Pixar Purchase Pays Off for Disney

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More Than a Movie

Right he is. Because even if Ratatouille doesn't come out of the gate with some super-duper opening weekend, and folks say that Iger and company got snookered in the Pixar deal, it doesn't matter. Sure, the Pixar deal was pricey, but it was worth it. Disney all but reinvented itself with the deal. Top Pixar creative font John Lasseter has remade Disney's stumbling animated studio, replacing the director for the upcoming American Dog and jumping in to overhaul the recent Meet the Robinsons. The latter flick is approaching $100 million, a rarity these days for Disney-made animated films. Disney also gets a clear shot at making theme-park rides based on Pixar flicks, such as the new Finding Nemo ride at Disneyland.

Moreover, the deal was a signal to the rest of the creative community that Disney could attract and keep the likes of such big-deal animation directors as Brad Bird, who directed The Incredibles and Ratatouille, as well as Steve Jobs' top two Pixar hands, Lasseter and Ed Catmull. "We didn't buy Pixar for any one film," says Disney studio chairman Dick Cook. "We bought it for people like John Lasseter, Ed Catmull, Brad Bird, [Finding Nemo writer/director] Andrew Stanton, and many others who we hope will make hundreds of films for us."

Still, Disney couldn't be trotting out its first wholly owned Pixar flick at a worse time. The week after Ratatouille opens, little kids will be flocking to see the Steven Spielberg-produced Transformers, a live-action flick based on the long-running TV cartoon. On July 8, Harry Potter and the Hogwarts crew come to your local movieplex with the fifth in that series. And later in July, Fox (NWS) releases the The Simpsons Movie, quite possibly the summer's biggest animated release.

Creating Demand

But Disney will gear up its impressive marketing machine. It's already got billboards up everywhere promoting Ratatouille, along with well-timed Disneyland promos, and a multicity tour throughout the summer featuring a slide masquerading as a 25-foot-high piece of cheese. (I don't make this stuff up!) For the first time, Disney is also offering sneak previews—Ratatouille will be shown on June 16 to generate a little of word-of-mouth to help the flick take off.

On top of that, Disney has hustled to help take the sting out of the deal for Disney shareholders. According to Disney Chief Financial Officer Tom Staggs, the company is six months ahead of schedule in buying back those 279 million Disney shares it issued as currency in the Pixar deal. Indeed, since the deal, Disney stock has jumped 40%, in part due to Iger settling the Pixar issue.

So, while some shareholders may well be biting their nails waiting for Ratatouille to open, they've already got their Pixar premium. Maybe a cooking rat won't set new box-office records when it opens. But a deal isn't built on one rodent, even if Walt built his company on one.

Grover is Los Angeles bureau chief for BusinessWeek.