With Tuesday's agreement to buy Pixar Animation Studios, Walt Disney Co. intends to resurrect its ailing animation business -- the hallmark of its last -- while ensuring its place in Hollywood's digital future.
The $7.4-billion all-stock deal for the computer animation pioneer aims to reestablish the creative and technological innovation that began with founder Walt Disney some 80 years ago.
"As I considered all the different possibilities of how to return Disney animation to greatness, it was clear to me that maintaining a relationship with Pixar was essential," Disney Chief Executive Bob Iger said.
At the same time, however, Disney needs to make sure that as a media giant it doesn't smother Pixar's creative spirit.
The deal moves Iger a step closer to cementing his legacy as the man who brought Disney into the Digital Age. By forging the alliance with Pixar Chairman Steve Jobs, Disney is joined at the hip with one of technology's most innovative executives.
It was Jobs' Apple Computer Inc. that developed the iTunes online store that changed the way many people buy music by popularizing portable digital downloads. In October, Jobs and Iger announced that Apple's newest iPod player -- a video version -- would debut with hit shows such as "Desperate Housewives" from Disney's ABC network.
The deal would vault Jobs into the upper tier of media figures. Already one of the most influential executives in technology, Jobs would be Disney's single largest shareholder, with a 7% stake worth about $3.5 billion. Jobs also would become a director of the Burbank entertainment giant.
Jobs said Tuesday that as he pondered Pixar's future, he saw "a fork in the road" before he decided to sell to Disney. Jobs has controlled Pixar for 20 years, paying just $10 million in 1986 to buy the operation from director George Lucas.
"After a lot of soul searching and thinking, and of course getting to know Bob, this looked to be the most exciting path to Pixar's future," Jobs said.
For Disney, owning Pixar not only would help fatten Disney's box-office coffers, but also would provide the studio with new characters to freshen its theme parks, consumer products and cable networks.
After a successful 15-year partnership in which Disney marketed and distributed such Pixar blockbusters as "The Incredibles," "Finding Nemo" and the "Toy Story" films, the two companies nearly parted ways two years ago after Jobs clashed repeatedly with Iger's predecessor, Michael Eisner.
