendance, causing studios such as Disney to
reevaluate their film distribution methods. One way the company has addressed declining cinemas
viewership is through enhancing the consumer movie experience, such as filming shows in I-MAX and
3-D. In 2009, Disney Pixar's 3-D "Up" grossed $68.1 million, coming only second to News Corp's
"Avatar." In the future, film studios are expected to focus more on the higher-margin DVD and
television broadcast segments as a result of this decline in cinema viewership.

Pixar will be celebrating 25 years of animation in 2011, the same time its upcoming film, Cars 2,
is released. Success is contingent upon the Disney-Pixar effort to consolidate and systematize their
animation divisions, in addition to understanding the market's ever developing needs/desires. The road
to happily-ever-after customarily consists of management reform, artistic adaptation and intense market
research; however, concerns of corporate direction, creative direction, and franchise control as well as
intellectual and creative chemistry still remain. This acquisition is a corporate assemblage that will
reverberate for years to come. Disney President and CEO Bob Iger commented: "The goal here, above
all else, is to make great animated films… the rest kind of takes care of itself."

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Monsoon Wedding – The Walt Disney company WEDS Pixar Animation Studio

Credits (Reference)

http://knol.google.com/k/case-study-disney-buys-pixar?collectionId=2y7l67l8la2ns.28#

http://corporate.disney.go.com/corporate/overview.html

http://www.secinfo.com/d14D5a.vCAq.c.htm

http://www.pixar.com/companyinfo/press_box/news/20060124-185239.htm

http://www.fundinguniverse.com/company-histories/Pixar-Animation-Studios-Company-History.html

http://www.time.com/time/magazine/article/0,9171,907642,00.html

http://www.suite101.com/content/disney-and-pixar-films-a262077

http://hbr.org/2008/09/how-pixar-fosters-collective-creativity/ar/1

http://corporate.disney.go.com/investors/annual_reports/2006/int/lts5.html

http://www.bain.com/bainweb/PDFs/cms/Public/Benelux_Results_Can_deal_making_solve_your_growth_pr
oblem.pdf

http://metue.com/03-29-2007/pixar-management/

http://blogs.bnet.com/harvard/?p=407

http://www.secinfo.com/d14D5a.vCAq.htm

http://www.secinfo.com/d14D5a.vCAq.c.htm

http://www.wikinvest.com/stock/Walt_Disney_Company_(DIS)

http://metue.com/03-29-2007/pixar-management/

http://corporate.disney.go.com/corporate/overview.html

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