The Ride of a Lifetime - Chapter 11

CHAPTER 11: STAR WARS

Disney, then set their sights on acquiring Lucasfilm, who had the rights to make Star Wars movies, and making them another great subsidiary as part of the Disney family. 

Bob Iger, the CEO, would meet with the CEO of Lucasfilm to discuss and negotiate the acquisition. An important lesson arises when Iger rightly points out that “The worst thing you can do when entering into a negotiation is to suggest or promise something because you know the other person wants to hear it, only to have to reverse course later. You have to be clear about where you stand from the beginning. I knew if I misled George [the CEO of Lucasfilm], simply to begin the bargaining process, or to keep the conversation going, it would ultimately backfire on me.” 

The CEO of Lucasfilm wanted the same price that Disney paid for Pixar but Iger made it clear that Disney would pay less. As he comments in the book: “Typically, the price we pay for assets doesn’t vary much from what we believe the value to be in the first place. It’s often possible to start low and hope to pay far less than what you’re valuing an asset at, but in the process you risk alienating the person you’re negotiating with.” 

In consequence, Disney ended up acquiring Lucasfilm as a subsidiary for less than what Disney paid for Pixar, and it has been a huge success. The new movies of Star Wars released in recent years have been in the list of highest grossing movies of all time in terms of revenue, way surpassing the $1 billion mark.