Disney rumored to be buying Pixar
San Francisco Business Times - by Adrienne Sanders
Pixar Animation Studios, creator of "The Incredibles," and The Walt Disney Co. are rumored to be on the verge of a deal -- either a new distribution pact between the longtime partners or the possible sale of Pixar to Disney.
Pixar CEO Steve Jobs and Disney CEO Robert Iger have been in talks to prolong their long-term distribution agreement, which ends with this summer's release of the movie "Cars."
According to the Los Angeles Times, two sources close to the deal said ongoing talks have been turning to Disney acquiring all or part of Emeryville-based Pixar. In that case, Jobs, also CEO of Apple Computer, would become a major Disney shareholder and possibly the company's chairman.
Disney and Pixar have no official comment.
Disney has been struggling to regain its crown as animation king, as Pixar has enjoyed a perfect record of six straight blockbusters, including "Finding Nemo" and "Monsters Inc."
Under their soon-to-expire deal, Pixar produces the movies and Disney markets and distributes them worldwide for a fee. The two companies split all costs and profits. As Pixar's success has grown, Jobs has said he wants a deal with Disney or another studio that would allow Pixar to keep the profits from its films while paying its partner a distribution fee only.
Past talks between Pixar and Disney fell apart in January 2004 due to friction between Jobs and Disney's then-CEO Michael Eisner. Iger, Disney's new CEO, has been courting Pixar for a new distribution deal since being tapped as successor last spring.
Analysts are questioning whether a full acquisition of Pixar would be a good move, even for a media conglomerate the size of Disney. Pixar's market value is nearly $7 billion and Disney would likely pay a premium for the company.
"Even under optimistic assumptions, the deal would likely be dilutive to Disney for the foreseeable future," wrote Michael Savner, Bank of America Securities analyst in a report on Thursday.
Savner added other doubts about the rumored deal, "We also expect that there could be integration/cultural issues," he wrote. "Arguably, what has made Pixar so successful is its independent culture and its singular focus on quality. The obvious risk to an acquisition is that both are sacrificed."
Some analysts have speculated that selling Pixar would allow Jobs to focus on running Apple Computer Inc., which is enjoying the popularity of its iPod products. But others doubt that Jobs would be willing to sell off even part of Pixar, which he bought in 1986 from George Lucas for $10 million. Jobs and Pixar's creative director, John Lasseter, a former Disney animator, established a independent and creative culture that draws in artists from around the world.
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