David Rosenthal: evaluation

Transcript context

…Or let’s get all of our finance teams involved and our lawyers involved. That’s what Steve was used to from Disney. He was like, “Cool. Doing a deal with you guys is no promises, a year of dragging this out, and every SWAT team of people being involved.” It’s Iger’s signature that he knows that he needs to put on Disney to just come in guns blazing here. When Steve at the Apple keynote that summer, I believe, in 2006 announces the video iPod, Bob Iger walks out on stage and says, “All of our Disney and ABC content, you’re going to be able to purchase it, you will be able to download it, you’re going to be able to watch it on the go on Apple products. This the opening of the thawing of the relationships between Steve Jobs and Disney. It takes a little bit of time after the announcement before Bob can become CEO, before Michael leaves and he officially is installed as CEO is about six months. In his first board meeting, immediately after he’s officially CEO, Bob asks then CFO Tom Staggs and the head of strat planning Kevin Mayer to put together an analysis of Disney Animation versus Pixar to present to the board. Bob has an idea that he hasn’t told anybody about. They put together this analysis and it’s brutal, like as you expect from what we’ve been talking about. In the same period of time that Pixar has been operating and had their deal with Disney, Disney Animation films have lost $400 million in aggregate. Meanwhile, not only has Pixar had hit after hit after hit and had made immense profits on their films, Bob has Kevin and Tom commission brand research to ask parents in the US what entertainment brands they think are best for their kids. Disney has always been the number one in this. Disney has been unseated by Pixar. More American parents at this point in time believe that Pixar is the best entertainment brand for their kids than Disney. This is real bad and he presents this in his first board meeting. He reminds the board about the saying about as animation goes, so goes the company, and he proposes three options, “One, we can keep the status quo; that’s not a good option. Two, we can go out and try and hire new talent to run our studios and revitalize Disney Animation.” He’s like, “I’ve looked. That’s going to be hard, it’s going to take awhile, and there’s no promise of success.” He’s like, “Or three, we can buy Pixar,” and he writes about this in the book. The boardroom just erupts in chaos. This is a crazy idea. Board members are shouting. People like the Disney family members are offended. It’s crazy, but he methodically makes his case and says, “Look, I don’t know if it can happen. The relationship has been damaged. Steve is Steve, but we have to try and do this. I think this can save the company. So, the board does give him approval to explore it finally. Bob called Steve the next day and he says, “Hey, I have a crazy idea. Can I come see you about it?” I just love this. He writes in the book, “I didn’t yet fully appreciate just how much Steve liked radical ideas. teve the next day and he says, “Hey, I have a crazy idea. Can I come see you about it?” I just love this. He writes in the book, “I didn’t yet fully appreciate just how much Steve liked radical ideas. ‘Tell me now,’ he said.” Bob’s driving in his car, he pulled his car over into this driveway, he calms himself, and he’s like, “I wasn’t really expecting to do this now.” He’s like, “Well, I’ve been thinking about our respective companies’ futures and what do you think about Disney buying Pixar?” Steve is silent for a moment and he’s like, “You know? That’s not the craziest idea in the world,” and thus begins the negotiation, which actually goes by very quickly. Within a matter of months, they’ve reached a deal for Disney to acquire Pixar for $7.4 billion, which is a huge, huge price at the time, and still unclear as we talked about the episode. Financially, did that deal makes sense? It’s been okay, but that deal saves Disney and that sets them on the path to start and revitalizing the company, bring technology leadership back into the company, being creative leadership back in the company.…

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