How do you report to the shareholders about this?
Good lord, this has been an interestingly rough 10 ~ 12 months for Disney.
First, they fall under heavy lawsuit from the new owners to the Winnie the Pooh rights. Then Roy Disney and Samuel Gold leave the board of directors. Roy, in particular, starts exposing problems among the ranks. Their network property, ABC, is still trailing well behind the majors, and losing money, despite NFL coverage. Then, they lose Barbara Walters as a regular. And, now, they lose their most consistent hit-maker, Pixar.
Interesting, the timing of some of this, if kind of predictable: Roy and Gold leave in separate public displays, well timed, just ahead of the holiday (read merchandising) crunch. That was a real confidence shaker. Now, Pixar quits pressing negotiations after 10 months, and just ahead of the annual shareholders' meeting.
While all separate events, some of this seems just a bit more than planned. Granted, I think allot of this needed to come to a head, anyway. And in the same week that Eisner's pay raise goes public... Ouch! This is a punters festival, to be sure.
Based on what I've seen of matters similar, I think Pixar is poised to weather this better [overall] than Disney is. But, of course, Disney is a friggin' behemoth (film company conglomerate, amusement park powerhouse, boutique/niche market hotel company, travel company with a private island), while, Pixar is a software vendor cum movie house. To that end, comparisons of the two companies, on an industry basis, are ill conceived. However, monetarily, I think it can be done. Mainly on the basis of return on investment.
If Disney and Pixar were to put out movies that grossed equal amounts of capital, it would represent a greater profit for Pixar. In fact, for Disney, it could actually represent a loss. This is where the return on investment becomes the only important factor, I think. Pixar was one of the most economical contracts Disney has closed in the company's history. 50% of the gross profits for only the cost of legal fees and Buena Vista's distribution expenses. No animators of their own need be paid. No hardware or supplies of their own were exhausted to produce Pixar's films. This is the only way Disney could have made this venture profitable for themselves. And, let's face it. if you want to keep working, you have to make money in the most profitable way available. And this applies to both and all companies. Ethics aren't a part of the equation, technically.
So, now, not only is Disney short it's best RoI (Pixar), it's losing money to multiple lawsuits, a bigger paycheck for the guy who --more or less-- killed the deal with Pixar and increasing expenses with recovering at least one broadcast network, aging and/or structually unsound thrill rides and a contagious cruise line.
Meanwhile, Pixar is still [technically] secure with the distribution of it's next two movie releases. So, they have a bit of time to cull down to the most appropriate suiter and stand to make an equal or better deal from it.
It's not hard to see which CEO is going to more enjoy his annual shareholders meeting, in the coming months...
Good lord, this has been an interestingly rough 10 ~ 12 months for Disney.
First, they fall under heavy lawsuit from the new owners to the Winnie the Pooh rights. Then Roy Disney and Samuel Gold leave the board of directors. Roy, in particular, starts exposing problems among the ranks. Their network property, ABC, is still trailing well behind the majors, and losing money, despite NFL coverage. Then, they lose Barbara Walters as a regular. And, now, they lose their most consistent hit-maker, Pixar.
Interesting, the timing of some of this, if kind of predictable: Roy and Gold leave in separate public displays, well timed, just ahead of the holiday (read merchandising) crunch. That was a real confidence shaker. Now, Pixar quits pressing negotiations after 10 months, and just ahead of the annual shareholders' meeting.
While all separate events, some of this seems just a bit more than planned. Granted, I think allot of this needed to come to a head, anyway. And in the same week that Eisner's pay raise goes public... Ouch! This is a punters festival, to be sure.
Based on what I've seen of matters similar, I think Pixar is poised to weather this better [overall] than Disney is. But, of course, Disney is a friggin' behemoth (film company conglomerate, amusement park powerhouse, boutique/niche market hotel company, travel company with a private island), while, Pixar is a software vendor cum movie house. To that end, comparisons of the two companies, on an industry basis, are ill conceived. However, monetarily, I think it can be done. Mainly on the basis of return on investment.
If Disney and Pixar were to put out movies that grossed equal amounts of capital, it would represent a greater profit for Pixar. In fact, for Disney, it could actually represent a loss. This is where the return on investment becomes the only important factor, I think. Pixar was one of the most economical contracts Disney has closed in the company's history. 50% of the gross profits for only the cost of legal fees and Buena Vista's distribution expenses. No animators of their own need be paid. No hardware or supplies of their own were exhausted to produce Pixar's films. This is the only way Disney could have made this venture profitable for themselves. And, let's face it. if you want to keep working, you have to make money in the most profitable way available. And this applies to both and all companies. Ethics aren't a part of the equation, technically.
So, now, not only is Disney short it's best RoI (Pixar), it's losing money to multiple lawsuits, a bigger paycheck for the guy who --more or less-- killed the deal with Pixar and increasing expenses with recovering at least one broadcast network, aging and/or structually unsound thrill rides and a contagious cruise line.
Meanwhile, Pixar is still [technically] secure with the distribution of it's next two movie releases. So, they have a bit of time to cull down to the most appropriate suiter and stand to make an equal or better deal from it.
It's not hard to see which CEO is going to more enjoy his annual shareholders meeting, in the coming months...