Catmull flew down to Burbank for a one-on-one dinner with Iger. But Lasseter, who was particularly wary, asked Iger to fly up and have dinner with him at his home. So Iger flew to Charles M. Schulz–Sonoma County Airport in Santa Rosa, where Lasseter picked him up and drove him to his home near the wine country town of Glen Ellen. “We sat and talked until the wee hours,” Lasseter remembers. “We talked about the importance of Disney Animation, the importance of bringing it back. I told him all I could see was the risk of dividing my time, and he said, ‘Well, I look at it the other way. I see it as giving you a bigger canvas because I think you can handle it.’
“Then he said, ‘The number one thing is, I don’t want to change Pixar,’ ” Lasseter recalls. “He said, ‘I was at ABC for two acquisitions. The first one, with Capital Cities, was great. I learned a lot from Tom Murphy, the Cap Cities CEO. And then Disney bought Cap Cities/ABC, and everything about it was bad.’ ”
Just as Steve had, Lasseter and Catmull grew comfortable with Iger, and as they talked over the deal with Steve they came to see other benefits. Being part of Disney would mean that Pixar would be protected in ways it couldn’t as a stand-alone public company. “Our board,” says Lasseter, “did amazing due diligence. They told us that having one hit per year for a decade going forward was already built in to our valuation. And since the shareholders, whom the board represented, would always want growth, eventually that one-movie-per-year model was not going to cut it. We would have to start making television shows, or many more movies a year.” It did seem, he decided, that the best way for Pixar to cement into place the way of life it loved was to sell itself to the company it had battled for so long.
Iger did his own personal due diligence, of course. One day he flew up to Pixar, for a series of one-on-one meetings with the directors of Pixar’s next few movies. “We had only had one movie, Cars, left to distribute,” he recalls, “and people within Disney had spent months pooh-poohing the idea for the next movie, about a rat in a restaurant in Paris. So I go up to Emeryville, and for six or seven hours the directors pitch me every single upcoming movie. I see a couple of movies that they didn’t wind up making [one called Newt, and the other an unnamed Lee Unkrich project about dogs in a New York City apartment building]. I also see work in progress from Ratatouille, Up, Wall-E. Disney hadn’t seen any of this, and I went back to my guys—including Alan Braverman, the general counsel—and told them that it wasn’t even close. The richness of the creativity, the quality of the people, was so obvious. We had to do this deal.”
With Lasseter and Catmull feeling more comfortable, Steve homed in on the final details of a deal. He didn’t overreach by demanding an exorbitant premium over Pixar’s market value. Believing that Pixar might someday be purchased, investors had already overvalued Pixar with a very high market capitalization of around $5.9 billion. Steve and Iger settled on a price of $7.4 billion. They agreed that Pixar and Disney would get equal billing on every film. They even agreed to a side deal that Catmull and Lasseter had proposed: To ensure that Disney wouldn’t change the culture of Pixar, Iger agreed that his company would never change or cancel any of seventy-five items on a list of Pixar cultural touchstones that Lasseter drew up. The list protected the cereal bar in the dining room, the annual paper airplane contest, the employee car show, the right of animators to do whatever they like to their office spaces, and so on.
Iger knew that the price he had paid could not be justified by any conventional reasoning. “There wasn’t an analysis in the world that would make the deal pencil out,” he says. But he argued to the Disney board of directors that the deal had more potential than could be captured by the numbers: if Catmull and Lasseter could revive Disney Animation, and if both studios, rather than Pixar alone, were creating memorable characters, the ancillary revenue from theme parks, merchandise, and other divisions could soar. “All the way back to Walt’s time,” says Iger, “Disney has been most successful in terms of its bottom line and its reputation when animation has been strong.”
Iger also knew that many so-called experts thought he was nuts for inviting Steve Jobs to join the board of directors as Disney’s biggest shareholder. “Many people who were deeply involved in the process told me that bringing Steve in as the biggest shareholder was the dumbest thing I could do,” Iger remembers. “I won’t name names, but one of the investment bankers we used told me that. He said, ‘You’re a brand-new CEO who’s going to try to run Disney. Jobs is going to be in your life at a level that will drive you crazy. You don’t have the clout to fight that. If you want to run this company in an unfettered way, don’t do this.’ ” Iger trusted his gut. “Steve and I had talked about the fact that he was going to take all stock, and hold it. I knew there was some risk in letting him into the tent. On the other hand, I had a good relationship with him, and I felt I could benefit from having Steve Jobs around. And if for some reason it didn’t work out for me, Disney would still have Steve Jobs and that would be a great thing.”
Like many others, Bill Gates was astounded by what Steve had been able to negotiate. “When he has the upper hand, he’s good at using time,” says Gates. “You know, he would wait people out. Just look at how much of the resulting company ends up being owned by this fairly small—and yes, very high tech, very brilliant—animation studio. They end up owning a very substantial percentage of the entire Disney-ABC-ESPN entity. It’s owned by a little animation studio! That took three rounds of negotiations, and by the time the acquisition is being done, Disney is just flat on its back saying, ‘Take me.’ Because of the political dynamics of Disney at the time, they needed that win, and Steve knew they needed it.”
Selling Pixar to Disney was a singular triumph. Steve had gotten Lasseter and Catmull the corporate parent they needed for their unique institution to thrive for decades. He’d even put the two of them in a position to revive the greatest animation studio of all time, Disney. And he’d done all this by developing, in the space of less than a year, a trusting relationship, in fact a friendship, with the man who’d been the go-to executive for one of the two people he most detested. Compare this with the wary antipathy Steve displayed during the NeXT/IBM negotiations, and you realize just how much Steve had changed over the intervening years.
It was a deeply personal negotiation, one that tested both Iger and Jobs right up until the end. After both boards had signed off, the announcement was set for Tuesday, January 24, 2006. Iger flew up from Los Angeles to be with Lasseter, Catmull, and Steve in Emeryville when they announced the deal to the Pixar staff. But with about an hour to go before the announcement, Steve surprised Iger by suggesting that the two of them go for a walk around the campus. Steve had something important to tell him.
Iger excused himself for a minute to chat with Braverman, his general counsel. “I’m not sure what he wants,” Iger confessed. “Maybe he wants to get out of the deal. Maybe he wants more money.” Then Iger and Steve left the building. Steve led him to a bench in an isolated nook on the campus. They sat down, and there, he put his arm around Iger’s shoulders. Here is how Iger recalls what happened next:
He says, “Bob, there’s something really important I’ve got to tell you. I’ve got to get this off my chest with you, and it’s really important as it relates to this.”
I ask him, “What is it?”
He says, “My cancer is back.” This is January of 2006. Since the operation there’s been no hint to the outside world that he has cancer again. So, of course, I ask him to tell me more. He talks about spots on his liver, chemotherapy.… I pressed him for more details. He said, “I’ve made myself a promise that I’m going to be alive for Reed’s graduation from high school.”