Disney is paying $7.4 billion to buy Pixar, $1.2 billion in cash and the rest in Disney shares. What's it getting in return? Pixar's most recent balance sheet shows just $1.38 billion in total assets, and $1 billion of that is cash.
How about $1 billion in sales and merchendising from Toy Story 3 within the next couple of years? Don't worry, Disney will make back every penny and many times more. And there's Cars, though the deal was already in place.
And it strikes me as unrealistic to expect Pixar to continue its unbroken string of hits. If Pixar never has a failure, then it's not taking any creative risks. As recently as "The Lion King," Disney had such an enviable record, and squandered its dominance. Surely Pixar won't repeat Disney's well-publicized blunders, including turning down the opportunity to buy half of Pixar for $15 million back in the mid-1980s. But I believe Mr. Eisner was right when he predicted that Pixar would eventually produce a flop.
Pixar will have plenty of failures. I expect they'll make sequels to many of their current successes that will be considered failures by the critics and artists, but when the bean counters are all done, they will have made Disney. This win/win for Pixar/Disney is a reason why Disney would pay more than any other studio. Only this pair can maximize the potential in all the development so far. Toy Story 3 is 80% done at Pixar and the only reason it's not finished is because Disney owns it and won't pay a fair price for it. Disney even considered making it on their own, but that would be a worse disaster and far more costly. There are probably several sequels that are sitting in a closet somewhere in Pixar and that value can only be unlocked by cooperation between the two studios.
They both got a fair deal and Disney got the bigger slice of the pie in my view. |
