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Updated: Disney Will Have an Extreme Makeover

There are a number of articles, like this one, from the Mercury News that are making the rounds these days about how through a series of actions Steve Jobs could rise to power to run Disney and what the implications would be for the media industry.

How does such a scenario develop?  Well, if Disney completes a deal to buy Pixar, the animation studio that created hits Toy Story and Finding Nemo, then Jobs, who is already Pixar’s CEO would obtain Disney stock as part of the deal.  In actuality, he would probably end up with enough stock to put him on Disney’s board and perhaps even the chairman’s seat.

So, how does that sit within the modern media landscape?  While, it may remind you of the failed AOL-Time Warner merger, which, was orchestrated to fuse AOL’s online portal with the Time Warner’s vast content library, the outcome will be much different.  While there could be questions as to why this mega-merger would have a different outcome.  Basically, there are two major differences between the AOL-TW merger and Disney and Pixar situation.  First, the AOL and Time Warner deal happened before broadband was widely deployed in American homes, which allows consumers to download larger media content such as songs and video content.  Secondly, there was no device nor the ability to mobilize AOL’s content whereas a Disney/Pixar deal would bring together not only two content behemoths but one of today’s hottest technology providers.

DisneyIf the Disney-Pixar deal does take foot expect Steve Jobs – in whatever capacity he is in the corporate hierarchy – to use the newfound position to influence the organization’s strategy so that he can leverage the Disney’s large content library via the Apple’s iTunes store.  Not only will this help fully usher Disney into the new digital age, but it will monetize an extensive library that is not available yet in the digital world.  While Disney’s ABC and ESPN units have already debuted content in Apple’s iTunes Music Store, with Jobs on the Disney board, it would not be surprising to see old television shows and movies, as well as new releases make their way into the virtual shelves and available for download.  Jobs has built a platform that over 80 million Americans now use to manage their music libraries, and with the latest release of the company’s iPod supporting video, Jobs is looking for a way to tip the scales again for television and film properties and further drive traffic through iTunes and thus the sale of the iPod. 

Of course, on a larger scale, if Jobs is successful in this endeavor it will impact not only Disney, but the larger media community.

Update: Since we posted this earlier in the week, the deal has been completed and it has been announced that Jobs will be on the Disney board of directors.  Business Week has a good analysis of how Jobs will interact and help drive the direction of the Disney organization.

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