Story of Steve and Bob: How the Pixar/Disney Deal Happened
After a falling out with Michael Eisner. Steve Jobs and Pixar were bound to leave Disney after being screwed in a business deal. Until one man changed the course of the relationship.
Disney acquired Pixar back in 2006. It is now a purchase that isn’t talked about as much as the Marvel and Lucasfilm purchases. In all honesty the deal should be talked about. The deal has an iconic backstory and The Walt Disney Company wouldn’t be where it is today without Pixar.
At the time of the deal Bob Iger was a fairly new CEO. After Roy E. Disney and Stanley Gold staged the “Save Disney” campaign. Michael Eisner was officially replaced. Roy E. Disney and Stanley Gold reconciled with Disney and started to work with Bob Iger. That was the first broken relationship Mr. Iger fixed as the CEO of The Walt Disney Company.
The second relationship he had to fix was with Steve Jobs, the founder of Pixar and the genius behind Apple. Which wouldn’t be a difficult task considering when Iger got the nod to become Disney CEO he called a handful of people to share the news his family, his former boss, and Jobs. On the call Iger declared that a new era was beginning at Disney.
Former Disney CEO Michael Eisner and Steve Jobs’ relationship soured. CEO Bob Iger needed to get down to business with Jobs. Although their very first business encounter didn’t surround the deal for Pixar. It was a discussion on bringing ABC shows to iTunes. Jobs said he was thinking about the same thing.
The two would continue the business discussions on the company’s relationship of Pixar, and the possible iTunes deal. Steve Jobs came down to the Disney headquarters in Burbank one day. Jobs told Iger “I’m going to show you something that only people at Apple have seen because I trust you.” He ended up showing Iger the video iPod. Something that would work perfect with the iTunes deal. The magic would all happen once Iger officially became CEO. It took less than one week for the iTunes deal to come to fruition.
“That solidified the relationship big time, that we put together a deal within five days and that I was willing to challenge the status quo and take a shot at putting our content on a platform that hadn’t even launched,”- Bob Iger
The deal was shades of Bob Iger’s future dealmaking. Which includes acquiring Marvel, Lucasfilm, Maker Studios, and the assets of 21st Century Fox. Iger’s dealmaking on the ABC-iTunes deal helped further the talks with Pixar. Months later it was announced that Disney would be buying Pixar for $7.4 billion. On the day of the deal things would start to get interesting.
“Bob there something really important I have to tell you.”- Steve Jobs
To set the scene it was half an hour away from Bob Iger and Steve Jobs announcing the Pixar deal. They were sitting on a bench on the Pixar campus. Steve broke the news that his cancer was back. Only his wife and doctors knew about the return of his pancreatic cancer. Jobs’ decision to tell Iger put him in a risky position. The conversation that followed was Jobs notifying Iger that he has a 50/50 chance at living for five years. Jobs wanted to be alive for his eldest son Reed’s graduation. Jobs’ own kids didn’t even know the cancer was back at the time.
“Are you telling me this for any other reason than wanting to get it off your chest?” Bob Iger questioned.
Jobs replied , “I’m telling you because I’m giving you a chance to back out of the deal.” Steve would continue on “My kids don’t know. Not even the Apple board knows. Nobody knows, and you can’t tell anybody.”
This put Mr. Iger in a tricky situation. The press was already waiting for the announcement. He went through with the deal regardless of the obvious risks involved. Despite promising Steve Jobs not to tell anyone. Iger did spill to Disney’s vice president and general counsel Alan Braverman. The deal went through and Disney was looking to rebuild after the not-so fairy tale ending to the Disney Decade. Disney purchased Pixar for $7.4 billion.
To put that number in perspective. Disney paid more for Pixar than for Lucasfilm and Marvel. The deal would help Pixar maintain its identity. Plus would help Walt Disney Animation get new leadership in Ed Catmull and John Lasseter. Catmull would become President of Walt Disney Animation and Pixar, and John Lasseter would become Chief Creative Director of The Walt Disney Company (reporting to Disney CEO Bob Iger and Disney Director Emeritus Roy E. Disney).
To give more background on why this deal was so significant. The original three picture deal for Pixar was a 50/50 cut between Disney and Pixar. Pixar would handle the production and creation. Disney would take care of marketing and distribution. The relationship was reaching its breaking point when Toy Story 2 was suppose to be a direct-to-video sequel. A slap in the face to the creators. Another killer in the original deal was that Disney owned sequel and story rights. Which even if Pixar left Disney. The company could of went on to make more A Bug’s Life and Toy Story without the permission of Pixar.
Thankfully, the two sides came to agreement. It was a match made in heaven. Following the huge acquisition of Pixar. Steve Jobs became the largest shareholder in The Walt Disney Company. The story of Bob Iger and Steve Jobs would continue.
Pixar’s strict rules on quality over quantity was engrained into Walt Disney Animation. Instead of pumping out tons of average films. The studio focused its time to create true animated classics. Bob Iger and Steve Jobs did become close friends. Usually discussing business ideas outside of the boardroom. Like what Bob Iger mentioned to Fortune. “He never envisioned the app industry.” Not even the visionary who changed the way on how we live knew that his creation would become a phenomenon, and that we would use his creations every single day.
Steve and Bob would talk three to four times a week. When Google offered a seat to Bob Iger on their board. Steve told him to turn it down because it would make him “jealous.” Jobs didn’t want the Disney CEO getting closer to another rival tech company. So Iger had to turn down the invitation from Sergey Brin, Larry Page, and Eric Schmidt to join the Google board. Joining a rival tech giants board would’ve probably hurt his friendship with Jobs.
Iger paid frequent visits to Jobs in Cupertino. The friends enjoyed brainstorming new ideas together. Bob Iger was one of the few people on the planet to have special access to Jony Ive’s design lab. Jony Ive is the Chief Design Officer at Apple.
Bob Iger recalls “We talked about buying Yahoo together.” Which could’ve changed the media landscape of Apple and Disney as we know it. Things could of been different for the now Verizon owned Yahoo. Between Bob Iger’s excellent business sense and Steve Jobs’ wisdom. Yahoo could of became something truly special. This is one of those alternate history scenarios that sound really epic.
Sadly in 2011, five years after Jobs broke the news to Iger on a Pixar campus bench. Steve Jobs passed away from pancreatic cancer. Before he passed away Jobs requested that Iger would take his spot on the Apple board. Jobs’ widow Laurene Powell Jobs would become the largest shareholder in The Walt Disney Company.
That was the final chapter in the special friendship between Bob Iger and Steve Jobs. The business relationship that infused Disney with fresh animation. The overall friendship made Disney tech savvy. Steve Jobs final act in their friendship shows truly how much he trusted and admired Bob Iger. From the park bench revelation to the Yahoo discussion. The friendship was entertaining and powerful.
“We had a very, very productive relationship — both as friends and business partners.”- Disney CEO Bob Iger
When we look back at the history of The Walt Disney Company. The creative visionary Steve Jobs played a significant role. From building Pixar into the powerhouse it is today to his relationship with Disney CEO Bob Iger. You cannot cover Disney or Pixar history without mentioning Steve Jobs. As a geeky Disney historian, what intrigued me was what these “brainstorming” sessions were about. Eventually, we may find out the ideas that were tossed around but for now we can look back at this extraordinary friendship.
The Story of Steve and Bob: How the Pixar/Disney Deal Happened likes to acknowledge and thank Rick Tetzeli and Brent Schlender for their book Becoming Steve Jobs for the facts and stories that were incorporated into this article.
Zach Perilstein is the Editor-in-Chief at the Boardwalk Times.