I'm sure you've heard about this by now. It's been all over the blogs and discussion boards. An article at The New York Times has spurned discussion over whether or not Disney's (NYSE: DIS) next Pixar film, Up, is shareholder-friendly. In other words, has it been designed so that it can make a lot of money? Or, is it instead just another self-satisfying exercise for its creators, shareholder value be damned?
Well, here's a quote that's gotten some play. Co-director of Up, Pete Docter, has stated that he doesn't really care about the money potential of a project. He said: "We make these films for ourselves. We're kind of selfish that way." Oh, gee, thanks a lot, you overpaid Pixar punk. Just out of curiosity, do you care at all about shareholders like myself who have held Disney for a really long time? Do you realize that the dividend received no raise this year?
Of course he does. And I'm sure he'd think I'm an idiot for complaining (media observer Michael Giltz certainly would think so, as he penned a piece supporting Docter et al.). After all, in his mind, so long as he satisfies himself, he figures that his movies will never fail. Maybe he's right, but I'm not sure I could ever be that arrogant.
Now, you can't fault the guy totally. He certainly takes his cues from head Pixar guy John Lasseter. The latter, according to the Times, apparently usually discounts the idea that one should think of a film's commercial potential when deciding whether or not to greenlight. Here's his quote: "Quality is the best business plan." Hey, I'm not down on quality, but I really don't think it's so awful to do some research on an idea to see what its chances might be from both a creative standpoint and a merchandising angle (incidentally, I do think that the lack of interest from merchandisers on Up that was mentioned in the article has more to do with the sour economy than anything else).
Where does CEO Bob Iger fit in all this? Now, he was quoted as saying "We seek to make great films first." In other words, he's supportive of his Pixar staff. Really, Bob? You seek to make great films first? You don't crunch any data and make modifications to your business model? You know, if I recall correctly, I think you do.
Iger came to the conclusion that Disney-branded family flicks tend to do better in the marketplace than, say, Touchstone-branded features that might not be so family-oriented. As a result, Iger felt it could be more economically ideal to reduce the quantity of projects released on an annual basis and instead focus capital on fewer concepts (see this old article). Iger, as well as competitors like Viacom (NYSE: VIA), Sony (NYSE: SNE), General Electric's (NYSE: GE) NBC Universal, and News Corp. (NYSE: NWS), still don't really get it. What they need to do is control compensation of talent, which tends to be very expensive and unfriendly to shareholders.
That's a subject for another day, however. The point is, Iger does look at the numbers, and I think he's being intellectually dishonest when he dismisses the idea that a public business can't mitigate risks when it comes to the movie industry. Although it's difficult to do, there are models and projections that can be made as to the potential profitability of a film if a certain concept is funded, especially when you take a look at the talent involved (talent obviously drives risk mitigation via foreign sales and the like).
And, obviously, the hedge funds that invest in Hollywood have their own models. Granted, though, many projections are most likely made in a macro sense (taking into account trends for ticket sales, inflation, DVD markets, etc.). I know that you can't necessarily look at specific plot details and predict if something is going to hit.
Still, it does irk me as a shareholder when I read stuff like this. One thing we all need to remember is that Disney paid billions for Pixar a few years back. Take a look at the stock price since the purchase and tell me if, so far, the move has been worth it.
And, by the way, even if you don't own Disney stock directly, it might be a large holding in one of your mutual funds. Believe me, a lot of people have exposure to the Mouse. I mean, come on, Lasseter and Docter make a ton of money. They walk around like they should feel no pressure. They seem to believe that the interest of shareholders should not matter, only that they should have fun doing whatever they want to do in Hollywood.
Then again, they won the lottery. They're richer than most of us will ever be. Seriously, I don't blame them for not caring. They're like CEOs. They're too overcompensated to care, too. Actually, they're better off than CEOs. The Pixar people are overpaid, and they don't have to deal with all the pressures of the business. Where do I sign up?
Disclosure: I own Disney, GE; positions can change without notice.











Reader Comments (Page 1 of 1)
4-07-2009 @ 11:12AM
Dan Barnett said...
Steve,
First, be thankful that your dividends weren't cut this year. I know this is a half-full/empty argument, but it could be worse. Ask BAC shareholders.
Next, movie makers are artists. So they make movies that are satisfying to their own goals. It is why Directors and Producers have conflicts. You quoting a Co-Director about profit is like quoting a Baseball Manager about player salaries. The Manager & the Director are both focused on having a "winner" not what that "winner" costs. You should instead look to the Producer or Corporate CEO to set a budget for any movie.
This is not the venue, nor am I qualified, to debate the issue of whether "Good Movies are Popular" or "Popular Movies are Good". But I would remind you that "Quality Sells" in just about any business.
If/when Up flops, I expect you to remind me of this post. I'll remind you if it wins a bunch of awards and is a success.
4-07-2009 @ 7:42PM
Frolin Ocariza said...
You strike me as the kind of guy who places far greater importance on stuffing your pocket with loads of money, than on the artistic merits of a film. If that's your philosophy in life, then I respect that (one man's garbage is another man's treasure, after all). I do have one suggestion to make, however: I suppose "making money" is an art in itself, so perhaps it would be better for you to use your "artistic skills" in this area by altering your investing practices rather than fume on a company that obviously cares more about the quality of their products (9 critically acclaimed movies in a row makes it obvious enough).
Do you honestly expect Pixar to ask themselves, "What can we do next to please the shareholders?" before making their films? This mentality, which several other animation companies seem to have upheld (and are still upholding) is proven to be one of the major causes of doom, quality-wise (DreamWorks is a prime example of this, although I'm beginning to sense that they're finally learning from their mistakes). Frankly speaking, if I were an animator, I would not compromise the artistic quality of my film just to rake in more profit (and yes, discarding a brilliant idea for a film - which is a category that "Up" seems to fall under judging by the trailers and promotional material - or altering a film from its superior version just to make more money is an example of such a compromise).
Money is a means to an end, not an end in itself.
4-08-2009 @ 11:18AM
Mike H. said...
PIXAR has not always been about marketing trends.
You can look at that quote by Pete Doctor and call him 'selfish,' but being a longtime PIXAR fanatic, I have to agree with John Lasseter, that 'quality is the best business plan.'
Of course, since I have no stake in the Walt Disney Company, I'll probably be discounted as a fanboy who doesn't realize how the business works.
Right now, PIXAR probably is the only place in the world that can do what they do: they can make films and not have to deal with excessive studio notes regarding the latest hip trends, or be forced into green-lighting unnecessary sequels like those during the days when Michael Eisner was in charge. Let's not forget that before he was ousted, Eisner had already planned what was seen as a lucrative but 'creatively-bankrupt' idea: to create sequels to all the films that PIXAR had success in. Plans were drawn up then for 'Toy Story 3,' 'Finding Nemo 2.'
What John Lasseter, Andrew Stanton, Brad Bird, and Pete Doctor have is the ability to do what so many artists only dream of doing. Many of us who have studied animation have seen enough studio train wrecks that occurred based on too much tampering (WB's 'Quest for Camelot' comes to mind, a long-forgotten film from a decade ago).
To some in the know for money, Dreamworks Animation is probably going to be seen as more lucrative. Dreamworks moreso prides themselves on the here-and-now. Their films contain myriad pop-culture references, enough flatulent humor to entertain the smallest of under-developed minds, hiring big-name voice talents to entice grown-ups who may be too hip for animation, as well as leaving almost every film open to the possibility of sequels, spin-offs, television specials, and more. Jeffrey Katzenberg several years ago outlined his lucrative plan for the studio's cash-cow, 'Shrek.' This franchise is set to run for 5 films, already has a 3-D studio attraction, a Holiday special, and a supposed spin-off coming for the character Puss-n-Boots.
The biggest debate I've seen regarding 'Up' is the character of Carl, who is an 'old man.' If this was a studio like Warner Bros, Universal, or Fox, the story meeting would end as soon as the pitch started: 'It's about this old man-" "Stop. Old people don't sell. Kids aren't going to see a film about their Grandpa. What, we're gonna advertise on Depends now?"
This debate of all things, reminds me of the conversation between Bob Parr and his boss Mr. Huff in 'The Incredibles.' Bob is looking at the viewpoint of 'the many,' while Mr. Huff is focused on 'the chosen few':
"We're supposed to help OUR PEOPLE!! Starting with our stockholders, Bob. Whose helping them out, huh!?"
4-08-2009 @ 1:23PM
hthwdwmgm13 said...
I'm so frustrated after reading this article I could scream! I'll try to approach this very sensitive subject with a little tact.
Steven, I understand that you and the shareholders simply want to milk the Disney company for all it's worth. The thing you're forgetting is that the Disney company is a staple of our country. It means MUCH more to MANY MANY people than your bottom line. Hundreds of thousands of people depend on Disney for income, everyone depends on the company to provide entertainment to a depressed race of humans.
After many years working for the Walt Disney company and watching its slow but steady decline in customer service, theme parks, movies, general merchandise, employee satisfaction, not to mention under average pay for the majority; to see Bob Iger take on a new approach that Michael would never have dreamed of is truly refreshing. Keep in mind if things were ran the way you want them to be Michael would have ruined the Disney / Pixar relationship several years ago.
To see Disney stand behind Pixar as the LAST creative post in the company with TRUE talent is wonderful. Yes Disney should make GREAT FILMS first. If they like their product, so will the public. If you let the creativity that Pixar has develop itself instead of trying to milk it like a dry cow you'll see much GREATER returns in your "investment."
It's people like yourself that are driving the company into a downward spiral. When I decided I had no choice but to leave the Disney Company, it wasn't because I wanted to or because I needed to do something different. It was because Michael Eisner had made it a miserable unbearable place to be. Michael did nothing but milk the company for himself, in the name of pleasing the shareholders.
After 18 years of milking the cow, it died. You and the other shareholders got what they deserved. The talent disappeared, was fired, or "restructured." The company lost its way and forgot what their roots were truly all about. Tinks pixie dust became saw dust, making people sick and bringing poverty to once flourishing areas like Central Florida and Anaheim California (to be exact). Products were made with lead paint in Chinese sweat shops, children paid nickels a day to make shirts that flew off the shelves at $25 each.
To be upset over allowing Disney to FINALLY once again blossom it's creativity, to give it the chance to create more of what truly matters, more of what allowed you to have those dividends all those years in the first place disgusts me. People like you make me sick. People like you have made America into the most greedy self righteous nation this world has ever endured.
If you're not happy with the direction of the company then cut all your ties with them, like I did. Either way, please don't step on the toes of many of my close personal friends who still rely on Disney for their livelihood.
It's apparent to me that Bob Iger, though making 28 Million Dollars for himself in 2008, realizes the current direction is not the right direction. Maybe a bad economy is what it is going to take for a company like Disney to realize it's really not about kissing shareholder ass, but rather appeasing it's customer base and taking care of those who spend money on the Disney product. Of course, you wouldn't understand this because you only want more NOW, and think of nothing but yourself.
When I go to Disneyland, I can't help but notice the burned out light bulbs, the $58 price tag over the words “made in china” at the Emporium, the ghost that no longer haunts, and the pirates that no longer sing, it's disenchanting. Surely instead you see dollar signs and think of how glad you are that money isn't being wasted on fixing such minute problems. The true problem is that everyone recognizes the problems, and slowly folks are losing their obsession with the mouse. Soon enough your way will bring Mickey to his grave.
Finally, I say to you, what business is it of yours to question the one man who profits the most from the well being of the company? I'm certain even Bob couldn't stand behind it if he felt there was nothing in it for him. Yes it disgusts me that Disney cut nearly 2000 jobs and Bob still brought home millions, but at least he realizes that bringing home another 28 million this year isn't as important as bringing home much more over the rest of his career with the mouse. So keep your pants on you greedy bastard, you'll be getting much more than you're worth. The business model that works for most companies, may not be the ideal situation for the most celebrated company on earth.
4-16-2009 @ 3:41AM
Kikkoman said...
Wow, what an insane post. First off, the nytimes piece is laden with statistical errors, misleading box office numbers (he uses only domestic grosses to prove his point), and totally out of context quotes. Secondly, how in the hell do you know how much people at Pixar make, and how exactly did you determine that they're somehow wildly overpaid and insanely rich? I can tell you that I personally know people who work at that studio, and they are far from overpaid. In fact, as a studio, Pixar offers average salaries compared to the industry, and animators get paid less than comparable ones at DreamWorks. They work there because they get a chance to work on special projects they can be proud of, and that's the brilliance of a place like Pixar. You attract talent by creating an inspiring place to work, and that in turn allows them to create inspiring movies, which in turn make money, which in turn makes stockholders money.
Disney's a big company, and for you to blame the tanking stock price on Pixar is disingenuous (new flash, the Dow was at 6600 a few weeks ago). In fact, look at the stock price 1 year after acquiring Pixar, and you'll see that it was up substantially. We're in a recession and people spend less in a recession, on everything, including movies and toys.
If you honestly think Pixar and its culture is a detriment to Disney stock, sell it. Nobody's forcing you to hold it. But for you to be so dense as to be irritated by the director of Pixar's next movie telling you he doesn't think about how many millions his movie is going to make...
What a waste of a blog.
4-20-2009 @ 9:01PM
bubawa32 said...
now i ask youwhy do you buy stocks
it'ts to make a profit=right not to just say you =own =disney==
6-21-2009 @ 6:10PM
Bobbajobba said...
You are a soulless dickwad. You sound like the type of spineless money-centered prick who would promote anal raping children if it meant you could make money from it.
Like the late great Bill Hicks said "you didn't even see children you just see dollars signs with pigtails."
I'm not religious, but today I'm going to convert to Christianity and pray for Jesus to make you spontaneously combust.