The Marketplace Report: Disney Looks to Nab Pixar

Madeleine Brand talks to Tess Vigeland of Marketplace about reports that the Walt Disney Co. is in serious talks to buy Pixar Animation Studios. That would make Pixar CEO Steve Jobs, who is also CEO of Apple Computer, the largest individual shareholder in Disney.

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MADELEINE BRAND, host:

Back now with DAY to DAY. The Walt Disney Co. may buy the company that's made such hits as Finding Nemo and Toy Story. The Wall Street Journal reports today that Disney is in talks to buy the animation studio Pixar. Until recently the two companies had been at odds, but the relationship changed after former Disney CEO Michael Eisner left. Marketplace's Tess Vigeland is here to talk about this.

And Tess, first, what are the details of this possible buyout; what's Disney offering Pixar?

Ms. VIGELAND (Host, Marketplace): Well, Madeleine, according to the Wall Street Journal, Disney is willing to pay something north of Pixar's current stock value which right now is around $6.7 billion. That's been over the last few weeks as all the speculation has grown about Disney buying Pixar outright. A deal would also likely give Apple Computer and Pixar CEO, Steve Jobs, a seat on Disney's board, and make him the largest individual shareholder in Disney stock. He's already the majority shareholder at Pixar of course. But we will caution that this is all still very preliminary and they could end up tabling the buyout and instead working up some sort of new distribution and film financing deal.

BRAND: And Tess, as we mentioned, this is quite a turnaround with the Disney-Pixar relationship; what happened?

Ms. VIGELAND: Well, what happened is that Disney got a new CEO. Michael Eisner left the company last year, and his relationship with Jobs had become very tense to the point that almost exactly two years ago the animation giant announced it was cutting ties with Disney. Disney had been the sole distributor for Pixar on movies like, as you mentioned, Toy Story, Finding Nemo, The Incredibles; they split the costs of all those movies. All of a sudden you had other entertainment companies like Time Warner and Paramount looking at Pixar and saying, hey let's look at a partnership. But Eisner started running into trouble. You'll remember that big shareholder revolt. Eventually he was pressured to resign. He left last year, and now the company is headed by Robert Iger. He's worked very hard to repair the Pixar relationship, and we're now seeing the fruits of that in this potential buyout deal.

BRAND: And Tess, didn't Disney recently strike a deal with Apple Computer to offer TV shows on iPods?

Ms. VIGELAND: Right. Yeah, their ABC TV shows like Lost and Desperate Housewives are now available on iPod, and that was certainly a harbinger of an improved relationship. Job, as I mentioned, heads up Apple and Pixar, so he's really the key to all of this. And just about any analyst will tell you that Pixar is a catch. Its stock price is hovering around $60 a share. It made $141 million in its last fiscal year. The shares are actually up nine percent just since the start of the year, by the way, because of all the speculations surrounding a deal with Disney. So we'll have to see what happens with all this.

And today on Marketplace as we continue our live broadcasts from China, we're exploring what U.S. and Chinese entrepreneurs are teaching each other about business culture.

BRAND: Tess Vigeland of Public Radio's daily business show, Marketplace. And Marketplace is produced by American Public Media.

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