'Nemo' gave CEO Jobs upper hand- San Jose Mercury News- 5/1/05

'Nemo' gave CEO Jobs upper hand-

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The essence of the clash between Steve Jobs and Michael Eisner was revealed in one moment of the Pixar-Disney partnership. Shortly before ``Finding Nemo'' was released in 2003, Eisner met with the Disney board of directors and offered a prediction: Pixar was headed for a ``reality check.'' Early clips of the clown fish movie had failed to impress him, he said. The movie paled in comparison to ``Toy Story'' or ``Monsters, Inc.'' and would not sell as many tickets.

It was as if Eisner were reveling in the idea of a Pixar dud. Such a stark reality check would give him bargaining power in the upcoming contract-renewal negotiations with Steve Jobs. If ``Finding Nemo'' flopped at the box office, Steve would lose the leverage he had gained from previous Pixar blockbusters. Unlike the last negotiation, he would not be able to push for more favorable terms. Eisner desperately needed to protect every dime of Disney profits, which had slipped an incredible 41 percent in the first quarter of 2003. Though Disney would lose profits in the short term with a ``Nemo'' flop, it would win in the long term with a favorable Pixar-Disney contract.

As we all know- this did not happen. Nemo became the largest grossing film of 2003 and was a critical success as well.

In the process, Steve had earned more than better leverage; he had stolen the ace right out of Eisner's hand. ``The impact of `Nemo,' '' said David Davis, senior vice president and box office analyst at Houlihan, Lokey, Howard & Zukin, ``is like a baseball player hitting 60 home runs in the final season of his contract.''

Pixar stock jumped up by 4 percent.

Other suitors swooped in. Warner Bros. stopped by the Pixar studio. So did Sony Pictures. ``Who wouldn't want to be in business with Pixar?'' said a spokeswoman for Sony. Disney executives fumed about Steve's ego. ``He's strutting around like a rooster right now,'' one said. ``Only time will tell if he gets his feathers plucked.''

If Steve was a crowing rooster, Eisner was a wounded peacock. ``This is all personal,'' one former Disney executive complained. Some people said that Eisner felt threatened by Steve's seemingly effortless success -- and his celebrity. Steve ``gets his face on Time magazine, he's loved by Wall Street. He'd be a perfect guy to take over Disney.''

A wake up call to the Disney company to be sure, and an accurate look at what is at stake if Disney and Pixar fail to reach a deal.

The essence of the clash between Steve Jobs and Michael Eisner was revealed in one moment of the Pixar-Disney partnership. Shortly before ``Finding Nemo'' was released in 2003, Eisner met with the Disney board of directors and offered a prediction: Pixar was headed for a ``reality check.''

My understanding is that this is not the "essence" fo the clash between Jobs and Eisner... That in fact it started much earlier when Eisner attended a senate hearing on piracy where he quoted the Apple Computer marketing campaing as promoting piracy...

In essence Eisner embarrased Jobs both publicly and politically... Now if someone is willing to go under oath and testify against you, would you consider Eisner an honest deal maker?

This is documented both in the senate hearings and in DisneyWar... The finding Nemo clash happened much later...