Disney-Pixar deal: happily ever after?
Two and a half years after the Walt Disney Company bought animation firm Pixar for $7.4 billion. The question then was "will it last?" At least for now, the deal can be claimed as one of the rare smooth acquisitions the media business. That's according to an article in the New York Times today ("Disney and Pixar: The Power of the Prenup", 6/1/08).
The media landscape is littered with badly implemented mergers that have caused big problems, including Paramount's takeover of DreamWorks and NBC's takeover of Universal.
Steve Jobs, Apple CEO and then also CEO of Pixar, stipulated some tough conditions for Disney and CEO Robert Iger. Part of the deal was that Pixar not be swallowed into the Disney world entirely, but be able to act semi-independently. That included not only retaining benefits and the Pixar management structure, but also not having to become "disneyfied" in a host of other ways.
As the article notes: "Mr. Iger also agreed to an explicit list of guidelines for protecting Pixar's creative culture. For instance, Pixar employees were able to keep their relatively plentiful health benefits and weren't forced to sign employment contracts. Mr. Iger even stipulated that the sign on Pixar's front gate would remain unchanged."
The result has been remarkable harmony and an investment that is paying off well for Disney. In fact, Pixar and President John Lassiter, have taken over much of the Disney's traditional animation operation and have streamlines it and made it newly profitable. Not least of that has been Pixar's cooperation with Disney in merchandising its movies (action figures, amusement park rides, straight-to-DVD sequels), most recently and very profitably with the animated feature. "Cars." That effort has brought billions of dollars in non-theater sales.
The story quotes one Pixar exec as saying "It took about a year before there was a collective letting down the guard…Initially people were thinking, 'Is something going to happen?' " As far as Disney list of promises went, the exec said: "We've never had to go back and look at it. Everything they've said they would do they have lived up to."
The lesson that might be drawn -brutal absorption of an acquired company may not be as effective as letting the integrated company adapt more slowly, while making use of its strengths to help through the rest of the company. In this case, the acquired company has become a key part of Disney's recent increased profitability.
In fact, Iger "won some early support at Pixar by talking candidly and clearly about the lessons he learned when his previous employer, the ABC television network, endured two takeovers." The kinder, gentler acquisition seems to have worked well.
9:09:01 PM 
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