Pixar For Sale?

blamanj writes "The on-again off-again relationship between Pixar and Disney is currently on-again, and in a big way according to this story. Pixar originally signed a distribution deal which gave Disney a percentage of the profits and a distribution fee of 10%-15% of revenues. With Pixar revenues well over two billion dollars on their films, Jobs was looking for a better deal and dropped negotiations with the mouse. But now, according to CNN, he might be willing to sell the company outright. I can't believe that Pixar employees would be happy."

Why wouldn't they be happy?

[ReformedExCon]

Company acquisitions are typically godsends for many talented employees. It gives them a chance, whether through direct layoffs or just the ability to use the move as an excuse, to find new employment elsewhere. Many go on to found their own companies and become successful beyond what they could ever hope as a simple employee.

It's probably not so bright a future for those employees who have no talent or vision, but since this is Pixar we are talking about, I don't think that's going to be the case in the vast majority of cases.

Makes a bit of sense

[The Lost Supertone]

Makes a lil sense, I mean this isn't like Apple for Jobs, this is a company he bought and helped raise up and stuff it's not the company he helped create like Apple. Though honestly I can't see why he wouldn't want to hold on to it. It's not as if he needs the cash. Unless he's planning on out right buying a really large chunk of Apple or something.

Risky

[JanneM]

Disney has been in a creative slump for a number of years. They did not catch on to the technological changes very quickly, and their stories have been lacking, feeling like new cookie-cutter versions of tropes that ceased to be fresh a long time ago.

I seriously doubt bringing Pixar (or any other animation group) in-house would help, though. There is a very real risk that an already demoralised animation division gives up altogether, while the outside company's group dynamic gets destroyed by the change in corporate culture, the hostility and despair from the in-house people and the inevitable loss of people that do not wish to continue after a merger.

For such a move to work, I believe Disney needs to put its own house in order first, so there is a thriving, positive culture to merge with. If not, you'll just destroy two groups, not rescue one as the plan may be.

But then, what do I know...

It's Just Business

[MoThugz]

Since when should employee happiness be the basis of whether or not to sell a company?

In the end it's the owners who decide whether to hold on to it, or divest it. However, it does seem a little unwise for Jobs to sell off what seems to be a profitable outfit.

Re:Risky

[Anonymous Coward]

I agree. Frankly, Disney is a mess. Disney Animation doubly so. They need some new leadership and need pull their heads out of their collective, well you know. They still seem to want to ride on the fact that they are Disney, and that sort of thing just doesn't cut it any more. Pixar is a perfect example of this.

Re:Employees not happy?

[TubeSteak]

Way to go jackass Do you have a job, and if so, are you a manager? Sorry for being rude, but an important part of any company is something we call "worker satisfaction." This is probably even more important in a creative company like Pixar, as opposed to some faceless banking company where you sit around and prep millions of lines of code for y2k. (Office Space reference if you didn't get it) Low worker satisfaction means a higher turnover rate which generally means less productivity. People need to remember that in most industries, the employees are the company. Not to sound like a Soviet Russian, but happy workers are efficient workers.

Disney would be stupid not to buy

[Stickerboy]

Regardless of the success of Chicken Little, buying Pixar would be buying exactly what Disney needs - a company full of talented, creative overachievers who care as much about their art and storytelling as profits and dollar signs (which they have no problem making plenty of).

The best idea would be to buy Pixar and leave it the hell alone - a Hong Kong for Disney's People's Republic.

Re:Why wouldn't they be happy?

[Aqua OS X]

True, but if you have a run-of-the-mill job in the HR, marketing, finance department, being laid off isn't so glamourous. Especially when you live in the bay area (aka $$$) during a mediocre economic period. Good luck getting the same pay rate and benefits that Pixar offered you. They're one of the best employers to work for in the SF bay.

Re:It's Just Business

[humina]

You're not buying much if you have a mass employee exodus and a drop in moral in the company. The whole purpose of buying pixar would be to buy it's talent(employees). The pixar brand won't last if the talent to create good movies isn't there.

Oh please...

[seanellis]

Nooooooooooooooooooooooooooooooooooooooo!

Can you imagine the lively, engaging style of Pixar stuggling to survive the diktats for formulaic plot heaped upon it by Disney execs? Think "The Emperor's New Groove" but done with shiny new CG. Ugh.

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Re:"Pixar employees won't be happy"

[Anonymous Coward]

I think it probably does. From what I've heard he's usually been pretty hands off and allowed them to make their films the way they wanted without a lot of meddling. I doubt they'll get that kind of freedom from Disney, a company that has consistently blamed their medium (2D animation) for their falling revenues, seemingly without a clue that it is their lackluster storytelling that has doom their pictures as it is with most films that fail when their producers have the resources to make them hits.

Re:Why wouldn't they be happy?

[ysegalov]

Usually when a large company acquires a small company, the small company shifts to 'stall' state for a couple of years. There are many past examples. The reasons range from employees suddenly feeling like small pieces in a huge machine, lost hope for an 'exit', and so on.

Re:Oh please...

[alnya]

The Emperor's New Groove is a misunderstood classic.

No touchy!

Re:It's Just Business

[Siener]

Since when should employee happiness be the basis of whether or not to sell a company?

Since you get companies (and Pixar is one) who's biggest asset is their employees. If all the employees quit right after Pixar is sold, then there's not much else of value left.

I was employed by a software company that went through this. Many developers were "made redundant" soon after the sale and the remaining ones eventually quit. Six months down the line there were no developers left. All the company had left was seven(!) directors, numerous managers and salesmen, zero new products some "intelectual property" they could do nothing with. How long do you think they lasted?

How long do you think Pixar will last if all the people who do the actual work all quit?

Re:Oh please...

[Anonymous Coward]

Actually the last three Disney 2D films were quite good. Especially good considering it was Disney.

The Emporers New Groove - imagine a modern Chuck Jones movie

Lilo and Stitch - actually hits all the right emotional buttons without falling into tripe

Home on the Range - funny with excellent style and animation (and not your standard Disney overwrought animation)

 

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silly rumors...

[constantnormal]

... and silly Slashdotters who will believe anything they read on the web.

• What's the motivation for this? Last time I checked, Steve Jobs was not one of the bigger shareholders [yahoo.com], so he would get little out of the deal, except to cede control of the one place which he can guarantee will allow Apple to sell movies via iTMS.

• How much would it go for? The NYT piece says such a sale would have to command a premium over the current market valuation (over $6B). Given annual revenues approaching $300M and heading into some new distribution arrangements that are likely to significantly raise that amount (hint: they are slaves to Disney under the current arrangement, with Disney taking the lion's share of the profits and owning all the I.P.), such a sale price is highly speculative, but I would think something on the order of $9B (or a share price of about $75) would be in the ballpark.

• Who would buy it? Disney could pull off such an acquisition, but if would strain the resources of the Mouse, and would require either issuing a boatload of new stock (pissing off the current stockholders by diluting their holdings) or taking on massive amounts of debt (at a time when interest rates are rising) or some combination thereof. Microsoft is a much more likely prospect, as they would give anything to expand out of their software box into other realms -- why do you think they're sinking boatloads of money into the Xbox? But the odds of Steve Jobs selling Pixar to Bill Gates are only slightly better than those of SCO bringing IBM to its knees -- I think.

• Who benefits? The obvious parties here are the mutual fund holders, who would gleefully pocket their profits. But then they also profit if Pixar continues on course to some new distribution arrangement with Disney, Sony, or whomever, significantly increasing the company's revenues in the process. Once a new distribution arrangement is announced, removing some of the uncertainty about the future of Pixar, a reasonable expectation would be for the stock to rise, reflecting the increased profitability (which depends upon the details of whatever distribution arrangement Steve works out with the new partners -- Steve isn't widely known for being generous in such dealings). It surely will not be more than a couple of years after the new distribution arrangement is concluded that Pixar's stock price hits 75, and possibly as little as 12-15 months.

I see no reason for Pixar, mutual funds, or individual stockholders to sell Pixar stock at this point.
The NYT probably just phoned Michael Eisner and asked for a good story to print.

Exactly!

[Overzeetop]

Everybody is moaning and complaining that the sale would be no good for the purchasing company, as all the good employees will leave. Well, from the seller's point of view, that's the problem of the new owner. The buyer, if they wish to keep the creative talent and continue making gobs of money with their new acquisition, needs to make sure the "new" employees stay happy hwere they are. If that means a variation in corporate policy for the Pixar division...well, that's what it takes. If you're going to cut benefits, you'd better be willing to pony up more cash in salaries.

While we bemoan the plight of the employees in the purchase, the simple fact is that they don't own the company, and are always subject to a sale when the owner(s) feel the price is right or that the value has peaked. That is business. If you don't like it, go make your own business. Then you can decide your own fate.

How can I make such harsh remarks from my cushy slashdot-posting-all-day-long job? I got tired of somebody else calling the shots three years ago, so I opened my own firm. Last summer I was contacted by a medium sized, regional company to sell my small practice to them and become the head of a new department, and built it from scratch. It took me about an hour to realize that, as much as I despise day to day business, I really like being the owner. I call the shots. I'm not making as much salary as I would for them, and insead of a wad of cash for my business, I've got a bunch of depreciating equipment, an office upfit loan, and a 4 year lease I've got to pay on every month. But I set my hours, determine which projects I take and which I don't want, and I set my own deadlines. Someday I plan on selling out. It may be to my employees, or it may be in a merger with another firm. It's just business, but in this case it's my business. The employees will have to deal with that.

Re:Can't believe that Pixar employees would be hap

[ScentCone]

OTOH, if they still believe that hiding behind that multiply-protected-by-acts-of-Congress cute mouse of Disney's is... more cute mice, then I'm sure they'd be ecstatic.

Well, since the employees at Pixar enjoy salary bonuses based largely on the performance of the company's copyrighted and sold products, most of them will probably be pleased to work (or continue to work) for a company that does indeed want to see (and defend) revenue from their expensively made products. It does Pixar no good if some family that wants to amuse their kids with a hundred sedative TV-playings of Finding Nemo after they've seen it in the theater don't have to pay for that in-house entertainment. The sale of DVDs is a big part of how Pixar can afford the top-flight talent that flocks to work there.

Pixar also sells software - something a lot of people don't know. Expensive software. Without protecting their rights on that front, a lot of the in-house development that they do wouldn't happen.

Disney's Ploy

[Anonymous Coward]

Being in the animation industry, I keep a close watch on the big hitters. Disney all but slashed the throats of hundreds of artists a few years ago. They have let almost their entire 2d department go, and have now shut down two of their 3d studios (Secret Lab anyone?). This is nothing but a ploy by Disney to get someone else to make their movies because they tend to screw it up themselves. Chicken Little may be good, but we will see if those artists have jobs in two years.

Re:A Neat Pixar/Disney Story

[oscarmv]

Ah, but notice it was the _Creative People_ at Disney that helped, those who for a while managed to produce great animated movies (i.e. Aladdin, Lion King, Mulan...).

The ones that messed things up are the ones that eventually messed Disney animation up: the middle management that knows better.

Re:silly rumors...

[Phat_Tony]

"Last time I checked, Steve Jobs was not one of the bigger shareholders..."

From the first sentence of TFA:

"The New York Times reports Jobs, who owns about 50 percent of Pixar (Research), would want a strong premium to its current $5.9 billion market capitalization to consider a sale..."

Re:Remember NeXT and Apple?

[SewersOfRivendell]

When Apple acquired NeXT, their top three levels of management were pretty much replaced with NeXT employees

I was there at the time. It's more like Apple's top twenty levels of management were replaced with one or two levels of NeXT employees. It's not so much a tribute to the rank and file NeXTies as it is a tribute to laserlike, singular focus on the part of the new executive management.

(FWIW. Yes, this is offtopic.)

Jobs may consider possibly extending...

[Infonaut]

From TFA: The paper attributed Jobs' willingness to consider a sale to "two people with knowledge of the talks" now taking place between Disney and Pixar about possibly extending their partnership.

Jobs is possibly interested in maybe possibly selling Pixar to Disney or perhaps to someone else maybe, possibly. Disney is trying hard to show Jobs and the rest of the world that their animation arm isn't completely dead. Jobs is angling for content deals that will help Apple. Much is possible; nothing is known.

Wake me up when there's more than a rumor.