Shortly after Robert Iger started as CEO of the Walt Disney Company in late 2005, he focused his efforts toward Pixar, the animation studio with which Disney had partnered and functioned from 1991 and had a great role in the creation of the famous film including Toy Story and Finding Nemo. Disney's personal animated film division had been facing decreased popularity after Jeffrey Katzenberg resigned to formcompeting studio DreamWorks and the business grew to be dependent on income from its collaboration with Pixar to sustain performance. With the Co- Production contract signed between the two studios ending in 2006, Pixar was hoping to discuss and convince Disney of better terms with some othersupplying accomplice. Could Disney face the risk of letting them go?
Which is greater: the value of Pixar and Disney in an exclusive relationship or the sum of the value that each could create if they operated independently of one another or were allowed to form relationships with other companies? Why?
Assuming that Pixar and Disney are more valuable in an exclusive relationship, can that value be realized through a new contract? Or is common ownership required (i.e., must Disney acquire Pixar?)
If Disney does acquire Pixar, how should Bob Iger and his team organize and manage the combined entity? What challenges do you foresee and how would you meet them?