Disney buys partner Pixar

LOS ANGELES - The Walt Disney Co. said Tuesday that it is buying longtime partner Pixar Animation Studios Inc. for $7.4 billion in a deal that could restore Disney's clout 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 Mr. Jobs Disney's largest shareholder.

Mr. Jobs, who controls more than half of Pixar's stock and also heads Apple Computer Inc., will also join Disney's board.

"With this transaction, we welcome and embrace Pixar's unique culture, which for two decades has fostered some of the most innovative and successful films in history," Disney Chief Executive Robert Iger said.

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, the theme park owner that also owns the ABC and ESPN TV networks, and Pixar have been talking for months about a new relationship.

With Pixar, Disney gains a company that has produced a long-running string of animated blockbusters, including The Incredibles.

Through Mr. Jobs, Disney will tightens its link with Apple Computer, the innovative technology company behind music and video iPods.

Disney is not acquiring a direct interest in Apple.

But Mr. Jobs could help Mr. Iger push his plans to marry films, TV shows, video games and other content to computers, iPods, handheld game consoles and even cell phones.

Pixar films have been a financial windfall for Disney, which receives 60 percent of the profits.

By contrast, Disney's own animation unit has struggled, producing some modest successes, such as 2002's Lilo & Stitch, and many flops, including Treasure Planet.