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

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

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

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

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  • 275(1988)950(1994) 2,200(1999)Account for 80 %(film cost)
  • 275(1988)950(1994) 2,200(1999)Account for 80 %(film cost)

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

  • Moon, Sung Jin; Park, Ji Hong; Theerawat
  • AGENDA
    I. Company overview
    II. Problem & Analyze
    2
  • PIXAR - OVERVIEW
    • Leading digital animation studio, creating animated feature films and related products Over $3 billion in gross revenues to date
    • Founded: February 3, 1986
    • The computer division of Lucasfilm turned into Pixar
    • Headquarters: Emeryville, California, U.S.
    • Products: RenderMan, Marionette
    • Acquisition by Disney: $7.4 billion, January 24, 2006
    • Featurd Films: Toy Story (1995), A Bug's Life (1998), Toy Story 2 (1999),Monsters, Inc. (2001), Finding Nemo (2003), The Incredibles (2004) , Cars (2006)
    Edwin Catmull
    George Lucas
    Steve Jobs
    John Lasseter
    3
  • The Walt Disney Company - OVERVIEW
    • One of the largest media conglomerates in the world
    • Television and feature film
    • ABC, ABC Family, the Disney Channel, ESPN, Miramax Films, Touchstone Television
    • Syndication and distribution
    • Buena Vista Pictures Distribution: DVDs, videos and syndicated television programming
    • Radio
    • Theme parks and attractions
    • Product merchandising and distribution
    • Founded: October 16, 1923
    • Founders: Walt Disney and Roy Disney
    • Industry: Media and Entertainment
    • Revenue: US$ 37.843 billion (2008)
    • Employees:150,000 (2008)
    Annual Revenues
    Robert Iger
    Roy Disney
    Walt Disney
    Michael Eisner
    4
  • 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
  • Q1. What are the strong capabilities Pixar has?
    6
  • Q1. What are the strong capabilities Pixar has?
    7
  • 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
  • Q2. Alternatives
    9
  • 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
  • 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
  • What are the risky factors
    Culture between
    Disney & Pixar
    Financial
    Stock Dilution
    12
  • What are the risky factors
    Culture between
    Disney & Pixar
    Financial
    Stock Dilution
    13
  • 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
  • Pixar Stock Deal Worth
    • 1 billion USD in Cash
    • Stock worth – 6.4 billion USD
    • 59.78USD per Pixar share
    (3.8% premium over 57.75USD for closed price)
    • Disney 2.3 : 1 Pixar @ 25.99USD
    • Steve Job with 7% stake turn to became Disney’s largest shareholder.
    15
  • What are the risky factors
    Culture between
    Disney & Pixar
    Financial
    Stock Dilution
    16
  • 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
  • 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
  • Pixar: Egalitarian Collaboration
    Environment invites congregation
    • Open spaces, lounges, game areas, “the bathroom effect”
    Pixar University
    Themes of teamwork
    • Story of Pixar’s founding, collective action moment in Pixar’s films, “art as a team sport”
    Bonus structure
    • Film succeeds  everyone gets a bonus
    19
  • 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
  • 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
  • Risk of Culture
    Disney: Solider
    Pixar: Artist
    22
  • Acquiring Pixar makes the most sense for Disney’s growth?
    23
  • “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