After careful examination of the Disney-Pixar deal it is evident that Pixar had more power in the negotiations. Pixar had the option to seek another partner for distribution but it was Disney who had no options. Walt Disney hadn't produced a hit animated movie in years, and hence it was time to stop wishing and start acting. Acquiring Pixar would be a very bold act indeed. The importance of animation to Disney over the years is obvious. Nothing creates more of an impact at this company than a successful animated film. But Disney animation hadn't turned out a major hit since Tarzan in 1999, and with increasing competition from Pixar and DreamWorks Animation, the company was struggling to produce films that resonate with today's audience.
With Disney and Pixar having enjoyed a successful and longstanding distribution partnership, it's no surprise that buying Pixar was option No. 1. But the single best reason for Disney to buy Pixar is that the latter is the king of today's animated film world. Since releasing "Toy Story" a decade ago, Pixar has created one mega-hit after another. Its titles include, "A Bug's Life," "Monster's Inc.," "Toy Story 2," "Finding Nemo" and "The Incredibles."
There are few more reasons why Disney wanted to buy Pixar.
1) It will be able to continue merchandising all the characters of Pixar animations. 2) From a Disney shareholder perspective, the possibility of having Steve Jobs as a top shareholder and active board member was very exciting. His success at Pixar with the turnaround of Apple, Jobs has done a great job of visualizing and then realizing how technology would transform entertainment. 3) Apple's iPod and iTunes already dominate the digital music market, Job's understands the potential, and while a major player in movie creation and traditional movie distribution, Disney could also emerge as the primary beneficiary of online distribution.
At roughly 20 times sales, Pixar wasn't a bargain. But with huge cash reserves...
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