News Analysis: Jobs at Disney would herald new role for content providers
http://www.iht.com/articles/2006/01/23/business/pixar.php
http://www.nytimes.com/2006/01/23/business/media/23jobs.html
News Analysis: Jobs at Disney would herald new role for content providers
By Richard Siklos The New York TimesMONDAY, JANUARY 23, 2006
NEW YORK The calculus of the Walt Disney buying Pixar Animation Studios is, on its face, simple: Big media conglomerate plus vaunted computer animation studio plus closer ties with Steve Jobs, the maverick Pixar founder, equals potential powerhouse.
But because Jobs's other job is chairman and chief executive of Apple Computer, a deal also raises the possibility of a warmer relationship between Disney and Apple if he plays an active role at the company. Although there would be no direct equity relationship between Apple and Disney, Jobs would be the largest individual shareholder in both and would be likely to hold at least a board seat at Disney.
In the complex and sometimes querulous dynamic between media and technology companies, such a move would no doubt raise questions about the ripples those ties could cause.
For example, would Jobs view Disney as the preferred content supplier for future generations of Apple iPods and other hardware that distribute and play media products like songs and TV shows? And would Disney's media rivals be less inclined to do business with Apple as it introduced new services because they would be abetting a competitor?
Similarly, will technology companies vying with Apple to develop new products for media consumption be less inclined to work with Disney lest their best ideas find their way from Disney's headquarters to Apple's campus?
Jobs, Pixar and Disney have not commented since reports of a prospective deal emerged last week. If a price and other details can be worked out, Disney's board could make a formal deal as soon as Monday. But several veteran entertainment executives and analysts, asked these questions, could agree only that the deal would change the media landscape.
"I do think that people would be a bit more leery to work with Apple" if the deal goes ahead, said Michael Nathanson, a media analyst with Sanford C. Bernstein. "A lot of these questions are about perception, and this is a very ego-driven industry."
In particular, Nathanson and others noted, there was the widespread sentiment within the industry that the success of the iPod had benefited Apple and Jobs far more than it had the music labels, which do not share in the lucrative sales of iPod units. Closer ties between Jobs and Disney could add a layer of contention for Apple. "If you're in bed with Disney, are you going to be free to deal with Warners and all the other guys?" asked Joe Bonner, an analyst with Argus Research in New York. "It does create an issue."
Jeffrey Bewkes, the president and chief operating officer of Time Warner, which owns the Warner Brothers studio, said Friday that he did not think a Disney-Pixar union would change his company's relations with either Disney or Apple. He and other media executives said they would view the union as just another of the many examples in which the many-tentacled media conglomerates compete against one another in one area while working together in others.
Barry Diller, the chairman and chief executive of IAC/InterActiveCorp, agreed that relationships would not change.
"Once you're inside this keiretsu," he said, comparing the American media industry with the Japanese industrial model of interlocking ownerships and interests, "they are involved in so many businesses where in one area they are competitive and in another they are supplicants."
For example, News Corp. is a major supplier of television and film programs and channels to cable networks but competes aggressively with cable through its controlling interest in DirecTV, the satellite broadcaster. Sony has found itself as both a partner and an archrival of Toshiba: Each has collaborated with IBM on a new processing chip, yet they are in the midst of a struggle over dueling high-definition DVD formats.
"With every company, you walk this line," Howard Stringer, Sony's chairman, said recently. "Who could we offend that we won't be doing business with tomorrow?"
Of course, tensions exist between branches of the companies themselves: Sony's music and film businesses are pouring resources into technologies to protect their material from being copied illegally, while its consumer electronics business must compete with rival products that may make unauthorized sharing and downloading easier.
At Time Warner, critics have suggested that the company's America Online arm has been hampered by the company's ownership of cable systems that compete with AOL for high-speed Internet and, more recently, telephone customers.
In the case of Jobs and Disney, tensions over Apple's strategy affected relations in recent years. Four years ago, the former Disney chief executive, Michael Eisner, publicly singled out a "Rip, Mix, Burn" marketing campaign by Apple as an example of efforts to profit from the theft of copyrighted material.
Eisner was succeeded last year by Robert Iger, who has made rebuilding relations with Jobs and Pixar a priority and has advocated that his company pursue new digital business models across a range of technologies with a variety of partners.
Disney has close links with Jobs, both as the distributor of Pixar hits like "Toy Story" and "The Incredibles," and, under Iger's directive, by making hits from ABC the first prime-time fare to be offered for purchase and viewing on a video iPod.
Thus, the biggest question about what a Pixar acquisition would mean for the media industry broadly rests more on the question of how big a role Jobs envisions for himself at Disney.
Even if his position is a relatively passive one - similar, say, to Ted Turner's influence at Time Warner after he sold his Turner Broadcasting System to the company a decade ago - just the fact that Jobs will have such a large personal investment in Disney means he will become more invested in a future where content companies can share in the spoils alongside device makers like Apple.
