Monday, December 02, 2013

UnCrazy Acquisition

Once, the business press questioned Disney's decision to pay big bucks for a smallish animation studio. Now, not so much.

... When Disney acquired Pixar in 2006, it hoped to reinvigorate its flagging animation division – once the company’s crown jewel.

Rivals such as DreamWorks Animation and Fox had eclipsed Disney at the box office, as had Pixar,. [Disney Chairman Robert] Iger acknowledged weakness at the studio that created Mickey Mouse, telling the New York Times, “I want to return Disney to greatness in this area, and this was the way to do it fastest.”

Seven years later, the deal has accomplished just that – though not in the way some may have expected. The rest of Disney is ascendant again, while some of the shine is off Pixar. ...

Disney’s recent movies, from “Planes” to ”[Frozen"] have fit into its broader corporate strategy – enabling the sale of toys and games. They also restore luster to a brand that had suffered in recent years.

“People looked at ‘Cars 2′ and said Pixar stumbled,” Phil Contrino, editor-in-chief of, said. “No they didn’t; it happened because ‘Cars 2′ sells more toys than tickets could ever hope to attain at the box office.”

That same line of reasoning motivates the revitalization of these other divisions, which permit Disney to release multiple blockbuster animated films in any given year — boosting corporate earnings throughout the year. ...

The thing of it is, nobody knew at the time what kind of impact the Pixar acquisition would have on Diz Co.'s bottom line. The merger only became a snazzy business move after the fact.

Just like nobody knew that Disney acquiring Robert Zemeckis's Image Movers would end up being a deep sink hole that swallowed up the conglomerate's money. (Or that Universal partnering with Chris Meledandri's Illumination Entertainment would garner vast riches for both corporate entities.)

Any partnership or acquistion is a calculated risk. But I don't think anyone now questions that buying Pixar for a sum north of $7 billion was worth it. Disney was buying a management team, after all, and that team has spun out billions of dollars worth of hits.

(For the life of me, why people keep slagging Monsters University because it's a, you know, icky sequel, is a mystery. The flick was well reviewed and made over $700 million at the box office. And wasn't Toy Story III a sequel? Or did I miss something?)

But does the Big Mouse care? Probably not. Most of their acquisitions are paying off handsomely, and if the corporation Walt built is now the Berkshire Hathaway of entertainment conglomerates, well .... Chairman Iger is probably crying all the way to Fort Knox.


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