On the same day UPN and The WB announced a merger to create a new network, The CW, The Walt Disney Co. announced a full-stock purchase of animation partner Pixar.
Disney said Tuesday it is buying longtime partner Pixar Animation Studios Inc. for $7.4 billion in a deal that in animation while vaulting Pixar CEO Steve Jobs into a powerful role at the media conglomerate.
Disney will buy the maker of the blockbuster films "Toy Story and "Finding Nemo" in an all-stock transaction that makes Jobs Disney's largest shareholder. Jobs, who controls more than half of Pixar's stock and also heads Apple Computer Inc., will also join Disney's board.
Disney has co-financed and distributed Pixar's animated films for the past 12 years, splitting the profits. But that deal expires in June after Pixar delivers "Cars."
Disney and Pixar have been talking for months about a new relationship.
CBS News technology analyst Larry Magid said it's not just Pixar's stylish characters and high-tech animation that will make this deal a success for Disney.
"Pixar CEO Steve Jobs who is also CEO of Apple is a major asset of this deal. He's the one who made the iPod an enormous hit. He certainly understands entertainment and what young people want," Magid said. "He's also a man of impeccable taste."
New Network Born
Two small, long-struggling television networks — UPN and The WB — will shut down this fall and programming from both will be used to aimed mainly at young and minority viewers.
The new network will be called The CW — "C" for CBS Corp. and "W" for Warner Bros. — each of which will own half of the new entity and contribute programs, assets and executives to the venture.
Tribune Co., a Chicago-based media company, will relinquish its 22.5 percent stake in The WB in exchange for a 10-year affiliation deal to carry the new network on 16 of its stations. The rest of The WB was owned by Time Warner Inc., parent of Warner Bros.
The CW will also be carried on the 12 stations owned by UPN, a unit of CBS Corp., guaranteeing the network carriage in 48 percent of the country and 20 of the top 25 TV markets in the country. Network executives said they hoped to have agreements in place to cover most of the rest of the country by the time it launches in the fall.
UPN and The WB had both struggled to compete against larger rivals in the broadcast TV business, including Walt Disney Co.'s ABC, General Electric Co.'s NBC, CBS Corp.'s CBS and News Corp.'s Fox.