The Walt Disney Company and Pixar Inc.: To Acquire or Not to Acquire

1. Moon, Sung Jin; Park, Ji Hong; Theerawat

2. AGENDA I. Company overview II. Problem & Analyze 2

4. Founded: February 3, 1986

5. The computer division of Lucasfilm turned into Pixar

6. Headquarters: Emeryville, California, U.S.

7. Products: RenderMan, Marionette

8. Acquisition by Disney: $7.4 billion, January 24, 2006

9. Featurd Films: Toy Story (1995), A Bug's Life (1998), Toy Story 2 (1999),Monsters, Inc. (2001), Finding Nemo (2003), The Incredibles (2004) , Cars (2006)Edwin Catmull George Lucas Steve Jobs John Lasseter 3

11. Television and feature film

12. ABC, ABC Family, the Disney Channel, ESPN, Miramax Films, Touchstone Television

13. Syndication and distribution

14. Buena Vista Pictures Distribution: DVDs, videos and syndicated television programming

15. Radio

16. Theme parks and attractions

17. Product merchandising and distribution

18. Founded: October 16, 1923

19. Founders: Walt Disney and Roy Disney

20. Industry: Media and Entertainment

21. Revenue: US$ 37.843 billion (2008)

22. Employees:150,000 (2008)Annual Revenues Robert Iger Roy Disney Walt Disney Michael Eisner 4

23. Questions What are the strong capabilities Pixar has? Does Disney have those or not? For Disney, are there any other alternative like strategic alliance better than acquiring Pixar? What are the risky factors when Disney tries to acquire Pixar? Acquiring Pixar makes the most sense for Disney’s growth? 5

24. Q1. What are the strong capabilities Pixar has? 6

25. Q1. What are the strong capabilities Pixar has? 7

26. Questions What are the strong capabilities Pixar has? Does Disney have those or not? For Disney, are there any other alternative like strategic alliance better than acquiring Pixar? What are the risky factors when Disney tries to acquire Pixar? Acquiring Pixar makes the most sense for Disney’s growth? 8

27. Q2. Alternatives 9

28. Q2. Alternatives CAPS (Computer Animated production system) -first relationship in 1986 owned by Disney -make 2D animation movies ex) Rescuer Down under, Lion King 10

29. Questions What are the strong capabilities Pixar has? Does Disney have those or not? For Disney, are there any other alternative like strategic alliance better than acquiring Pixar? What are the risky factors when Disney tries to acquire Pixar? Acquiring Pixar makes the most sense for Disney’s growth? 11

30. What are the risky factors Culture between Disney & Pixar Financial Stock Dilution 12

31. What are the risky factors Culture between Disney & Pixar Financial Stock Dilution 13

32. What are the risky factors Financial & Stock Dilution Estimated Value of Pixar 6.5 billion – 7.4 billion USD End of Fiscal Year 2005 Disney had Net Income 2.5 billion USD How to Acquire the “near-perfect strategic fit”? 14

34. Stock worth – 6.4 billion USD

36. Steve Job with 7% stake turn to became Disney’s largest shareholder.15

37. What are the risky factors Culture between Disney & Pixar Financial Stock Dilution 16

38. Disney’s Culture Big company, big bureaucracy 150,000 employees in 2008 Hierarchical structure: distant upper management, heavy-handed middle management Micromanagement  low morale, “brain drain” of creative talent Profitability, not quality, rules the day Executives are the ones making creative decisions Generic Disney formula for animated films Straight-to-video “cheapquels” Princess Stories series ($3 billion in sales) Circle 7 Studios (“Pixaren’t”) Disney makes films on a tight schedule 17

39. Pixar: Free-Spirited Creativity Emeryville location (the “anti-Hollywood”) Individually-decorated workspaces; huts instead of cubicles Hawaiian shirts and scooters Policy against employment contracts 18

41. Pixar: Perfectionism Pixar short films Story of Toy Story 2 No “cheapquels” for Pixar “Pick one idea, good or bad, and stick with it until it works.” 20

42. Pixar’s Culture The three basic principles: Everyone must have the freedom to communicatewith anyone. It must be safe for everyone to offer ideas. Stay close to innovations happening in the academic community 21

43. Risk of Culture Disney: Solider Pixar: Artist 22

44. Acquiring Pixar makes the most sense for Disney’s growth? 23

45. “You can accomplish a lot more as one company than you can as part of a joint venture. It makes a big difference when everyone is working for the same set of shareholders.” Bob Iger - Disney CEO