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January 24: The Phone Call That Saved Disney Animation
How Bob Iger's crazy idea and a whiteboard meeting with Steve Jobs led to the $7.4 billion Pixar deal
On January 24, 2006, Disney announced it would buy Pixar for $7.4 billion. A Hong Kong parade and one phone call convinced Bob Iger to make the deal happen.
Key Facts
Announcement Date
January 24, 2006
Deal Value
$7.4 billion in an all stock transaction
Steve Jobs Stake
Became Disney's largest individual shareholder at 7%
Jobs Pixar Ownership
Owned 49.65% of Pixar before the deal
John Lasseter Role
Named Chief Creative Officer of both Pixar and Disney Animation
Ed Catmull Role
President of both Pixar and Walt Disney Animation Studios
Original Pixar Purchase
Steve Jobs bought Pixar from Lucasfilm for $5 million in 1986
Iger Inspiration
A Hong Kong Disneyland parade with no recent Disney characters
Deal Finalized
May 5, 2006 after shareholder approval
Legacy Deals
Led to Disney acquiring Marvel, Star Wars, and Fox
Quick Stats
| Attribute | Value |
|---|---|
| Stock Exchange Ratio | 2.3 Disney shares for each Pixar share |
| Jobs Disney Stake Value | Approximately $3.9 billion |
| Disney Animation Losses | Lost money on animation for a full decade before the deal |
| Pixar Hit Films Pre Deal | Toy Story, Finding Nemo, The Incredibles, Cars |
| Iger Became CEO | October 2005, just months before pursuing the deal |
| Previous Disney CEO | Michael Eisner who clashed with Jobs over Pixar terms |
| Whiteboard Concerns | Jobs worried Disney culture would destroy Pixar creativity |
| Final Meeting Location | Goldman Sachs conference room in Los Angeles |
About January 24: The Phone Call That Saved Disney Animation
On January 24, 2006, Disney announced it would buy Pixar for $7.4 billion. Behind the deal was a parade in Hong Kong, a phone call about a crazy idea, and a whiteboard covered in reasons it should never happen. Steve Jobs had bought Pixar from Lucasfilm for just $5 million twenty years earlier.
A Parade With No Disney Characters
Bob Iger attended the opening of Hong Kong Disneyland in September 2005, just weeks after becoming Disney's CEO. He watched the parade and noticed something alarming. Every popular character had been created by Pixar, not Disney. The company had not produced a single animated hit on its own in over a decade. Iger flew home and ordered a financial review confirming Disney had lost money on animation for ten years.
The Crazy Idea Phone Call
Iger called Steve Jobs one afternoon and opened with six words: "Steve, I've got a crazy idea." Anyone who knew Jobs understood he could never resist hearing a crazy idea. Jobs listened and replied, "Well, it's not that crazy." The two men had already built trust that summer when Iger offered ABC shows for the iPod, a deal the previous CEO would never have considered.
The Whiteboard That Almost Killed the Deal
Jobs and Iger met at Apple headquarters and listed pros and cons on a whiteboard. Jobs scrawled his biggest fears in capital letters. He worried Disney's corporate culture would destroy Pixar's creativity and that the distraction would kill everything special about the studio. But the pros column kept growing until Jobs admitted both companies would be better together than apart.
No Slide Decks, Just Vision
The final meeting happened in a Goldman Sachs conference room in Los Angeles. Jobs, John Lasseter, and Ed Catmull sat across from Disney's board. There were no presentations or slide decks. Each Pixar leader simply shared their vision for the future. Disney agreed to protect Pixar's unique culture through a specific list of guarantees.
The Deal That Changed Hollywood Forever
The acquisition made Jobs Disney's largest individual shareholder with a 7% stake worth $3.9 billion. Lasseter became Chief Creative Officer of both studios. The deal gave Iger the blueprint to later acquire Marvel, Star Wars, and 20th Century Fox, reshaping the entertainment industry.
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Historical Analysis
⚡Historical Significance
- •
Disney had failed to produce a successful animated film on its own for over a decade before the Pixar deal.
- •
The acquisition reunited Disney with the creative talent that had revitalized computer animation, starting with Toy Story in 1995.
- •
Steve Jobs transformed a $5 million purchase from Lucasfilm into a $7.4 billion sale, one of the greatest investment returns in entertainment history.
📝Critical Reception
- •
Industry analysts initially questioned whether Disney was overpaying at $7.4 billion for a studio with a small film catalog.
- •
Bob Iger's decision to protect Pixar's independent culture proved critical to maintaining the studio's creative output.
- •
The deal is now widely regarded as one of the smartest acquisitions in entertainment history.
🌍Cultural Impact
- •
The merger revitalized Walt Disney Animation Studios, leading to hits like Frozen and Moana.
- •
John Lasseter's dual role brought Pixar's creative philosophy to Disney's struggling animation division.
- •
The deal created a blueprint for Disney's later acquisitions of Marvel, Lucasfilm, and 20th Century Fox.
- •
Steve Jobs becoming Disney's largest shareholder bridged the technology and entertainment industries.
Before & After
📅Before
Before the Pixar deal, Disney Animation had not produced a hit in over a decade and was hemorrhaging money. Former CEO Michael Eisner had alienated Steve Jobs and Pixar was preparing to leave the partnership entirely. Disney's animation legacy appeared to be fading.
🚀After
After acquiring Pixar, Disney revitalized its animation division and produced massive hits like Frozen and Moana. The deal made Steve Jobs Disney's largest shareholder and gave Bob Iger the confidence to acquire Marvel, Lucasfilm, and Fox, transforming Disney into the dominant entertainment conglomerate.
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Did You Know?
•
Bob Iger got the idea to buy Pixar while watching a parade at Hong Kong Disneyland with no recent Disney characters
•
Steve Jobs responded to Iger's pitch by saying it's not that crazy
•
Jobs wrote his fears about the deal in capital letters on a whiteboard at Apple headquarters
•
The final deal meeting had no slide decks because each Pixar leader simply shared their vision
•
Jobs bought Pixar for $5 million in 1986 and sold it to Disney for $7.4 billion twenty years later
⭐
Why It Still Matters Today
•
The Pixar acquisition established the template for every major Disney deal that followed including Marvel and Star Wars
•
Films produced under the merged studios have generated tens of billions in box office and merchandise revenue
•
The deal proved that protecting a creative company's culture during acquisition leads to better long term results
•
Bob Iger's approach to the Pixar deal is now taught in business schools as a model for creative industry mergers
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Test Your Knowledge
How much do you know? Take this quick quiz to find out!
1. What inspired Bob Iger to pursue buying Pixar?
2. How much did Steve Jobs originally pay for Pixar?
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Original Insights
•
Iger realized Disney needed Pixar while watching a Hong Kong Disneyland parade where every popular character was a Pixar creation
•
Steve Jobs scrawled his fears about the deal in capital letters on a whiteboard at Apple headquarters
•
The final deal meeting at Goldman Sachs had no slide decks because Pixar's leaders simply shared their vision
•
Jobs had previously refused to work with Disney under CEO Michael Eisner and publicly announced the partnership was ending
•
Steve Jobs later vouched for Disney when Iger approached Marvel, directly enabling that acquisition too
Frequently Asked Questions
Disney announced the acquisition of Pixar on January 24, 2006 in an all stock deal worth $7.4 billion. Shareholders approved the transaction and it was finalized on May 5, 2006. Steve Jobs became Disney's largest individual shareholder as part of the deal.
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Sources & References
This article is reviewed by the Pagefacts team.
Editorial Approach:
This article reveals how a parade at Hong Kong Disneyland, a phone call about a crazy idea, and a whiteboard full of fears led to the $7.4 billion deal that saved Disney Animation and reshaped Hollywood.
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