The Journal takes a jaundiced view of Mouse acquisitions.
Walt Disney's $563 million agreement last week to purchase social-gaming company Playdom brings to $12.6 billion the amount the entertainment company has laid out on premium-priced acquisitions over the past five years ...
So far the returns on Disney's deals look distinctly ordinary. Take Pixar. Netting out cash and investments on the animation studio's balance sheet, which reduced the purchase cost to $6.4 billion, Disney paid about 30 times its 2005 operating profit of $215 million. Given that the box-office performance of Pixar releases since the deal haven't been appreciably better than before, it is doubtful earnings have risen significantly. Even profit of $300 million would suggest an annual return on investment as low as 5%. ...
I always wonder about big bucks acquisitions.
Disney buying Pixar worked out well for Steve Jobs. And I'm sure John Lasseter and Ed Catmull have done well. But is this acquisition as mediocre for Corporate Diz as the Wall Street Journal would have us believe?
Perhaps not.
Disney removed Pixar as a competitor, acquired the Pixar brain trust, and has spun out new hit films. Admittedly, this acquisition thingie is a more expensive strategy than just resuscitating the animation division Disney already had, but when the company had an executive that was able to do that before (one J. Katzenberg), they fired him. And the ungrateful wretch went off and built a rival studio that now eats Disney's lunch.
So, all in all, maybe buying Pixar was the right move. If they'd rebuilt from within, who's to say the exec who did it wouldn't go off and launch another rival five years from now?
Can we spell C-H-R-I-S M-E-L-E-D-A-N-D-R-I ?
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15 comments:
After being fired, a lot of times people succeed in spite of their previous employer. Revenge, when channeled properly, can often be used to one's advantage.
Who's to say that Katzenberg would be as successful if he wasn't fired?
Since when is a 5% return on investment considered disappointing? Wall Street greed will be the ruin of us all.
how about revenues from toys, rides and merchandise ... that has to be substantial
The Marvel acquisition looks more problematic. How much merch money can be made from already-established characters? A lot's going to depend on how well new movies based on those characters do. Even more problematic is the Muppet purchase. It's hard to see how that acquisition will ever make Disney a dime, much less repay its investment.
"Who's to say that Katzenberg would be as successful if he wasn't fired? "
Well, he turned Disney around once (he was responsible for the 2nd golden age of Disney, starting with The Little Mermaid) and then left after Lion King and started Dreamworks. I think the results speak for themselves...
Well, he turned Disney around once (he was responsible for the 2nd golden age of Disney, starting with The Little Mermaid) and then left after Lion King and started Dreamworks.
I fully understand that he was responsible for some great decisions and projects at Disney while he was there, but would that have lasted? Of course we will never know, I'm just putting forth the fact that sometimes people work harder because they have been fired.
Since when is a 5% return on investment considered disappointing?
Stick to animation. Business is obviously not your forte.
"(Katzenberg)....left after Lion King and started Dreamworks."
Didn't he leave after Pocahontas? (I know that undermines the point, somewhat).
No. He left while Pocahontas was still in production. It still would've been lousy if he had stayed, given that he micromanaged it up til almost the end of it.
"It still would've been lousy if he had stayed"
Wow, tough crowd. Pocahontas did make the cut in The World of Color Show. Some of us think it was a really good film.
"he was responsible for the 2nd golden age of Disney, starting with The Little Mermaid"
One of many, and second to Roy Disney. Folks like John Musker and Ron Clements, who fought to bring Howard Ashman into the fold shouldn't be forgotten.
On his own, just look at how long it took for JK/DW animation to find it's footing (all those flops before Shrek--and only one film worth remembering out of all of them: Kung Fu Panda--although HTTYD was OK.
Disney's Pocahontas was a terrible film. Piss poor to look at, and dull. Check out Terrence Malick's "A New World" for a better take on that story.
@ Anon 12:02:00 PM
We can argue Jeffrey's contributions at Disney/DW but can you name the grand successes Disney (other than Pixar's) has had since his departure.
The Muppets cost relatively little--about $100 million. If Disney hired someone funny and creative to run the Muppets, they could make a tidy sum. After all, many Pixar films seem very much Muppet-like. Many of Disney's other acquisitions have shown a real executive incompetence under both Eisner and Iger--Fox Family for 3 billion? Infoseek for over 1 billion (all down the drain)? Club Penguin for about 400 m.? Iger's obsession with new media like Playdom (700 m.) seems like a recipe for major losses. At least Pixar and the Muppets mean rides and merchandising opportunities. I'd love to see Disney invest in creative people with new ideas, but that is expecting too much, perhaps.
disney is a creatively dead company.
Jeff contributed a lot to the Silver Age Disney films - especially to Aladdin and the Lion King. His absence became painfully obvious when Pocahontas came out - horrible story, unfunny sidekick animals, rushed-looking animation. Eisner was nuts to make a rival out of Jeff K. He was also, IMO, nuts to buy the Muppets. Pixar represents a new technology and a new way to tell stories. The Muppets represent just the opposite.
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