Rewarding as such a deal could be for Jobs, it may be even more valuable to Disney. Chicken Little aside, the company's animation division is a shell of itself in its Lion King glory years, having been eclipsed by Pixar and DreamWorks Animation SKG, producer of the Shrek franchise. Until recently, Disney and Pixar had a tight relationship; Pixar made the movies, which were co-financed and distributed by Disney. The partnership has been hugely profitable for both sides, generating over $3 billion in box office revenues over 12 years. Yet the relationship slated to end this year had shown signs of fraying as Jobs negotiated a new contract with former Disney boss Michael Eisner. Talks broke down in acrimony last February and fears that the partnership would be permanently ruined gave ammunition to dissident Disney shareholders demanding that Eisner quitwhich he did last year.
His replacement, Robert Iger, has been eager to patch things up. Last October, Iger and Jobs shared a stage at the California Theater in San Jose, where Jobs introduced the video iPod and said content would be available from Disney's ABC television network. Iger joked about striking a deal with Apple, not Pixar, but their warm handshake suggested they were putting any bad blood behind them.
If Jobs is looking for more of a presence in Hollywood he doesn't need Disney as his vehicle, of course. He's rapidly turning Apple into an entertainment company as his iTunes music store offers an expanding range of music videos, TV shows and movie trailers. Almost every week brings an announcement of a new content deal, the latest being with NBC Universal. Media companies, for their part, are fawning over Apple. NBC's The Office drew its largest-ever audience last week in the 18-to-49-year-old demographic, which the network attributed to interest sparked by users downloading previous episodes on iTunes.
The question for moviegoers is whether Pixar will keep cranking out hits should it be swallowed by Disney. Pixar's ranks include a number of Disney alumni, including the creative duo credited with many of its hits, John Lasseter, and Sarah McArthur, vice president of production, who joined Pixar in 1997 after a stint at Disney that included creating such blockbusters as Beauty and the Beast and The Lion King. Will such money-spinning creative talents chafe under Disney's more restrictive corporate culture? No one knows if they'd even stick around. Jobs, for his part, has criticized Disney's creative and financial practices, accusing the company of trying to squeeze the last penny out of hit franchises, regardless of quality. "We feel sick about Disney doing sequels," he said on a conference call with investors last year. "If you look at the quality of their sequels, such as Lion King 1 1/2... it's pretty embarrassing." Should he join the Mouse House, you can be sure he'll be whistling a different tune.