Disney buying Pixar for $7.4 billion

The deal received the blessing of Roy E. Disney, nephew of company founder Walt Disney and a former board member who once also oversaw animation at the company.

Roy Disney and former board member Stanley Gold led a shareholder revolt against the company in part over what they saw as a deterioration of the relationship between Pixar and Disney under the reign of Eisner.

“Animation has always been the heart and soul of the Walt Disney Company and it is wonderful to see Bob Iger and the company embrace that heritage by bringing the outstanding animation talent of the Pixar team back into the fold,” Roy Disney said in a statement.

With Pixar, Disney gains a company that has produced a long-running string of animated blockbusters. Iger wants to strengthen Disney’s animated features, the hallmark of the company since its founding and a steady source of characters for Disney’s theme parks and other units.

Pixar has served as Disney’s de facto animation unit for a decade. Two Pixar movies, “Finding Nemo” and “The Incredibles,” have won Academy Awards for best animated feature film.

Pixar films also have been a financial windfall for Disney, which receives 60 percent of the profits.

By contrast, Disney’s own animation unit has struggled, producing some modest successes, such as 2002’s “Lilo & Stitch,” and many flops, including “Treasure Planet” and “Home on the Range.”

Its first fully computer-animated effort, “Chicken Little,” grossed more than $100 million domestically since its release last year and will likely be profitable. But that figure falls well short of the more than $200 million domestic gross of 2004’s “The Incredibles.”

Pixar also benefits from the deal by cashing in at the top of its game, before it produces the inevitable box office disappointment, Vogel said.

“Eventually, we know that after six huge hits, there would be a film that would come along that would be less good than what they had,” Vogel said. “This was a good time to broaden the horizon and the canvas. I think Steve Jobs is very smart about knowing when to hold them and when to fold.”

With Jobs, Disney also tightens its link with Apple Computer, the innovative technology company behind music and video iPods.

Jobs could help Iger push his plans to marry films, TV shows, video games and other content to computers, iPods, handheld game consoles and even cell phones.

Disney and Pixar had been discussing an extension of their distribution deal since early 2003. Last year, analysts said striking that agreement was Iger’s top priority.

The talks stalled in 2004 after Pixar demanded that it own 100 percent of all future films and pay Disney a straight distribution fee, similar to the deal “Star Wars” creator George Lucas had with Twentieth Century Fox.

Pixar also wanted ownership of all the films already produced as well as two that were remaining under the existing agreement at the time.

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