http://www.nytimes.com/2006/01/20/business/media/20pixar.html?th&emc=th January 20, 2006 Deal Could Offer New Disney Role for Apple Chief By LAURA M. HOLSON and JOHN MARKOFF LOS ANGELES, Jan. 19 - Steven P. Jobs could be considered the Walt Disney of his era, breathing new life into animated movies with hits like "The Incredibles" and "Toy Story," and reinventing Apple Computer as a media darling with its popular iPod. Now Mr. Jobs is in negotiations to join forces with the Walt Disney Company itself. A deal would involve the sale of Mr. Jobs's Pixar Animation Studios for more than $6.8 billion to Disney, according to three people apprised of the negotiations. The sale, whose terms are still being negotiated, would make Mr. Jobs a major shareholder and director at Disney, which has been trying to find its footing in the changing world of animation. And the merger could give Mr. Jobs a pivotal role, if he wants one, in helping shape the convergence of new media and old at Disney. "He's one of the handful of people who has shown the ability to guide both technology and entertainment companies and that might be quite useful to Disney," said Bran Ferren, a former Disney Studios Designer and technologist, who is now co-chairman of Applied Minds, a technology consulting firm based in Glendale, Calif. "What he has that is rare is taste, and that's a very valuable commodity if you can focus it and harness it." But the move is also potentially risky for Mr. Jobs, because it ties his fortunes to an old media company that, like other entertainment giants, is trying to navigate a difficult course these days. For Disney, the acquisition would help by lifting the company's lagging computer animation ambitions. But it would also bring on board a visionary who has already done what Robert A. Iger, Disney's chief executive, has been trying to do in his first year running the company - be a major player in the entertainment world while using technological advances to distribute movies, music and TV shows through multiple sources. "Investors may hope that Mr. Jobs's successful track record at Pixar and Apple will rub off more broadly on Disney," said Richard Greenfield, a media analyst at Pali Research in New York. Disney's board is expected to meet this weekend to discuss whether it wants to proceed with a merger, according to the people apprised of the talks. Two of those people said Disney and Pixar executives had not agreed on a price, and the deal could still be scrapped. The merger discussions were first reported on Thursday by The Wall Street Journal. But if the two sides are able to agree on a price, something that those involved say is likely, Mr. Iger will recommend to the board that Disney buy Pixar. An announcement could come early next week. Many of the terms have been worked out. The new animation division would be overseen by John Lasseter, Pixar's chief creative officer and a former Disney animator, who would work with animators at Pixar's headquarters in Emeryville, Calif., and at Disney in Burbank. It is not yet clear if there would be layoffs, although they would be likely. While Pixar under Mr. Lasseter has thrived, Disney's animation division has floundered, burdened by its past and its inability to adapt to an environment where pens and paper are being replaced by computers. Analysts say a Disney-Pixar combination would be successful only if Pixar took the reins of animation at Disney, because the cultures are vastly different. "John Lasseter's role in any new incarnation of Pixar will be crucial," wrote Katherine Styponias of Prudential Equity. Mr. Lasseter's involvement at Disney may end up contributing more to the merger's success than Mr. Jobs's, since it is likely that Mr. Jobs sees more of a future in Silicon Valley than in Hollywood. Mr. Jobs, said friends and associates, deeply believes the counterculture worldview that he articulated in Apple's "Think Different" advertising campaign. A child of the 60's counterculture, even though he arrived at the tail end of the movement, Mr. Jobs has told reporters that he has never felt close to the Hollywood moguls he does deals with. In his commencement speech at Stanford last year, after a bout with pancreatic cancer, Mr. Jobs told the graduating class: "Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice." If he decides to sell Pixar - and Disney agrees to buy it - it is likely Mr. Jobs would be doing so because his inner voice remains closest to Silicon Valley. And there would be a lot of money in it for him. His 50.6 percent stake in Pixar would give him roughly $3.4 billion worth of Disney stock if the deal is priced at $6.8 billion, making him the biggest individual Disney shareholder. Those who are close to Mr. Jobs have said that despite his success in Hollywood and with animation, his heart has remained with Apple Computer, the quirky company that has established a loyal user base over almost three decades. Moreover, executives in the consumer electronics industry widely believe that Mr. Jobs is now positioning the company to repeat the iPod phenomenon in two markets: Internet TV and wireless smart phones. These projects, which would extend Mr. Jobs's computer base into new industries that he could potentially transform as thoroughly as he has the music industry, may not both be introduced this year. Mr. Iger began mulling a potential acquisition of Pixar last November when he concluded that distributing Pixar's movies was not of much value to Disney, according to a person who has discussed the matter with Mr. Iger. At the time, Mr. Iger and Mr. Jobs were talking about whether Disney would extend its agreement to distribute Pixar films past 2006. (The two are in a joint venture, which ends with the release of Pixar's coming "Cars.") Mr. Iger, according to one Disney investor, was in a difficult spot. Since being named chief executive last year, he had told Wall Street that his No. 1 priority was reinvigorating Disney's animation business. But in saying so, said one Disney investor, "Disney had boxed themselves into a corner." Pixar, in recent years, has been a steady supplier of new characters and stories for Disney, which were adapted for use in Disney's theme parks and consumer products. Mr. Iger did not make Mr. Jobs an offer then. Price was an issue: Mr. Jobs wanted far more than $60 a share. Disney, for its part, wanted to see how its first foray into computer animation, "Chicken Little," would fare when it was released in November. (It performed well, but not as well as Pixar movies.) "We suspect Disney was increasingly concerned with its upcoming internally generated animated films," said Mr. Greenfield of Pali Research. Indeed, last year Disney postponed one of the four computer-animated films it was betting on, "Rapunzel Unbraided." In December, Mr. Iger and Disney's investment bankers started to think about buying a stake in Pixar instead. But by January, the person who talked with Mr. Iger said, the Disney chief was anxious to acquire all of Pixar. Wall Street reacted positively to news of a potential merger. On Thursday shares of Pixar increased 2.8 percent, to close at $58.87. Disney shares rose 4 percent, to $26.24. "Perhaps Steve is selling at the top of the market," Mr. Greenfield said. "He is finally ready to take a victory lap at what has become a successful company." Laura M. Holson reported from Los Angeles for this article and John Markoff from San Francisco. Andrew Ross Sorkin contributed reporting from New York. ---------------------------------------------------------------------- You can UNSUBSCRIBE from the OpenDTV list in two ways: - Using the UNSUBSCRIBE command in your user configuration settings at FreeLists.org - By sending a message to: opendtv-request@xxxxxxxxxxxxx with the word unsubscribe in the subject line.