I wonder if we'll ever see Steve Jobs wearing mouse ears at his next Macworld keynote. The merger of Disney (DIS) and Jobs-led Pixar Animation Studio (PIXR) had to happen, if only to inject some new blood into the flagging entertainment brand that Disney has become.
But now that the Apple Computer (AAPL) CEO has a bigger financial stake in the trials and tribulations of the Mouse House than anyone on the planet, I can't help but wonder what the turn of events means for Apple.
Financially speaking, the timing of the Pixar sale is ideal. On a split-adjusted basis, Pixar shares have been trading at near a five-year high, and the Disney acquisition values the stock above that, if only by a little. If ever there was a time to unload Pixar on a willing buyer, this was it. Jobs, who is CEO of Pixar, gets not only a board seat, but also a sizeable stake in Disney, about 6.5%.
REHABBED MICKEY? And as Jobs relinquishes his role as head of Pixar to settle back into a single day job at Apple -- there's never been any evidence suggesting the dual role was a distraction -- Pixar's animation business can grow to its proper size and influence as part of a new, reinvigorated Disney (see BW Online, 1/26/06, "A Pixar Exec's Fairy-Tale Story"). When the Disney board meets, Jobs will cast his powerful vote on corporate business and recuse himself when appropriate. And life for those who love Apple and its products goes on as normal, right?
Then again, this is Steve Jobs. And Disney. And Apple. And when I look at those three ingredients, I can't help but feel that this trio should be mixed only carefully and in small doses, lest the resulting combination prove volatile.
But done right, the possibilities are enticing. First, what might the creative geniuses at Pixar do with access to Disney's trove of animation intellectual property? Pixar-made movies, shorts, and TV shows could now star updated 21st century iterations of Mickey Mouse, Donald Duck -- even Clarabelle Cow. New characters will refresh the Disney magic across its many lines of business, from features to TV to theme parks.
RIGHT MARRIAGE. There's little question Pixar could work magic in the Magic Kingdom. I happened to be at Walt Disney World in Orlando a couple of summers back when the animation studio at the Disney-MGM Studios theme park was showing previews of the 2004 animated feature Home On The Range. At first sight, I knew it was going to be flop. For whatever reason, Pixar knows what works with audiences now, and Disney hasn't, at least on the animated-feature front, since the years of Pocahontas (1995) and The Lion King (1994).
This is the kind of synergy that makes a good deal of sense. Disney needs Pixar to put more life back in the Mouse House, while Pixar needs Disney to grow into what it can ultimately become.
But what's the upside for Apple? Clearly, as it preps the launch of an intensive campaign to win more of the digital-entertainment dollar -- using its iPod and iTunes Music Store as the tip of the spear -- it would benefit further from Disney's vast store of audio and video content. That's provided the deals can be consummated in a way that lets Jobs avoid conflicts of interest. (The iTunes store already features some Disney films and content from Disney's ABC, including episodes of Lost and Desperate Housewives.)
SHINING APPLE'S IMAGE. Both companies also will gain as Jobs helps sharpen Disney's understanding of how to navigate the increasingly confusing, treacherous waters of digital-media distribution. Whatever deals takes place between Apple and Disney for content will likely serve as templates for similar pacts between Apple and other media outlets.
More generally, they will probably set the tone for the manifold tech-media content alliances likely down the road -- in much the same way that the 99-cent song download became the de facto industry standard for music.
There's another interesting side benefit -- that of brand association. Having Apple's top executive and co-founder associated with the world's premier family-entertainment brand can't help but give Apple and its products a family-friendly stamp of approval in certain circles. Apple has always had something of a rebel streak that appeals to mavericks who "think different" and go against the grain.
DELICATE DANCE. At the same time, the iPod craze has introduced Apple to a younger, au courant crowd. Maybe an attachment to Disney will widen Apple's appeal even more amid the vacation-in-Orlando set.
How could all this fail? Much lies with Steve Jobs. He has a way of pushing for what he wants that might not fly at Disney. He'll have to tread carefully, and in that follow the lead of Disney CEO Robert Iger. I have visions of the phrase "What will Steve think?" being repeated with apprehension by Disney executives from Burbank to Orlando as they plan new products and content.
The bar Jobs sets for what makes a good product is rather high. As a board member he won't likely be in the kind of role that would have him approving or vetoing products. That job will be left to Iger and his many deputies. But for certain new types of products tied to digital media, Jobs's input and clarity of vision will no doubt filter through.
MEDIA MOGUL? Which brings me to the issue of distraction. Is this really a good thing for Apple? Will Apple continue to be Jobs's one true professional love and command that lion's share of his valuable energy and attention when the temptation to take a more hands-on role in remaking Disney lies tantalizingly within his grasp.
I wonder what Steve Jobs might have done had he been born in an earlier century? I imagine it would have been something involving media and entertainment. Might he have built a newspaper empire to rival those of Hearst and Pulitzer? Would he have seized upon Edison's developments for motion pictures to start his own movie studio?
His managerial heart seems to yearn for control of a media concern, and luckily for him, he landed in the computer business 30 years before the PC became central to the media universe. Could it be that everything that has happened so far in Jobs's professional life has been a mere prologue to the creation of the 21st Century's first real media giant?
Hesseldahl is a writer for BusinessWeek Online in New York
Printer-Friendly Version