Next Disney CEO, Iger, has task of smoothing ruffled feathers
Veteran expected to seek Pixar, NFL deals, placate allies Eisner alienated
Yesterday, the day after he was named the next chief executive of Walt Disney Co., Iger said a top priority was to reach out to the Pixar Animation Studios chief in hopes of repairing a fractured partnership that over the years produced such blockbusters as The Incredibles, Finding Nemo and the Toy Story films.
When Iger takes over for departing CEO Michael Eisner on Oct. 1, it will fall to the diplomatic and low-key former network television executive to mend frayed relationships with key allies who clashed with the mercurial Eisner.
Analysts agreed that it was too late to prevent Disney's pending breakup with Harvey and Bob Weinstein, co-founders of its Miramax Films division and the men behind such films as Chicago and Shakespeare in Love. A settlement ending their union is expected within the month.
But Iger has an opportunity, analysts said, to breathe new life into Disney's relationships with Pixar as well as the National Football League, whose games Disney airs on its ABC and ESPN networks.
Iger's conciliatory style is expected to serve him well. "To know Bob is to like him," said Jessica Reif Cohen, a media analyst with Merrill Lynch & Co. "But he's got his challenges."
Chief among them, analysts said, will be luring Jobs back to the bargaining table.
Iger said that as much as he valued Pixar, salvaging the relationship required striking "the right deal" for Disney shareholders.
Over the years, Pixar's movies have contributed more than half of Disney's profit from films. Pixar and Disney currently split profits and production costs under a multipicture deal that expires next year with the release of Cars.
Jobs wants to change that and is using Pixar's success to leverage a better deal. He has proposed paying Disney a straight distribution fee, much as director George Lucas does with Twentieth Century Fox for releasing his Star Wars movies.
After repeatedly battling with Eisner, Jobs a year ago halted talks that could have extended the alliance with Disney. While haggling over business terms, Jobs and Eisner have traded barbs in public.
Underscoring how personal the feud has become, Jobs has made it clear to people inside and outside Pixar that he would be willing to resume negotiations once Eisner is gone.
Jobs declined to comment yesterday.
For his part, Iger has publicly given mixed signals on whether the Pixar deal can be saved. Last fall, he told a conference in London: "It would be nice to continue the relationship to infinity, but I think we've outgrown each other."
Some analysts say the two sides are so far apart on basic financial terms that good will alone won't be enough to bring the parties together.
"The chance that Pixar will go with Disney is still relatively slim," said Tuna Amobi, a media analyst with Standard & Poor's.
Responding to speculation of resumed talks, investors pushed Pixar's stock price up nearly $2 to $90.96. Disney's shares only inched up 43 cents on New York Stock Exchange to $28.02.
In the case of the NFL, Disney has exclusive rights through October. The NFL's three other major television partners - Fox, CBS and DirecTV - all renewed their contracts with the league late last year, agreeing to stiff rate increases of an average of more than 25 percent a year over the six-year contract.
Analysts and industry insiders say the NFL's rate will only increase as the expiration date of the current contract at the end of the 2005-2006 season, draws near.
Disney has said that it would not begin serious talks with the NFL until after the Super Bowl in February. Iger declined to comment on the talks.
Sealing a new NFL deal presents problems for Iger.
Investors could accuse Disney of paying too high a price for renewing Monday Night Football for ABC and the Sunday night package for ESPN. And losing either franchise could upset any number of constituents, from investors and broadcast station affiliates to cable operators and TV viewers.
In the case of the ABC contract, the NFL is looking to charge more than $1 billion a year, up from about $550 million today, sources said.
The trouble is, Iger needs ABC to be profitable to meet growth projections Disney has promised Wall Street. Disney is losing an estimated $150 million on its current Monday Night Football contract, and would lose money on any contract of more than $482 million a year, according to Reif Cohen of Merrill Lynch.
As a result, Disney will probably shift Monday Night Football to ESPN and possibly give up the Sunday night ESPN package, according to sources.
The Los Angeles Times is a Tribune Publishing newspaper.