Disney to buy Pixar?

[Indy_Disney]

Thoughts? I think one thing that makes Pixar successful is their corporate culture. Would Disney change that? Could this cause John Lassater and others to jump ship? Pixar is nothing without the creative personnel.

http://money.cnn.com/2005/10/31/news/midcaps/pixar_disney/index.htm?section=money_latest

 

[All Aboard]

Let's see, 1995 to present...

Pixar: Toy Story, A Bug's Life, Toy Story 2, Monsters, Inc., Finding Nemo, The Incredibles. Average box office: $243 million. Average positive critical review: 97% (with lowest being a Bug's Life at 91%)

Disney: Pocahontas, Hunchback of Notre Dame, Hercules, Mulan, Tarzan, Emporer's New Groove, Atlantis, Lilo & Stitch, Treasure Planet, Brother Bear, Home on the Range. Average box office: $102 million. Average positive critical review: 72% (with the lowest being Brother Bear at 38%, also noteworthy were Atlantis and Home on the Range, each at 48%)

Looking at just the 21st Century, Disney has average $82 million per film and have pleased the critics 63% of the time, while Pixar has averaged $253 million at the box office and scored 96% with the critics.

Gosh, I hope this purchase doesn't happen.

 

[YoHo]

If Chicken little fails, then this is going to be pushed hard.

Whether it's a good thing is based on a whole heck of a lot of factors most important of which is how autonomous they'll be.


In a perfect (from a Disney fan perspective) world, they'll become feature animation and maintain their independence in terms of filmmaking.

 

[RyMickey]

In a perfect (from a Disney fan perspective) world, they'll become feature animation and maintain their independence in terms of filmmaking.

Unfortunately, as was posted above, Disney's creativity has floundered lately. Although I don't think that recent flicks like Atlantis and Brother Bear were as bad as the reviews stated (don't get me started on Home on the Range, though ), there is definitely something missing from the animation department (could it be the animators ?). Pixar is innovative and creative, and although I don't think they've been without their misses creatively (I think Nemo was their weakest story yet -- although I seem to be alone with that thought), if Disney were to buy them out AND if they were able to keep their independence, I would be a happy stockholder indeed.

 

[All Aboard]

I think Nemo was their weakest story yet -- although I seem to be alone with that thought

You're not. There are at least two of us. For the record, I think Monsters, Inc. is their strongest story yet.

 

[DancingBear]

Sure Pixar has had a great run, and I'd love to have John Lasseter working for Disney again, but why the heck would anyone pay a premium over market capitalization for a company with very few real assets (given Disney's rights to the current library, and the fact that technically the rest of the world has about caught up with Pixar), with Lasseter as the only one under contract? Eh, $teve?

If they did do it, I'd guess that they'd give them a lot of autonomy, because otherwise they'd risk losing all of the human capital of the company other than Lasseter.

I was startled by this quote from the article:

Jobs would evaluate any Pixar partnership based on where he could get the best deal for the studio, the paper reports, not on his developing friendship with Iger.

After all, I thought from many posts here that Job$ would have re-upped with Disney long ago except that Ei$ner was a big meany.

 

[YoHo]

Frankly, I have trouble believing anything comming out in a press report. Not that he's lying, but rather obfuscating.

I also agree that you're essentially paying for Lasseter and the Pixar name. I assume they also own or rent their facilities. What if they moved all of US feature animation up to the bay area?

 

[Peter Pirate]

DB, we've not been seeing eye to eye lately, but that was a great post.

Pixar, and I admit Lassiter, have had a great run. But in tinseltown the past means nothing and fortunes can change in the click of a papparazzi's camera.

I predict that Chicken Little will be very big and that Disney and Pixar will reup...No need for a buyout. Hmmm, I've been saying this all along...

Hey AV, do you agree?

 

[Another Voice]

There's a very simple dynamic that's been driving the Disney-Pixar waltz for the last couple of years. Wall Street has decided Disney needs Pixar.

In a lot of ways this is true. Disney has always needed feature animation to drive the studio, theme parks and consumer products. The slump in the 1970's and 1980's didn't result from $89 hotel rooms or Escape from Witch Mountain, it was because Disney made only a few, less than stellar animated films – and none of them captured the public's imagination. The "Second Golden Age" began the day The Little Mermaid was released and was sustained by a string of hits. Interest in those movie made people intereted in buying Simba plush animals and watching the 'Beauty and the Beast' show at WDW. The Company faultered again when that string ended. Fortunately for Disney, they could purchase the kinds of movies they were no longer willing to make. Pixar films provided the new characters and created the public exposure to keep the rest of the company sputtering along.

Yes, it's overly simplistic – but it's exactly the same kind of quick, easy, no-thinking-involved analysis that Wall Street loves. Bob Iger knows he keeps his job only as long as he keeps Wall Street happy. If he can sign Pixar, the chumps on CNBC will proclaim him as a wonderful manager and the guy who could do the thing that Eisner couldn't. Of course, if Pixar leaves…

Naturally Steve Jobs knows this too. The more Disney needs Pixar, the more money Jobs is going to get. Half of Hollywood and all of Emeryville is going to be hanging by the phones on Saturday morning waiting for the Friday box office results*. There have already been articles in the trades out here setting the expectations for Chicken, a domestic box office of $300 million or more will probably allow Disney to claim they don't need Pixar, anything between $200-$300 million is going to be problematic, and anything less than $200 million is going to mean Steve Jobs will at least get a seat on the Disney board in addition to his millions.

All of the expectations are hyped because the film's impact on the Disney – Pixar relationship. Both sides have staked the future of their companies on this movie. It's not the first time. Eisner bet his job on a Finding Nemo flop forcing Pixar into favorable terms. The movie was a hit and Wall Street decided Eisner couldn't deliver the deal.


P.S. As for Pixar's future – yes, the past is no guarantee of future success. The difference is that Pixar still seems committed to producing the best films they can. This gives them an edge. Disney, before giving up completely, didn't have that commitment and it showed in their films and at the box office.




* In reality it will happen sooner than that. For a release as important to a studio as Chicken Little is to Disney, they will have people counting heads during the noon screenings on Friday to extrapolate the weekend's box office.

 

[RyMickey]

There have already been articles in the trades out here setting the expectations for Chicken, a domestic box office of $300 million or more will probably allow Disney to claim they don't need Pixar, anything between $200-$300 million is going to be problematic, and anything less than $200 million is going to mean Steve Jobs will at least get a seat on the Disney board in addition to his millions.

Does Disney (or anyone for that matter) really think Chicken Little will make $200+ million? Aren't we looking at (maybe) a $30-40 million weekend (again, I think that's a big maybe) and then a drop-off from there thanks to the behemoth that is Harry Potter followed by Narnia. Speaking of Narnia, I realize that it's opening over a month later, but isn't Disney really just shooting themselves in the foot with opening TWO family flicks (both of which they hope will do boffo business) in the span of 35 days?

I just don't feel any buzz for CL. There's no excitement or interest along the same lines as "The Incredibles" or "Finding Nemo" or (god knows why) "Shrek".

Hmmm...Now I've got to ponder. Do I want Chicken Little to succeed or do I hope for it to fail?

 

[Peter Pirate]

Thanks Voice, nice read!

I think the excitement based on my kids friends is very high for CL. My youngest (12) naturally wants to see it (as do many friends) but my oldest daughter(16) told me that , surprisingly, many of her friends are really anxious to see this film (my daughter is not).

Anyway, it makes for intersting talk and the bottom line is as long as good films can be made, be they by Disney alone, Pixar alone, a cooperation or by Peter & Bluto's Magic Film Company how much should we really care?

 

[Another Voice]

Does Disney (or anyone for that matter) really think Chicken Little will make $200+ million?

That’s the mess Disney has gotten itself into. Through a series of decisions over about three years, they find themselves were it really doesn’t matter what they think Chicken Little can do – the expectations are now being driven by other people. Wall Street, Hollywood Blvd, and Pixar are all going to use the results to decide if Disney can produce a movie which will deliver Pixar-sized box office. That all these burdens are being placed on a problematic movie like Chicken, well, that's being seen as an indication about how Disney treats its own movies.

as long as good films can be made, be they by Disney alone, Pixar alone, a cooperation or by Peter & Bluto's Magic Film Company how much should we really care?

Well, if was that easy for Peter & Bluto to crank out a film that’s so commercially and artistically successful to earn money for the next twenty years – why isn’t everyone doing it? Why has Dreamworks – with a mega hit franchise in Shrek churned out Sharks Tale? Why was the follow-up to the hugely successful Ice Age a flop like Robots? And why did Disney’s efforts to create another company just like Pixar result in a monstrous box office failure called Valiant?

It comes down to the fact that making truly successful movies is tremendously difficult. It takes a delicate mix of the right people, the right resources, the right environment and the right management to make good movies consistently. At the moment, only Pixar seems to have figured out how to make one successful film after another (and remains willing to put in that effort). That’s why we should care about whether it’s Disney or Pixar or Pete’s Studio that’s making the movies – because only one of them makes good movies.

 

[Onceuponatime]

I think Disney has a bigger problem then the actual quality - or lack there of - of CL. People are getting in the mindset that Disney FA makes flops. Their recent string of failures already has people thinking "Why bother". If people stay away this weekend based of recent failures, CL will have a terrible time winning them back regardless of the follow up reviews.

Pixar on the other hand has the luxury of putting out a less-then-best effort and having it still be a huge commercial success. People are convinced that if the product is from Pixar, it must be great. It would take an astounding bad Cars to even dent that mindset.

 

[YoHo]

That is also correct and only serves to re-enforce Disney's problem. Especially now that we are in an age where the opening weekend is the only important thing in determining the success of a movie.


Personally, I see Chicken Little as being a best another Emperor's New Groove. ie, maybe funny and quirky, but no box office smash.

 

[Peter Pirate]

Point taken Mr. Another. But as long as someone IS making good animated features at least we know someone IS minding the store...And even though it's been Pixar doing this as of late, it still seems kind of 'magical' if you will. Perhaps it's the business relationship that still keeps the Disney logo in front of us or (and more likely) perhaps we all can see that some folks, like Mr. Lassiter still stand for what we all see as 'Disney quality' whether he's working for Disney or not.

Certainly it is obvious that there is no 'formula' for making these hits. There is no substitute for creativity, talent and hard work and even these ingredients don't guarantee a successful movie and I agree that if the 'tie ins' (for example) are the most important creative element (or even a top consideration) success will never be more than occasional.

But the business is fickle and even Walt failed more than he would have liked, the key is belief in the structure you have set up, which Disney has not had for awhile...A true shame because as recently as Lilo & Stitch and to a lesser degree Brother Bear some components of that infratructure still had belief and ability. The good news is this creative talent can be cultivated and bred fairly easily BUT the commitment to the job has to be deeper than declaring success or failure based on a first wekends take.

 

[All Aboard]

With the exception of a couple of outliers, the Disney Animated Features and Pixar Features from the last 5 years have had some decent correlation between critical review and box office. With the exception of Treasure Planet and Home on the Range, each film garnered between $1.75m and $2.75m per each point on the Tomatometer.

A few examples: The Incredibles 97 Tomatometer, $261m box office, which is $2.69 million per point. Brother Bear 38 TM, $85m, $2.24 million per point. Lilo and Stitch 85 TM, $146m, $1.72m per point.

The two previously noted exceptions generated box offices LOWER than what the rating would otherwise indicate. Treasure Planet was fairly well received at 73%, but only grabbed $38m at the box = $0.52 per point. HOTR was a one to one ratio at 49 points and $49mill.

Clearly, this isn't a bellwether indicator, but it is an exercise in numbers nonetheless. Currently, Chicken Little has a Tomatometer rating of 33%. Let's be kind and say that when the heavier volume of reviews come in, it climbs to 50%. Then, the analysis here would suggest that the box office comes in somewhere between $87.5m and $137.5m.

Of course, Chicken Little could prove to be the first significant outlier in the other direction. Meaning, despite critical disdain, it comes through at the box office. This, of course, happens with many other movies. Take Scooby Doo for example. A dismal 26 on the Tomatometer, but $153mill at the box office.

However, for Disney animated features, this sort of thing hasn't happened (at least not during the past 16 years that there are Tomatometer ratings - that goes back to The Little Mermaid.) Pocahontas, with it's mediocre reviews at 57% delivered $142million, even that falls within the range at $2.49mill per point. Of course, inflation plays a bit of a factor there. But that film was riding the tails of the four Disney smash hits that preceded it.

My guess for Chicken Little - no more than $150mill.

 

[Onceuponatime]

Have a question about creative talent. To my knowledge all of Pixar's films have been original stories. I am by no means versed in the contents of Walt's film library - or Disney's FA for that matter - but I cannot think of a single FA that wasn't based on someone else's work. Is there any ?

 

[2Xited4Disney]

I think that Disney's animations only hope is Rapunzel Unbraided opening in 2007 or 08

 

[YoHo]

Dumbo, Emperor's New Groove, Lilo & Stitch, Bambi?

 

[raidermatt]

I also agree that you're essentially paying for Lasseter and the Pixar name.

YoHo, (and DB and Peter), I think this is a gross oversimplification. Disney wouldn't just be paying for Lasseter himself, but for the creative infrastructure and culture Lasseter and Jobs have created. No, you can't adequately account for that on a balance sheet, but its very real nonetheless.

Of course, if they simply engulf Pixar and impose the new Disney way on them, they will be squandering that for which they are paying a premium. But it still commands a premium.

That's not to say its an asset that guarantees future success, just like having Lasseter and his track record doesn't guaranteee anything (somebody say Katzenburg?). But its still an asset, and not one that's easily created on your own, even with the right intentions (which Disney has not exhibited).

After all, couldn't the same argument have been made after Toy Story? That there were no solid assets to pay for? But the beat has gone on, and the assets have produced and grown in value. At some point, that has to be recognized as about as good a gamble one can make when it comes to making movies.


As for CL, I'm not feeling the buzz in the same way your are Pete, but as I have frequently said, I've been wrong before. That said, I also haven't felt much of a negative buzz either. So I think All Aboard's high end guess of $150 mil is probably pretty close. I'll say in the end, $130 mil.


As for the idea why we should care as long as SOMEBODY is producing good animated films, I essentially agree. Despite Disney's best efforts, "Magic" is not patent protected, and Pixar most definitely produces it in their films.

That's good.

Its just that we are on a Disney board, and I think to a person, we ALL would like to see Disney recapture some of its past Magic.