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Disney, Pixar Deal 'All Good'

30 Jan, 2006 By: Kurt Indvik

“It's all good.”

That was what one Buena Vista Home Entertainment exec told me last week as news of the Pixar acquisition by Walt Disney Co. began to sink in throughout Hollywood.

On the face of it, the Pixar deal doesn't add to Buena Vista's market share of home entertainment, since the two companies have had a long-standing distribution deal. But certainly, there was a collective sigh of relief in Burbank as Disney's new CEO Bob Iger having revived the frayed relations between the two companies since he took over from Michael Eisner last October, cemented a deal that surprised some in Hollywood and the Silicon Valley. Buzz had been that Jobs wasn't interested in selling, but after talking with every studio in Hollywood, Jobs reportedly said he felt that a buyout allowed Pixar to do what it does best; make movies, instead of having to focus on managing distribution relationships.

The $7.4 billion all-stock deal buyout deal (valued at $6.4 billion less the $1 billion in cash Pixar had built in the last several years) solidifies Disney's preeminence now as the leader in animated entertainment. Pixar has been the powerhouse in this arena ever since Toy Story, even as Disney has found renewed success in this category, with Lilo & Stitch and the recent $130 million run of Chicken Little.

Beyond that, however, there is the feeling among analysts that bringing Pixar and its CEO Steve Jobs into the fold (he now becomes Disney's biggest shareholder and will have a seat on its board) will bring a digital edge to Disney that sets up well for the future. Disney already was sending signals by being the first to sign up with Apple's iTunes to offer TV episodes via the video iPod. And certainly Iger has made it clear he is already thinking outside the proverbial window, having made numerous statements that the traditional revenue windows for Hollywood films should, and would be tested in the future as digital downloads and other delivery opportunities make themselves financially viable in the future.

Jobs is well known as a visionary with the single-minded drive to execute that vision, and he may very well play a role in pushing the digital delivery model forward for Disney and Hollywood as a whole.

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