Bob Iger: Pixar Deal Completed To Show Disney Employees It Was A New Day

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Bob Iger: Pixar Deal Completed To Show Disney Employees It Was A New Day
Image source: CNBC Video Screenshot

Following are excerpts from the unofficial transcript of a CNBC exclusive interview with Walt Disney Co (NYSE:DIS) Chairman and former CEO Bob Iger on CNBC today, Tuesday, December 21st. Following is a link to video on CNBC.com:

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Pixar Deal Completed To Show Disney Employees It Was A New Day, Says Former CEO Bob Iger

Part I on CNBC's "Squawk Box"

DAVID FABER: Yeah, of course, he did step down as you well know Becky, at the end of let's call it February of 2020 right before the pandemic hit very hard and of course, he had three times that we thought he was going to step down as CEO only to stay on but this time is for real. He's got about 10 days left as you said on a career that’s spanned some 47-plus years at this company starting as he did in sports at ABC at 23 years of age and we did have a chance to sit down for a long period of time last week, late last week in Disneyland and talk about his career, talk about the challenges facing Disney at this point, a lot of other things that you don't typically do in a CNBC interview. But I did ask Iger whether at this moment as he looks towards the future and of course towards his past at Disney whether he's got any anxiety at all.

BOB IGER: There's no anxiety about that at all. Sadness because I'm leaving people that I love working with and a company I've loved working for. But no remorse. No second guessing. No anxiety.

FABER: You don't regret having left when you did and stepped down as CEO when you did?

IGER: No, I think the, look, I didn't, no one knew that the pandemic was going to explode the way it did. I think the timing was unfortunate. But throwing a new CEO into, you know, that, you know, that circumstance, it was difficult. But no, I have no, no regrets about having made that decision. It was time. I didn't want people to say be going around saying, "When the heck is he gonna leave," you know? "Isn't it time?" I'd rather have them say, "Gee, did he have to leave when he's leaving? We would've liked him to stay longer." I'm getting some of that.

Part II on CNBC's "Squawk Box"

FABER: You know, listen, there are no shortage of challenges for Chapek and there's also been a decent amount sort of reported and written about challenges between Chapek and Iger, you know, as you’d probably expect, Iger did not want to engage too fully on it. I don't know if we have time but I did ask him if there should be any concern amongst Disney shareholders in terms of the relationship between the Bobs but at this point, of course, as you know, it is Mr. Chapek’s show and that's something that Iger agrees with.

IGER: It shouldn't be a concern to Disney shareholders at all that, you know, that, that any dynamic between us is, would have an impact on the company long term. I'm leaving. He's in. It's his company. He's going to manage it as he see fit, he sees fit with the board under circumstances that are very different than existed when I was CEO and, and chairman because they're changing, as we've talked, they're changing so rapidly. And, you know, he'll make his own decisions, and, and I, you know, I hope that he's learned good lessons. I believe that he has, in terms of, you know, some of the things that I did along the way, and what worked and what didn't work. And I think the relationship I have with him is not really relevant to, you know, how he, how effective he is running the company.

Part III on CNBC's "Squawk on the Street"

FABER: But yeah, we did sit down for a long interview that I was very happy to have an opportunity to conduct and a bit different than we typically do here at CNBC talking of course about his long career at Disney not just his time as CEO, obviously we hit on a lot of the key business questions as you might anticipate and we went over a lot of other things as well, you know, including sort of some of the things that he saw in terms of his strengths and weaknesses. And I guess I'll start there because he did sight sort of something he noticed about his own responsiveness that he said was one thing that alerted him maybe it was time to consider stepping down. Take a listen.

IGER: I will say that over time, I think I started listening less than maybe with a little less tolerance of other people's opinions maybe because of getting a little bit more overconfident in my own, which is sometimes what happens when you get built up, you know, in some form or another, as you know, something special or great or whatever. I was mindful of that.

FABER: Well you were introspective enough to recognize it though. A lot of leaders might not even recognize it.

IGER: I think I wrote about that too. I was I became a little bit more dismissive of dissent and other people's opinions than I should have been. And that was that that was an early sign that it was time. It wasn't the reason I left but it was a contributing factor.

FABER: That you just weren't, right, you just didn't have the patience any longer or you thought I've heard this all before and—

IGER: Yes, a lot of all those things. You've heard all the, every argument before. I don't want to hear it again, even though it may be more valid today than it was then, times change. All the, you know, all the, that's the time, the challenges of a CEO of a large global company today in terms of managing time so you can't, so dissent has to be finite in a sense and depends on where you draw that line and when you, when do you shut dissent down. Maybe I was doing it a little bit too quickly. I felt that.

Part IV on CNBC's "Squawk on the Street"

FABER: Back to Bob Iger and that interview we conducted late last week. Of course, Mr. Iger spending his last few days as the Chairman of Disney after what's been a 47-year career plus career at that company, 15-plus as its CEO as well in a period, as Jim noted earlier, in which the stock did extraordinarily well. We did have that chance though sort of an unusual opportunity really to talk not just about Disney and its business, but also sort of about some of the broader leadership lessons that Mr. Iger learned and perhaps could impart to others. He did some of that in a book that Jim and I of course have lauded for some time as well, but he and I did spend some time talking about that and culture and things that he would tell other potential CEOs as well. Take a listen. I'm curious as to how you think you went about changing the culture of Disney and what you would say or, you know, how quickly you can do it as a leader and where that culture is today versus then.

IGER: Yeah, I think for any CEO of any particularly large company in today's world, the world throws you more and more curveballs, more and more challenges. And they now they come at you constantly and from directions that you could never anticipate, never expect. It gets really tough and I think I think one of the reasons why I think it's right for there to be change at the top sometimes is that can turn a CEO into more of a skeptical or pessimist or just because they get weary of all of those challenges. And I think we had gone through it. I know we had gone through a period of time at Disney prior to my ascending to become CEO where those challenges were numerous. They were omnipresent. There was the Comcast hostile takeover attempt. There was the share, the board member or shareholder revolt. There was the impact of technology on all of our traditional businesses. There was 9/11, there was, we can think about all of these things and I think Disney at the time had become weary of those challenges and with that came a little bit less of a belief in its future. There was a scale issue as well, were we large enough and it was intimidating, you know, faced some of those technology companies. Steve Jobs announcing “Rip. Mix. Burn.” and what was going to be the future of IP. People challenging copyrights, it was left and right and all over the place. And so, what I wanted to do when I came in was to see whether we could not ignore those challenge but put them aside and become optimists again and look to a future that we actually believed was brighter. And one thing that was important to me was embracing technology even though it was causing disruption and potential threats, I wanted to embrace it as a means of creating opportunity for us.

FABER: Well you did I mean Jobs showed you the first video iPod, didn’t he?

IGER: Right, so we put our television programs on it first which was a tiny, tiny deal but all of a sudden it signaled, wait a minute, maybe we could use technology to gain as opposed to, to lose. And that mentality was something I wanted to infuse in the company which is future's bright, let's view technology as opportunity versus threat and that, and that announcement actually turned out to be a big one and it has led to more serious conversations with Steve about buying Pixar too.

FABER: Right, right.

IGER: And I think one of the things that I was surprised at is if you if you consider pessimism about the future to be part of the company's culture, I thought it was going to take a long time to change that. It was very fast.

FABER: Why do you think it was so fast? And why was that a surprise to you?

IGER: Well, I think what it says something about that change in the top matters, you know, I'm not suggesting good or bad. I'm not suggesting oh in comes Bob and out goes Michael but it's, it has its it can freshen things up so to speak. And it’s happening at Disney now as well, you know, there's a change at the top and that could create a whole different outlook for the company going forward.

FABER: Do you think it freshens things up, your departure as CEO?

IGER: Look, the world is changing dramatically and it's important for a CEO of a company to address all of those changes rapidly. Bob is going to address them probably differently perhaps than I may have. That's neither good nor bad. I think change, I think generally speaking, change is good. Change isn't necessarily bad.

FABER: Yeah. What do you see yourself doing, you know, a few days from now when you are no longer a part of this company?

IGER: Step away from all of this, this dream when this dream finally ends. You know, I've worked full time, really full time since I was 23 years old and going to be 71. Working in the job that I've the jobs that I've had CEO and Chairman have, you know, were taxing from a time perspective, never in terms of my energy or my enthusiasm. It's time for me to have a blank canvas so to speak to be forced in a way to be a little bit more imaginative with my time. Not fortunate enough to have that luxury. Well, what will I do today?

FABER: Do you have any hobbies though?

IGER: Yeah, I have some hobbies. I don't golf. I like to sail, you don't sail and golf in the same lifetime. There just isn't enough time for that. But my wife has a full time job. My kids are out of the house—

FABER: So you’re going to have to keep busy?

IGER: I'll keep busy. I'm doing some selective investing. I'd like the ability to be an advisor to founders of startups because I think I've got some advice to give in that regard even though I haven't run a startup. And I've been sought after by some already. I'll probably do some of that. I plan to write another book, which is a homework assignment right now. I've got to get at that. And I'll do some speaking and I'll see where life takes me. I'm not in any rush. I've been advised by some who have stepped down from high office, including President Obama, do not, he said, “Do not make any decisions. Don't commit to anything for six months.”

FABER: Six months?

IGER: I’m telling you, don't do that. Yes.

FABER: You know, you wrote about Eisner's departure in the book and you said it's hard to know exactly who you are without this attachment and title and role that has defined you for so long.

IGER: Yes. When I wrote about tha,t I, I had developed a lot of empathy from Michael. I remember his last day at Disney. It was a Friday, last Friday in September of 2005 when his wife and one of the sons came to Disney and had lunch with him and he drove off the Disney lot after having been CEO for 21 years. And I was, at that point, I couldn't wait because I was ready to have that office and that title and that job and raring to go. And I don't think I thought long and hard at the time what that really meant to him and here I am. Yesterday was my last day on that Disney lot, you know, in this role and it was, it was an emotional experience for me. My son came to the lot, one of my sons, we had lunch together. There I walked around, took some pictures, I was feeling incredibly wistful, incredibly emotional. The ties that I've had to this company that have been so part of my life were ending and I in two weeks from now, I will not have a title and I've had a decent title since I was in my 30s. It’s a long time. But there's no anxiety about that at all. Sadness because I'm leaving people that I loved working with and a company I've loved working for, but no remorse. No second guessing. No anxiety.

FABER: You don't regret having left when you did and stepped down as CEO when you did?

IGER: No, I think the, look, I didn't, no one knew that the pandemic was going to explode the way it did. I think the timing was unfortunate. But throwing a new CEO into, you know, that, you know, that circumstance, it was difficult. But no, I have no, no regrets about having made that decision. It was time.

FABER: It was, why?

IGER: Some of the things that I've said which is believing that change at the top was good, although I will say a lot of it was very, very personal. It wasn't about the company. It was about me, you know, wanting to leave with the vitality to explore the world in different way. I thought back about a biography I read a pitcher for the Brooklyn Dodgers and the Los Angeles Dodgers named Sandy Koufax left at the top of his game and I think the biographer, Koufax’s biographer Jane Leavy said that he left walking off the field or on his own volition are, “Great athletes rarely retire on their own instead they limp off the field.” I didn't want to limp off the field.

Part V on CNBC's "Squawk on the Street"

FABER: Well Carl, shares of Disney actually having a strong open this morning, up some almost 2.5% but for the year, the shares of the company down roughly 17%, one of the key reasons of course continuing concern about the growth of subscribers at Disney+ its key direct-to-consumer offering, and whether in fact the company can continue to add subscribers at a rate at least that investors had come to expect given quite vigorous subscriber growth certainly during the course of 2020 and early part of 2021. As you might expect in a long sit down with Disney's Chairman, he is still Chairman for another 10 days or so, Bob Iger, I did ask him about how he sees the outlook for streaming given its importance to Disney's overall business.

IGER: There's guidance out there that the company has provided that I'm neither gonna update or comment too much on but obviously the company has expressed confidence in its ability to achieve the guidance that it has out there. So, I obviously supported that guidance was put out there by Bob when he was CEO and I was Chairman. Again, I think, we can't, we can't just maintain a pat hand because the world isn't staying basically the same. We have to continue to evolve and all that that means not just changing but taking advantage of opportunities aggressively.

FABER: But there’s this continued question as strong as Pixar is with its audience, as strong as Star Wars is and Marvel and the incredibly deep loyalty it has, do you need to be broader in order to actually reach those kinds of numbers?

IGER: I think there probably need, there probably needs more volume, there probably needs to be more dimensionality meaning more, you know, basically, more programming and more content for more people, different demographics, but Bob's aware of that. He’s addressing those issues.

FABER: You seem to have that first mover advantage and gulped up a lot of assets that I'm sure many of the competitors now wish they had actually moved on. Doesn't mean that there weren't plenty of opportunities that perhaps you passed on but is everybody else sort of subscale when you look at the world as it was 16, 17 years ago?

IGER: You know, I've never really spent much time thinking about how our competitors are positioned in that regard. I spent most of the time thinking about how we're positioned. So I don't know that others are scaled right or subscaled necessarily, I just think we're well scaled.

Part VI on CNBC's "Squawk on the Street"

FABER: All day long, we've also been sharing excerpts of interview that I did last week with Bob Iger, the longtime CEO and the current Chairman of Disney. There's a look at the performance of the stock during the period of his CEO-ship so to speak. Remember he stepped down it's it's not that far away from two years ago Bob Chapek is the CEO of the company. Chairmanship will also change as well at the end of this year. Mr. Iger ending a 47-plus year run at the company that began with his working at ABC Sports when he was a young man. When we talked about his tenure of course, as you might expect, deal making was certainly one of the keys and starting with that decision to acquire Pixar. Take a listen.

IGER: I'm proud of a lot of the decisions that were made, certainly the acquisitions. I'd say of all of them probably Pixar because it was the first and it put us on a path to achieving what I wanted to achieve which is scale when it came to storytelling. That was probably the best.

FABER: And you faced I mean your own board. You were uncertain whether you're going to get it passed. Eisner came back to, to say, “Don't do it.”

IGER: He subsequently, we had a long conversation about that years later and he admitted that he was wrong about that. I think there was a lot of emotion at that point for him having left Disney under such strange circumstances with Steve but looking back when he reflected on it with me, he admitted that I did the right thing.

FABER: Well, you know, it's funny because I remember interviewing you and Jobs that afternoon after you announced it and I was basically focused on the price. I think, man, you're paying an awfully high multiple and many people may not have understood how incredibly important it was to sort of set a new direction for the company and revitalize animation.

IGER: Well, that's exactly what I wanted to do. I, what I wanted to do more than anything is I wanted to send a signal to everybody at Disney that it was a new day, that we were more open minded about expansion in particular about partnerships, that creativity was the most important strategy for the company and Pixar at that point exemplified original storytelling and quality and creativity and in its highest form. And then there was the Steve factor, which I sometimes called the cool factor, which is what Apple was, what Steve represented the fact that Steve would embrace not just Disney but me and the vote of confidence that Steve gave in me, and Steve becoming a member of the board and our largest shareholder and I was all tied up in my desire to not only grow content, but it reposition Disney to our employees, to our shareholders and to our customers. And the price you mentioned it also factored in my desire to revitalize Disney Animation, which we did. You look at “Frozen” and you look at “Moana” and you look at “Zootopia” and you look at “Wreck-It Ralph” and you look at “Tangled,” and the number of Academy Awards and the box office success and all of the IP that that created, generated and what how basically we're going to mine that IP for Disney+, you know, it all was tied really everything that we've done at Disney Animation since then, was tied to the Pixar acquisition.

FABER: Do you think it was something unique about you that allowed you to convince all of these founders to part with their “babies?”

IGER: In all cases, I developed a trust with them and that I convinced them would serve them well if they sold to us meaning, in Steve's case, he, he owned half of Pixar publicly traded company and converted his ownership of Pixar into all Disney. That by the way, wasn't the motivation behind him doing and it wasn't about growing his personal wealth at all. But more importantly, with Steve, I created a trust in him that the assets of Pixar and its people would be in the right hands. And so I think in terms of your question, what was it about me that convinced them. First of all, it was me meaning it was singular in terms of I didn't do the deal myself. It was singular in terms of the pursuit. One on one in some cases, being as candid as I possibly could be and I think as authentic as I could be in developing a relationship, even if we've developed over a relatively brief period of time and not disappointing him either.

FABER: What does that mean?

IGER: He was never disappointed. Once we did the deal, in fact, in the months before he died he came to, he and his wife, Laurene, came to our house. And Laurene and Steve and Willow and I sat down at a dinner and he toasted to the deal we had done some years earlier, convinced that it was the right thing to do for Disney and for Pixar. And I remember it was, it was very heartfelt and tears came to our eyes, four of us at the dinner table crying, in part dreading what was potentially in store for him which is the end of his life but in part reflecting on what we had done together and truly appreciating it. So. I think again, it's development of a relationship, different in some ways but similar in others. It was me going to New York spending months trying to figure out getting a meeting with him, sitting with him one on one once and then twice a couple of days later and convincing him that it was the right thing to do for the Marvel shareholders, publicly traded company and the people at Marvel and I think he was intrigued with the notion of, of investing in Disney plus Marvel and it worked out extremely well.

FABER: And became a large shareholder. I assume you heard from him frequently as well after he became a Disney shareholder.

IGER: I heard from Ike, yeah, I heard from Ike a lot over the years.

FABER: Yes, that’s what I heard.

IGER: We weren't, we weren't always—

FABER: In sync?

IGER: Complete agreement on things. But that's neither here nor there. I think it's turned out extremely well for him and certainly for the shareholders of Marvel. It's turned out I think they got Disney shares somewhere in the neighborhood of $28 a share. I know we were up around 200 even if you look at it today in that 150 range, that's a pretty good return on investment and George's case was also singular in many ways. I had breakfast with him at Disney World. Talked to him about the future of Lucasfilm and broached the subject. He was close with Steve Jobs and don't forget Pixar was owned at one point by George. Steve bought it from George. And there was a real connection although Steve had passed when I first sat down with George and George was impressed with how we had managed Pixar and assimilated Pixar into the company. He was very, very concerned about Lucasfilm many respects his baby, his legacy, and there was a trust there too that I think we demonstrated that we could be trusting in terms of how we had already managed the Marvel assets and the Pixar assets and I think he was looking to some extent for either long term wealth preservation or long term wealth creation.

FABER: You know, you mentioned in the book, the idea that if Steve had lived, Disney and Apple might have become one. Did you guys ever really talk about Apple buying?

IGER: No, Steve and I never did. What we did talk about and he was public about at one point at one of his late Apple product presentations, he stood in front of a street sign with an intersection I think one said liberal arts and one said technology. That's what made his heart sing. I think that's how we put it that intersection. So what we talked about a lot was what happens when great technology meets great creativity. He thought that means that to him was the secret sauce for almost everything. And if you, if you project that into how the world was changing and you think of a world where suddenly the opportunity to use that technology to create new experiences for people in terms of how they access content, the natural thing would have been for Apple to have the great content that Disney creates applied or used on their platform. And I know I'm pretty convinced we would have had that discussion. And you know, that was maybe someone wistful of me when I wrote that, but I just knew of his passion for everything we did and everything Apple did and then his deep, deep belief that nothing would be more powerful than that combination. I think we would have gotten there.

Part VII on CNBC's "TechCheck"

FABER: Yeah, of course Julia, and something you've been very focused on as well as your coverage of the company, direct-to-consumer certainly being a such an important component overall of their strategy. I know we can both remember back in what was it August of 2015 on that earnings conference call when for the first time Iger addressed potential sub erosion at the giant cash flowing property ESPN. Since then, of course, it's no secret that the linear ecosystem has been in decline, and certainly Iger acknowledges that as well.

IGER: I think you're seeing a migration to more digital, direct-to-consumer forms of entertainment distribution. And being in that business at a larger scale, which because I think that will provide more growth for the company than the traditional media platforms would've and just the migration, the erosion of the traditional media platforms and the growth of the new ones. We're playing in that new space much more aggressively than we would have obviously without Disney+, without Hulu as well. I think people are consuming things in much more different ways. App-based entertainment in the home has, is replacing the linear channel consumption in the home. So, when you go back to the question you asked about the future of that business, it's not bright at all. It's, it's actually eroding right before our eyes.

FABER: And it continues to erode before our eyes You know, it was a long interview and opportunity to talk to Iger about so many different things, best decisions in which he sort of talked about the decision to buy Pixar and worst decisions as well where YouTube came up.

IGER: I remember when YouTube was sold. One of the things I always rued, because when YouTube emerged, it was the, we didn't see that first. I'm the one who put “America's Funniest Videos” on ABC in 1989, which was user-generated content. It's kinda funny, which YouTube really started as. It's evolved tremendously. Why didn't I think of that?

FABER: Yeah. Why, yeah.

IGER: I don't know, I, I missed that one—

FABER: You missed that one. Worth, it's worth about $300 billion now, by the way, based on its revenue if you—

IGER: Well, YouTube would've been smart.

FABER: It would've been. All right, so that gets me to worst decision. Is there one that comes to mind in terms of just a really bad decision you made over those 16-plus years?

IGER: I made some bad decisions. Fortunately, they weren't monumental or they woulda, brought me, me down. So I can't really think of, like, the worst decision. I made some bonehead creative decisions along way, you know, greenlit some things that I probably shouldn't have. I mean—

FABER: All right, yeah, but saying yes--

IGER: But that's kinda easy.

FABER: To Cop Rock is not exactly the worst decision you're gonna make.

IGER: You know, I’m, I'm, there's, that's actually, it's interesting, I try to be honest and candid, both in terms of assessment and myself. I definitely made a bunch of bad decisions. Sometimes people, sometimes product, nothing gigantic.

FABER: Nothing gigantic?

IGER: No.

FABER: And nothing comes to mind at all that you can share?

IGER: A buncha little things.

FABER: Just little things.

IGER: Yeah.

FABER: So I guess that's a pretty good tenure then, if it's a buncha little things--

IGER: Well, I lasted a long time, so I guess, I suggest I didn't make any really bad, any big, bad decisions.

Updated on

Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
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