On Jan. 30, 2004, Jobs announced Pixar was looking elsewhere. In nine years, the partnership had produced some of Disney’s top-grossing pictures, such as “Finding Nemo.” Source: PRNewsFoto/ via Bloomberg
Steve Jobs relentlessly challenged the industry to change -- ushering in the age of digital animation with “Toy Story,” upending the record labels with the iPod and the iTunes store, and by negotiating to sell TV shows and films online. Photographer: Alan Dejecacion/Getty Images
“Steve and I were talking for months about delivering TV shows on iTunes, which is when he shows me the video iPod, and I said, ‘We’re in!’” Iger said in e-mail. “Movies were next, a year later. It was about what we wanted to do and what we felt was right for our business.”
With the 2006 sale of Pixar, Jobs became Burbank, California-based Disney’s biggest investor, with a stake worth $4.35 billion.
Hollywood executives resisted putting shows online. Piracy had devastated the music industry and iTunes’ dominance of online music retailing gave Cupertino, California-based Apple unprecedented influence over the record labels.
‘Getting It’
Jobs was determined to get the studios on board, said Jim Gianopulos, co-chairman of News Corp. (NWSA)’s Fox Filmed Entertainment.
“He’d call up and say, ‘We’ve got to do this, this is the way to do it, and you guys aren’t getting it,’” Gianopulos said in an interview. “We would banter back and forth, but we always found ways to work together. To his great credit, he would see an aspect of the film side, the media side, that he hadn’t considered, and he would call back the next day and he would have figured out how to work that problem.”
Today, iTunes is the top seller of online movies, with 66 percent of the market for electronic sales and Web video-on- demand, researcher IHS said in August. Its share of U.S. music retailing was 70 percent last year, according to NPD.
“Steve understood that the only way to compete with piracy was to create a system that by its very nature is more convenient for consumers,” said Paul Vidich, a Warner Music Group Corp. (WMG) executive who negotiated the first record-label agreement with Apple.
‘Rocket Ship’
Diagnosed with a rare form of pancreatic cancer in 2003, Jobs died Oct. 5 at age 56. Gianopulos said his discussions with Jobs over film rights evolved into a personal friendship.
“He would come into the meeting and say, ‘Hey, you want to see something cool?’ And he would reach into his jacket and pull out the first prototype of the iPhone,” Gianopulos said. “It was like someone had shown you the first rocket ship.”
Disney, the pioneer in animation and theme parks, became a lab for Jobs. The studio served as distributor of Pixar movies starting in 1995. Later, after Jobs sold the animation studio to Disney for $8.06 billion in stock, the company became an Internet trailblazer as well -- becoming the first of its peers to offer films and TV shows on iTunes.
Today former Pixar CEO Ed Catmull oversees all of Disney’s animation. John Lasseter, Pixar’s creative leader, holds a similar post at Disney with roles in films and theme parks.
Clash With Eisner
Relations with Disney almost foundered in 2003 in a dispute with Eisner over an extension of the Pixar deal, and on Jan. 30, 2004, Jobs announced Pixar was looking elsewhere. In nine years, the partnership had produced some of Disney’s top-grossing pictures, such as “Finding Nemo.”
By that time, Eisner’s position at Disney was shaky. His pay and flagging stock angered institutional investors and Roy Disney, nephew of founder Walt and an influential shareholder. Iger was named to succeed Eisner in March 2005 and the first call was with Jobs.
“He wished me well and hoped we could work together soon,” Iger said in a 2005 interview with Businessweek. In October, within two weeks of taking over, Iger agreed to sell episodes of TV shows from Disney’s ABC network on iTunes for $1.99 each. Three months later, he clinched the deal for Pixar.
Pixar’s 12 movies have generated $5.73 billion in worldwide box office sales for Disney and theater operators, according to Box Office Mojo, a movie-tracking service. They’ve become theme- park attractions and a “Cars” land will open at Disney’s California Adventure next year.
‘Pretty Simple’
The entertainment industry is still grappling with how to prosper in the digital world Jobs helped create.
In August, after a year-long experiment, Apple ended its 99-cent rentals of TV episodes from Fox and ABC. CBS Corp. (CBS), owner of the most-watched U.S. TV network, and NBC didn’t participate because the price was too low.
After first caving in to Jobs’s demands that all songs sell for 99 cents, the music industry last year won more control over pricing on iTunes, pushing through a 30-cent increase in the price of some tracks.
Music executives credit Jobs with saving the industry from Internet piracy.
“The guy had been doing serious thinking while we were all batting our heads against a wall,” Jimmy Iovine, chairman of Interscope-Geffen-A&M, said in a 2004 interview. “He was going to provide us with that great interface and we were going to give him unique content that you couldn’t get anywhere else. It was pretty simple, really.”
To contact the reporters on this story: Michael White in Los Angeles at mwhite8@bloomberg.net; Ronald Grover in Los Angeles at rgrover5@bloomberg.net; Andy Fixmer in Los Angeles at afixmer@bloomberg.net
To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net
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