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MGT 291 Disney-Pixar Merger

Final Presentation
by

Lindsey Spice

on 4 March 2013

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Transcript of MGT 291 Disney-Pixar Merger

History of Disney The Disney-Pixar Merger:
A Tale of Good vs. Bad Leadership The End Presented by Team Awesome
Dani, Katie, Lindsey,
Matt, Ming, Tiffany History of Pixar Why a merger? Long-Term Results Final Deal Once upon a time... 1991 - Initial Feature Film Agreement
3 films/9 years
Revenues: 15% Pixar vs. 85% Disney Disney could have fired Eisner or at least removed him as the lead negotiator.

Eisner approached everything with a competitive strategy, which clearly wasn't working.

Eisner failed to pursue an integrative approach, simply looking at the merger as a distributive negotiation.

Disney should have dropped their competitive negotiation strategy earlier and shifted to a more collaborative approach. Merger Successful! Current contract expiring
Collaboration w/o barriers
What's important: INNOVATION
Disney had more to gain:
Increased revenues across business units
Double-digit increase in earnings FY 2008
Improve computer animation capabilities
Leverage Jobs' dynamic & innovative personality - also his biz acumen
Make Jobs the #1 shareholder A New Sheriff in Town January 2006: $7.4 billion merger

Lasseter (Pixar) named Chief Creative Officer of Disney Animation & Pixar.

Jobs added to Disney board and became largest stockholder.

Pixar studios remained completely autonomous from Disney.

Joint steering committee created to try and spread the Pixar culture throughout Disney. "One of the 10 best corporate mergers of all time." "They've produced some beautiful collaborations that are the envy of Hollywood." A Very Disney Happy Ending? Pixar films post-merger: over $4 billion profit worldwide Disney's stock price at the time of the merger was $25.72. Today it's $49.66. • 1979-1984 - Ed Catmull and John Lasseter join Lucasfilm Ltd.
• 1986 – Steve Jobs buys Pixar from Lucasfilm
• 1991 – Contract signed with Disney to produce 3 feature films
• 1995 – First Feature Film – Toy Story (box office leader)
• 1999 – Toy Story 2 (box office leader) Woody vs. Buzz:
Light Years Apart Collaborative vs Combative Leadership Styles •1923 – Disney Bros. Studio Formed
•1928 – First Mickey Mouse Sound Cartoon – Steamboat Willie
•1937 – First Feature Film - Snow White and the Seven Dwarfs (worldwide success)
•1984 – Michael Eisner becomes CEO
•1992 – Euro Disneyland Opens
•1996 - Disney Acquires ABC
•2005 – Robert Iger becomes CEO Disney - Eisner Pixar - Jobs Democratic Leader
Hard worker
Excellent communicator
Candid style, yet accessible
Inspiring Sheriff Bob Iger 'If I can't trust a person to do something, then I need a different person'
- Bob Iger 'I’ve really learned over time that optimism is a very, very important part of leadership'
- Bob Iger “You’ve got to project an accessibility - that you can get on an elevator and actually have a conversation with someone...

- Bob Iger John Lasseter Collaborative & Democratic Trusts his people to address shared concerns of Pixar Issues discussed openly and supportively Develop trust amongst employees in order to create a safe place for sharing His employees are his children Empower Employees Collaborative Culture Celebrate Success Pixar Leadership Lessons Early Days... Disney-Pixar War "Eisner is blind as to how much he needs Pixar"
- Steve Jobs Iger Replaces Eisner "All characters in the Disney parade created in the last decade were Pixar's
- Bob Iger Damage Control Eisner - Combative & Authoritative
Iger - Collaborative & Democratic
Leadership Style Matters "Pixar's management control of the Disney animation unit was key to selling Iger this company."
- Steve Jobs "Make the necessary concessions. Involve yourself, but not to the point of usurping their authority."
- Bob Iger Joins Jobs at Pixar Start of Career Pixar Today Good Eisner Bad Eisner Decent and Goofy
Embrace Disney's creativity
Nurtured R&D Dept
Led by example Aggressive & Authoritative Roy Disney - Save Disney Campaign Top Management replaced with ABC Executives Resent Legacy of Walt Disney Disney-Pixar Relationship Turned Sour The Original Pixar Team Pixar 3 Management Mantras The Beginning of Disney-Pixar "Just make it great...."
- Steve Jobs Pixar showed Disney's head of film a short animated clip

Disney was so enamored, they offered to produce 3 films... A few facts "least well-reviewed of Pixar Animation Studios' 11 movies" "among its poorest performers at the box office" "not the movie that you would expect Pixar to make a sequel of — yet they are" Cars - $462M
Cars 2 - $560M Box Office Global Retail Sales Gross - $10B
Annual- $2B Radiator Springs Racers Match Made In Cartoon Heaven 1.06B 100% profits
Pay 10-15% distribution fee
Finance films independently Pixar wanted more... Eisner vs. Jobs Why do Mergers Fail? 1996 - Co-Production Agreement
5 films/10 years
50-50 profit
Share production costs
Equal branding on films & merchandise Disney-Pixar Merger Benefits Management Integration & Retention Challenges Over-estimate synergies Integration Problems Not-so-happy ending... Everything went to Hades "[Eisner] would not give an inch in his business dealings..." "Failure to establish and build constructive working relationships..." Recipe for Disaster Save
Disney
Campaign!
Full transcript