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January 24, 2006

Big Stories Flying All Over

Well, the two biggest stories of 10 Days At Sundance 2006 happened today... and neither had anything to do with Sundance.

Both are about the further shrinking of the film industry into easily digested bites. First, there is the Disney “acquisition” of Pixar and the second is the Time-Warner fold-in of “The WB” into Viacom/CBS’s UPN.

The Pixar deal is, in my view, a misstep driven by fear and ironically, Chicken Little. The attraction for Disney is ownership of the Pixar library, ownership of ongoing Pixar films, Pixar President Ed Catmill’s leadership at Disney animation, and in theory, the leadership and support of Steven Jobs. The reflection of the recent Paramount/DreamWorks deal is a little eerie, though the only shifting jobs here will be in animation. Unanswered in any piece I’ve read so far is whether Pixar will move operations to Burbank or if Disney Animation will find itself at home in the Bay area.

The downside is, simply put, the future.

Pixar leadership will be challenged for the first time by the Disney schedule of two feature animated films a year, with no flexibility for shifts such as moving Cars from a November slot to a summer slot the next year. In addition, there won’t be any more competitive influence on marketing choices or any threat at all of a bomb affecting the future of the company.

Oh... and that price tag. Over $7 billion. More than double MGM. More than 4 times DreamWorks.

But hey, Pixar has a library of six movies. Wow! Six whole movies! To which Disney already held all sequel and ongoing DVD rights. So the library is worth, essentially, to Disney... bupkiss. The only advantage of this arrangement is that if Iger can talk Jobs/Lasseter into making sequels, they will be true Pixar sequels. But there is no guarantee of that actually happening.

So what exactly is Disney getting for $7 billion? Four of the seven Pixar movies have generated total revenues of over $1 billion. But there is no assurance – or likelihood – that the streak will continue. And even if it does, you’re looking at a decade of success before this deal makes much sense for Disney.

As always, when you sell at the height of your perceived value, which is where Pixar has been lately, the buyer invariable has to overpay. And clearly, with all the hype around how hugely important Pixar is to whoever they are in business with and the long running misunderstanding in the media of Eisner’s position about the company (I am guessing that he is really pissed about this deal), there should be media support. And this deal is unlikely to seriously damage Disney in the long term. But it will slow the boat from turning with speed if ever it needs to do so.

The WB/UPN deal is the latest sign that Time-Warner is simply unwilling to spend the money to build a serious network. I have long thought that this decision was very short-sighted. They also missed the window to do an NFL deal between CBS and the new sister network ala ABC and ESPN in the last year.

What will the new network look like? It’s a mystery so far. But really, with the exception of about 5 shows, they are starting from scratch... again.

Meanwhile, affiliates who don’t end up being the selected broadcast partner in the markets where both nets currently live will be under pressure in an ongoingly pressure filled world for unaffiliated companies. The worm turns again.

Posted by poland at January 24, 2006 05:30 PM

Comments

Actually, Dave, there are a lot more shows than five that The CW can schedule. In fact, they could make up virtually their entire schedule from current hit shows, if they wanted (don't forget that they program a lot less hours than most networks). Zap2it provides the best analysis:

http://tv.zap2it.com/tveditorial/tve_main/1,1002,271|99710|1|,00.html

Posted by: James Leer [TypeKey Profile Page] at January 24, 2006 06:22 PM

The WB and UPN combining really came out of nowhere.

I didn't see even a rumor of that anywhere.

Posted by: Rufus Masters [TypeKey Profile Page] at January 24, 2006 06:29 PM

They should be willing to spend the money. The NFL could have made them a legit network. Ask Fox how that worked out. Sports gives credibility. Which is very big. It might seem like a money loser. But it's far from it. It helps build a network. Gives it an identity. TV shows come and go. Sports is forever.

Posted by: Sanchez [TypeKey Profile Page] at January 24, 2006 08:05 PM

The fact is that both networks didn't have enough to cover two networks. They needed to combine their forces. Now maybe they can get a whole network and go full bore.

Posted by: Fades To Black [TypeKey Profile Page] at January 24, 2006 08:54 PM

Just wondering, why would anyone want a "network"? Is it because cable must carry "local tv" channels?; thus guaranteeing that cable carries it?

The pixar deal seems way over priced. Is this Ovitz part 2?

Posted by: oldman [TypeKey Profile Page] at January 24, 2006 09:23 PM

As long as they keep "Veronica Mars", I'm happy.

Posted by: waterbucket [TypeKey Profile Page] at January 24, 2006 10:03 PM

Does this make Disney more or less of a takeover target itself?

Posted by: Blackcloud [TypeKey Profile Page] at January 24, 2006 10:04 PM

Camel: in this country at least, broadcast networks can command greater advertising rates than mere cable networks. Also there's the whole vertical integration idea, that each huge media company wants to have a movie studio, at least one broadcast network, and several cable networks so that they can have corporate synergy and all that jazz.

Posted by: jeffmcm [TypeKey Profile Page] at January 24, 2006 10:29 PM

From Disney's point of view I'm guessing this deal is due to the axim:

Keep your friends close and your enemies closer.

If Disney allowed Pixar to make a distribution deal somewhere else it would, for the first time in over 60 years, be giving up its association with the best quality feature-length animation out there. I'm guessing the Disney board is saying to itself "Not having to compete with Pixar in the animation market is worth $7+Billion."

Posted by: Eric N [TypeKey Profile Page] at January 25, 2006 04:13 AM

From the outside it does seem overpriced. But we don't have access to the facts, figures and numbers they do. Even if it's overpriced by how much more than normal? They overpaid by a billion? I wonder who they're competition was for Pixar.

Posted by: Terence D [TypeKey Profile Page] at January 25, 2006 05:26 AM

as long as they renew veronica mars i'll watch this new network.

Posted by: bicycle bob [TypeKey Profile Page] at January 25, 2006 07:02 AM

All the Sundance hype has been taken over and over shadowed here.

Posted by: BluStealer [TypeKey Profile Page] at January 25, 2006 07:59 AM

They don't have much in the way of successful shows on either network. They're going to have to start from the bottom.

Posted by: LesterFreed [TypeKey Profile Page] at January 25, 2006 08:30 AM

First of all, the "huge" $7 billion price tag represented only a small premium over Pixar's stock value.

Second, both Disney and Pixar animation studios will retain their names and locations, though clearly Pixar will be the driving force at Emeryville.

Third, these companies need each other. Disney has been and most likely will always be driven by animation. All of their theme parks, films, and merchandising revolves around that fact. If they suddenly don't have the best animation (Chicken Little was not good enough), then their businesses could start to resemble museums of past greatness. Pixar has obvious things to gain from Disney's marketing muscle. If the glove fits...

Posted by: palmtree [TypeKey Profile Page] at January 25, 2006 09:21 AM

Actually, the networks have a lot of programming that gets very desirable demographics, and, indeed, WB/UPN programming frequently beats one of the "big 4" networks in a timeslot.

Posted by: MattM [TypeKey Profile Page] at January 25, 2006 09:22 AM

palmtree's right. I don't know why Poland keeps pushing the "Iger is afraid" meme over and over.

Wall Street likes this deal, Disney employees like this deal, Disney fans like this deal. The only people who are skept are WDFA and Pixar staffers, who understandably don't know what the future holds operationally.

Posted by: Wrecktum [TypeKey Profile Page] at January 25, 2006 09:48 AM

Dave, you haven't been to Disneyland lately, have you? I just took my six-year-old there this weekend. Pixar is at the heart of all their new rides, and they're the rides my kid liked the most. The Pixar characters are everywhere; my kid wanted to see them before the 'classic' characters. It's pretty clear that Disney works hard at keeping the parks fresh, so a steady stream of new characters for them is important. You have to include that in the $7 billion cost.

Posted by: mattn [TypeKey Profile Page] at January 25, 2006 09:49 AM

Most of all, Steve Jobs money managers and accountants and lawyers and maids love it. As well as Disney and Pixar shareholders. A lot of people are going to get rich (or richer) off this.

Posted by: Rufus Masters [TypeKey Profile Page] at January 25, 2006 10:45 AM

^^ I've read that Pixar currently has about a billion dollars of cash on hand, which was not included in the purchase price (a straight stock swap). This needs to be added to the equation as well.

Posted by: Wrecktum [TypeKey Profile Page] at January 25, 2006 10:49 AM

the merchandising and the theme parks have to be included. the have two huge franchises now with toy story and the incredibles. that will be now disney properties. means dolls, rides, toys, etc.

Posted by: bicycle bob [TypeKey Profile Page] at January 25, 2006 11:27 AM

Actually, Toy Story and Incredibles were already Disney properties (Disney threatened to make Toy Story 3 without Pixar). The deal just helps guarantee any future Pixar characters will get the Disney treatment. Pixar in turn gets to use the characters they created for sequels.

Posted by: palmtree [TypeKey Profile Page] at January 25, 2006 11:35 AM

"Actually, Dave, there are a lot more shows than five that The CW can schedule. In fact, they could make up virtually their entire schedule from current hit shows, if they wanted (don't forget that they program a lot less hours than most networks). Zap2it provides the best analysis:
http://tv.zap2it.com/tveditorial/tve_main/1,1002,271|99710|1|,00.html"

I think a lot of this is pretty optimistic. All of those UPN sitcoms except one coming over? Why? Those underperformed even by UPN's low standards.

What I think will come over from WB:

Smallville
Supernatural
Gilmore Girls
Beauty & the Geek
Reba
One other sitcom, new or returning
Aquaman (new -- and the only marquee project in development at either network)

From UPN:

Veronica Mars
Top Model
Everybody Hates Chris
One other sitcom -- probably Girlfriends
Wrestling

If you assume that Top Model and B&tG will rotate -- that's 10 out of 15 hours a week. And I'm not convinced they'll give wrestling a prime time slot -- maybe they'll use the 5-7 pm time on Sunday for that instead.

If Everwood gets renewed, it'll probably be because they don't have enough ready to go to fill all the slots. I think it's probably the biggest question mark, along with the midseason WB shows that haven't premiered yet. Charmed, One Tree Hill, Related, and all the other sitcoms on both UPN and WB are probably history.

I do think this is a very good thing for Veronica Mars, the only show on either network I actually care about. And in LA we will finally get to see it in HD, too.

I wonder if there will be any kind of resurgence in the market for original syndicated dramas, since more stations will have the time slots to air that kind of programming. That market really died about 5 years ago, and it was kind of sad to see it go, in all its cheesy, low-budget glory.

Posted by: Lynn [TypeKey Profile Page] at January 25, 2006 11:56 AM

I'd like to have Jobs' bank accounts. Could do very nicely with that in my pocket. Maybe even 20%. Could live very comfy.

Posted by: Bruce [TypeKey Profile Page] at January 25, 2006 12:01 PM

I've seen one show on either network and it was one episode of the Chris Rock show.

Posted by: LesterFreed [TypeKey Profile Page] at January 25, 2006 12:29 PM

They have some building blocks for a network. But wrestling is tanking now. And their sitcoms are nonexistent.

Posted by: Josh [TypeKey Profile Page] at January 25, 2006 01:41 PM

Wrestling is tanking in part because the network moved the show to Friday night. This is the kiss of death for a show that skews young and male.

Posted by: Wrecktum [TypeKey Profile Page] at January 25, 2006 01:52 PM

Actually, WB has at least one other new show that's guaranteed to make the jump to the CW--the untitled Amy Sherman-Palladino project. If they don't honor their airing commitment, Sherman-Palladino will jump ship, which they can't afford, as that'd hurt Gilmore Girls.

Everwood seems to me better than even money because it's a critical darling (and an excellent show to boot) that could do well either filling the "7th Heaven" vacancy on Monday or a "family drama" slot at 8 on Sundays.

Mondays seem likely to be "Everwood"/"Aquaman"
Tuesdays will be "Gilmore"/"Mars"
Wednesdays are up in the air, but I expect 9 PM to feature "urban" sitcoms to fight a very white, very drama-heavy schedule everywhere else. "Top Model" at 8 might amke sense.
Thursdays will be "Smallville"/"Supernatural"

Posted by: MattM [TypeKey Profile Page] at January 25, 2006 03:43 PM

They have some really good programming if they combine networks. "Smallville", "Gilmore Girls", "veronica mars" and "Everwood" are all great shows.

Posted by: Richard Nash [TypeKey Profile Page] at January 25, 2006 04:24 PM

My goodness, Veronica Mars was insanely good tonight, putting all the twists and turns of other shows to shame. Who knew that a high-school girl detective would be so entertaining?

Posted by: waterbucket [TypeKey Profile Page] at January 25, 2006 07:02 PM

^ I wouldn't know. I'd never watch a show about a high school girl detective.

Posted by: Wrecktum [TypeKey Profile Page] at January 25, 2006 08:08 PM

Then your loss, my dear Wrecktum. You'll catch this on DVD years in the future and will say to yourself: Why didn't I watch it when it was on?

Posted by: waterbucket [TypeKey Profile Page] at January 25, 2006 08:52 PM

Kristen Bell is some kind of actress. Really a find. I bought the dvd of the first season. Watched it in about 3 days. It was that good. But now I want to see Season 2 and I'm 10 ep's behind. I got the tivo working now.

Posted by: Josh [TypeKey Profile Page] at January 26, 2006 06:49 AM

How can you not LOVE Veronica Mars????

You need to do yourself a favor and watch it. It's not just some girlie girl detective show.

Posted by: BluStealer [TypeKey Profile Page] at January 26, 2006 11:22 AM

She's dating the Saw 2 director now (who is also working on the remake of Pulse she's starring in). Just some gossip FYI.

Posted by: jeffmcm [TypeKey Profile Page] at January 26, 2006 02:11 PM

She can do better than the Saw 2 director. I haven't even seen how he looks but if she wants a director to hang with that can put her on the A list she can move up.

Posted by: Angelus21 [TypeKey Profile Page] at January 26, 2006 03:21 PM

"I wouldn't know. I'd never watch a show about a high school girl detective."

Yeah, seriously, your loss. One of the smartest shows around. It's high school as a noir film.

Kristin Bell is going to be the star that Sarah Michelle Gellar only wishes she could be.

Posted by: Lynn [TypeKey Profile Page] at January 26, 2006 03:45 PM

I want Dave Chappelle's shows. y'all can have the rest of TV (especially anything remotely like Arrested Development).

If there was something like the Jeffersons or All in the Family on I could get interested in TV again.


Posted by: Lota [TypeKey Profile Page] at January 26, 2006 04:40 PM

It never occured to me while watching 'Veronica Mars' where I had seen Kirsten Bell before. I knew I had recognized her, and much to my surprise she was Flora in season one of 'Deadwood'. And she was in 'Spartan'! Anyhow, I caught up with season one of VM on DVD around Christmas, and I'm just being patient and waiting for season 2 to come out on DVD...I unfortunately don't have the power of tivo, so I go with 'Lost' on Wednesday nights...
VM is a fantastic show. Any word on if its going to be renewed?

Posted by: Aladdin Sane [TypeKey Profile Page] at January 26, 2006 04:56 PM

Veronica has a very good chance of being renewed. Apparently, the network's execs are excited about the prospect of pairing it with Gilmore Girls. Hehe, maybe we can convince Wrecktum to watch both shows.

Posted by: waterbucket [TypeKey Profile Page] at January 26, 2006 09:01 PM

I can't believe they'd pair GILMORE and VERONICA. Most network programmers aren't capable of a decision that makes so much sense.

Wrecktum, you're only hurting yourself by skipping two of the smartest, most entertaining shows on the air right now.

Posted by: Cadavra [TypeKey Profile Page] at January 27, 2006 10:28 PM

Veronica Mars 4 Prez!!!!

Posted by: KamikazeCamelV2.0 [TypeKey Profile Page] at January 27, 2006 11:56 PM

Well, we know who's running Disney's ani dept now.

http://news.independent.co.uk/business/news/article341627.ece

Posted by: PandaBear [TypeKey Profile Page] at January 29, 2006 12:14 PM

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