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Does Disney Still Have A Friend In Pixar?

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Is an incremental $300mm in revenue and under $200mm in net income a year worth $7.4bn, and is this performance even sustainable? That’s the question many analysts are asking about Disney and Pixar after Ratatouille raked in (a mere?) $47mm on opening weekend.
The movie debuted #1 in domestic box office and faced competition from Bruce Willis’ titanium-enhanced musculoskeletal system (if you catch Live Free or Die Hard you’ll know what I’m talking about) and Steve Carell’s giant career mistake, but still turned out to be Pixar’s worst opening weekend in 9 years. Also, at a projected domestic gross of under $200mm, Ratatouille will be the 3rd straight Pixar movie to fall short of its predecessor.
Analysts like Merrill’s Jessica Rief Cohen were bullish on Disney’s post-Pixar prospects at the time of the acquisition in January 2006, even though many thought the move wouldn’t be accretive until 2008. In retrospect, almost everyone agrees that the Pixar deal was pricey, and that Jobs cashed out at Pixar’s peak valuation, but there are lingering disagreements as to whether Pixar amounts to a net positive as a Disney brand.
Seeking Alpha concedes that the Pixar deal was expensive, but that the unit focuses the mouse’s media division more on content and less on distribution. The argument here is that it’s much tougher for a giant like Disney to remain on the forefront of ever changing distribution methods, but valuable content is indispensable regardless of how it’s delivered to the masses. The intellectual property/content business also takes maximum advantage of Disney’s scale.
Personally, we think that if movies like Ratatouille save us from Shrek 4: Attack of the Surfing Penguins, or at least inspire other studios to match Pixar’s quality, Disney did the right thing by not upsetting its winning combination with Pixar. Disney also gets to reaffirm its status as the industry benchmark for animation, and a content provider's image is a huge asset, however intangible.
On Disney's Pixar Acquisition: Pricey, But Worth It [Seeking Alpha]
Disney's (DIS) Pixar Purchase: Never Give A Sucker An Even Break [24/7 Wall St]