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Yesterday I half-heartedly went to see the Pixar / Disney (NYSE: DIS) movie "Ratatouille" with my 11-year-old son. To my great surprise it was fantastic. The story, quality of animation and superb writing were cleverly executed. If Pixar continues to produce this highly imaginative level of animation then the first class Walt Disney tradition lives on.
It may appear that the entertainment industry is being diluted, fragmented and slowly surrendering to the Internet via vast amounts of "product" created by amateurs and wannabees, but this is deceiving. The Web has allowed for the immediate distribution of a diverse range of ideas in new media such as YouTube (Google Inc. (NASDAQ: GOOG). It has created a platform to launch what otherwise might be undiscovered talent. But we deceive ourselves if we think this will ever be a substitute for the top talent assembled by Pixar / Disney.
For example, we know that there are more people playing basketball then ever before and they have greater skills too. However, we still pay top dollar and flock to see Kobe and Shaq, even though they now play on opposite coasts. We want to see the best. While the web has proven to be informative, entertaining and democratizing it is not Hollywood. While it has exposed us to new ideas, (and garbage) and provided opportunity to millions of people and new artists, for the most part it is a new delivery system and a new marketing platform. It is not Disney or Dreamworks and it never will be.
Disney's acquisition of Pixar was a very expensive and in some ways risky proposition, but top talent does not come cheap. Last year Smush Parker played along side Kobe Bryant. He is a very good basketball player who earned an unconscionable NBA salary nearing $1 million. Unfortunately compared with Bryant, very good looks amateurish. Very good when held up to the standard of world class superiority looks terrible. The world knows this and pays up; Bryant made 30 times as much as Parker for good reason. Disney overpaid on a given day for something unique for good reason.
I am not an advocate of overpaying for a companies stock but I do believe there are times when a company might be forced to over pay for unique talent to create value. It appears Disney has done so with Pixar.
Historically in times of strife movie theaters remained filled, a refuge from a reality too hard to face. If the stock market drops in value you might find entertainment stocks a place of refuge too. I wonder if I could bring this full circle by writing a screenplay about the stock market ...hmm. Let me see...rat's preparing gourmet food....monkey's stock picking beats Wall Street traders...hmm.
Those of you who are new to BloggingStocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.
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Reader Comments (Page 1 of 1)
7-27-2007 @ 10:20PM
kid cognac said...
Let's face it... culinary arts, cooking shows and competitions in the media have brought the food and beverage industry into the spotlight. A lot more kids are exposed to this industry than ever before. Pair this with a well done animated flick and I think (hope) it will be a winning combo ( like deep-fried Twinkes at the state fairs!)