stanford gsb disney m&a of pixar vs marvel

The Incredibles vs. The Avengers:

A Comparison of Disney’s Most Significant Acquisitions

Stanford Final Project Vaisakh Shankar, GSB Erik Teensma,

Angelo Ocampo & Dani Smith July 12, 2016

What comes to your mind when you think of Disney?

Which acquisition was

more valuable to Disney?

vs.

Historical DIS Stock Price

Pixar Acquisition Marvel Acquisition

Black: DIS Pink: NASDAQ Purple: S&P 500

Invest $1,000 on July 12, 2006 Get $3,813 on July 12, 2016

Annualized Return of 14.31%

Pixar Additional Films Revenue Budget Video Sales Inside Out (2015) $857,400,000 $175,000,000 $106,600,000 The Good Dinosaur (2015) $331,900,000 $175,000,000 $50,000,000 Finding Dory (2016) $603,300,000 $200,000,000 NA Total $1,792,600,000 $550,000,000 $156,600,000

Marvel Additional Films Revenue Budget Video Sales Avengers Age of Ultron $1,405,000,000 $267,000,000 $74,000,000 Ant Man $519,000,000 $130,000,000 $56,179,000 Captain America Civil War $1,150,000,000 $250,000,000 NA Total $3,074,000,000 $647,000,000 $130,179,000

Revenue Generation Metrics Pixar (2006-2014) Marvel (2009-2014) Number of films since acquisition 8 8 Worldwide Grosses $4,781,944,543 $6,304,740,356

Gross Film Revenue from Pixar: $6,574,544,543 /2 = $3.3B to DIS Gross Film Revenue from Marvel: $9,378,740,356 /2 = $4.6B to DIS

Media Networks

44%

Parks and Resorts

31%

WD Studios 14%

Consumer Products

9%

Interactive Media

2%

DIS 2015 Revenue

0

5000

10000

15000

20000

25000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Rev

enue

($M

)

Disney Revenue Comparison by Segment

Parks and Resorts

WD Studios

Interactive Media

Media Networks

Consumer Products

Walt Disney Animation

Studio Founded

1923

Steve Jobs creates Pixar,

Inc.

1986

1991

Pixar approaches

Disney

Co-production agreement

Expiration of agreement

Disney acquires Pixar, Inc. for $7.4B

1997 2006 2006

Adopted the director

driven and production approach of

Pixar

Strategy

! Need for Competitive advantage

!  Superior Product Quality

with Pixar’s Acquisition

!  Change the “Profitability over quality” view

“Strategy is a commodity and execution is an art” - Peter Drucker, Management Consultant

"  Pixar’s People Technology & Patents "  Leadership Matters

Marketing (S.T.P.)

Corporate Governance

Talent Management

Marvel Films (later Marvel Studios, Inc.)

1993 1996

Bankruptcy

2009

Disney acquires Marvel Entertainment

for $4.2B

Strategy

Marketing Governance & Talent

!  International Expansion and Penetration of its Business into different

markets

! Strategic Ties with new Partners – Limited theme

park options

!  Growth and Market Expansion

! 3D branding Strategy

!  Marvel’s local culture was preserved

!  Intellectual Property !  8,000 character

library

Pixar

Corporate Governance Preservation & Adoption of

Local Culture

Marketing Market Leadership & Brand

Positioning

Financials Gross Revenue = $3.3B

11 Films

Talent Acquisition Edwin Catmull & John Lasseter

Marvel Corporate Governance

Preservation of Local Culture

Marketing Co-branding, 3D Branding,

& Market Expansion

Financials Gross Revenue = $4.6B

11 Films

Talent Acquisition Intellectual Property

“The question isn’t did Disney pay too much but how expensive would it have been for Disney if Pixar fell into someone else’s hands.” -Barry Ritholtz, Chief Investment Officer at Ritholtz Capital Partners

Questions?

Pixar (PIXR)

Marvel (MVL)

0

10

20

30

40

50

60

1994 1996 1998 2000 2002 2004 2006 2008 2010

MVL Stock Price Breakdown of $4.2B Purchase Price

Bankruptcy Protection

$525M Loan

Appendix

1923 Walt Disney Forms The Disney Brothers Studio 1928 Mickey Mouse Debut

1932 First full-color cartoon 1937 First Animated Film 1940 Walt Disney Music Launches

1955 Disneyland CA opens 1966 Walt Disney Dies

1983 Disney Channel Launches 1989 Disney MGM Studios Merge

2005 Disney Content on iTunes 2006 Disney Acquires Pixar 2009 Disney Buys Pixar

1991 First Disney Pixar Deal Launched 1995 Disney.com Launches

1920 2010

Informational Sources •  “To Acquire or Not to Acquire.” HBS Case. •  “To Acquire or Not to Acquire, An Update.” HBS Case. •  “The Marvel Way: Restoring a Blue Ocean.” HBS Case. •  “How Marvel Went from Bankruptcy to a $4B Buyout.” HBR Article. •  “Disney Buys Marvel: Designing 3D Brands.” HBR Article. •  “How Pixar Fosters Collective Creativity.” HBR Article. •  “Managing Creativity, Lessons from Pixar and Disney Animation.” HBR Article.

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a841-d9d686dc9a56-Pixar-Movies.jpeg •  http://img1.cartoonscreencaps.com/Galleries/Finding_Nemo/Finding_Nemo_Screenshot_0069.jpg •  https://images4.alphacoders.com/818/81856.jpg •  https://atlantaladylitwits.files.wordpress.com/2012/05/the_avengers_wallpaper1.jpg •  http://www.bestwallpapershq.com/wp-content/uploads/2016/04/wall_e_game-wide.jpg •  http://www.twitrcovers.com/wp-content/uploads/2012/09/Pixar.jpg •  http://wallpapercave.com/wp/61wPtic.jpg •  http://cdn.collider.com/wp-content/uploads/2015/05/marvel-studios-logo.png •  http://vignette1.wikia.nocookie.net/pixar/images/f/fb/Pixar_Wallpaper.jpg/revision/latest?cb=20120917224617 •  https://images4.alphacoders.com/369/36924.jpg •  http://www.wallpaperinhd.net/file/6661/2880x1800/stretch/walt-disney-characters-(1920x1200)-wallpaper-22.png •  http://evansheline.com/wp-content/uploads/2011/09/pixar_luxo.png •  https://65.media.tumblr.com/af4be8dbdbc47f6aa98948fe4c57341e/tumblr_mn0tqaUCw11s5jjtzo1_500.png •  http://vignette2.wikia.nocookie.net/testing-123/images/9/9c/Disney_pixar_logo.png/revision/latest?

cb=20141128134954 •  http://images.clipartpanda.com/mickey-mouse-face-clip-art-classicmickhead.gif •  http://www.jamrockentertainment.com/IMAGES/apinocchio.gif •  https://s-media-cache-ak0.pinimg.com/736x/6d/16/2f/6d162f9417d607b0f953010c1764f972.jpg •  http://vignette2.wikia.nocookie.net/goldenthroats/images/e/ed/Disneypeterpan.jpg/revision/latest?

cb=20150420144526 •  https://s-media-cache-ak0.pinimg.com/564x/79/93/9c/79939cd743bd405b41ba52fd24fcb82d.jpg •  https://a.dilcdn.com/bl/wp-content/uploads/sites/25/2014/02/Dramatic-Snow-White-and-the-Seven-Dwarfs-

Poster.jpg •  https://s-media-cache-ak0.pinimg.com/736x/64/f4/07/64f40735cb2012cc3fd5cc8fca011369.jpg