Michael Eisner publicly slammed Apple as a piracy enabler during a Congressional hearing, and the news hit Hollywood and Silicon Valley like a bombshell.
Apple's stock price, which was sitting at $15.85 that day, plummeted to $13.45—a drop of over 14.5%!
Caught between Silicon Valley and Hollywood, Dunn stayed quiet on the matter, watching from the sidelines with a cool detachment.
Eisner's flip-flopping between promises and power plays was seriously messing with Dunn's interests.
Dunn had planned to use Pixar to put pressure on Disney, teaching Eisner a lesson. But to his surprise, Jobs wasn't on board with breaking ties with Disney at this moment.
And this was despite the fact that Jobs and Eisner's relationship was downright awful!
But then, in a twist of fate, just when Jobs had decided to let it slide, Eisner lost his mind and called out Jobs in Congress. Talk about digging your own grave!
In Dunn's previous life, Jobs had swallowed his anger and kept working with Disney. But in this life, Dunn was certain Jobs would make a different call. Here's why:
First, Dunn was a major Apple shareholder and Jobs' biggest backer, giving him some serious leverage.
Second, sure, Disney could maximize Pixar's profits, but Dunn's sincerity and clout in the film industry were unmatched. Even if Pixar took a short-term hit, partnering with Dunn was the smarter long-term move for Pixar's future.
Third, Apple's stock had been steadily climbing over the past year, thanks in part to the iPod launch—but Dunn's aggressive stock purchases hadn't gone unnoticed either. Jobs was grateful.
Fourth, Disney was a Hollywood giant, but Dunn could bridge Hollywood and Silicon Valley. In the midst of this piracy controversy, that gave Apple—and Jobs—a much-needed buffer.
Fifth, Jobs had a fiery temper! In his past life, he'd chosen to grit his teeth and bear it. But now, with Dunn in his corner—ready to bankroll a contract buyout and handle film distribution—Disney wasn't his only option anymore.
With these five points in mind, Dunn was confident. All he had to do was wait for Jobs to reach out and kick off their counterattack.
Sure enough, four days later, Dunn got a call from Jobs.
"Dunn, I've been thinking about this for days, and I'm with you on this!" Jobs' voice was hoarse over the phone, like he hadn't slept much.
Dunn couldn't resist a little jab. "With me? On what?"
Jobs huffed, "Come on, Dunn, you know exactly what I'm talking about. We need to team up on this!"
Dunn chuckled. "Steve, I told you ages ago—Eisner's the kind of guy who'll stab you in the back. Working with him was a terrible call. Good thing you're finally seeing the light."
Jobs sighed. "I was just trying to protect Pixar's stock price."
Dunn got it.
If Pixar bought out its contract and cut ties with Disney, its stock could tank. Even with Dunn's studio as a new partner, winning back investor confidence would be tough.
Disney's influence in the animation industry dwarfed Dunn's studio.
"I'm a Pixar shareholder too, you know," Dunn said firmly. "I'll make sure Pixar's stock stays solid."
"Oh?" Jobs sounded intrigued.
Dunn pressed on. "I've told you before—I'm working on acquiring Universal Pictures. Yeah, the paperwork's a hassle, but I've got tight connections with Universal. I can lock in a distribution deal that'll keep Pixar's stock steady. My studio's films go through Universal with just a 10% cut!"
"Ten percent?" Jobs shook his head, unimpressed. "Dunn, that's for live-action films. Pixar makes animated movies. Animation has way more potential for merchandise and tie-ins."
In Hollywood, films like animated features, with their massive merchandising potential, usually meant distributors demanded a bigger slice of the pie.
Dunn grinned. "You think Spider-Man's merchandise haul is smaller than Pixar's? Steve, listen—anything Disney can offer you, I can match. And what Disney can't offer, I can still deliver!"
Jobs didn't need convincing. "No need to sell me on it—I'm in. I've already told Pixar's legal team to start negotiating the distribution contract with Disney. I'm buying it out."
"Now you're talking!" Dunn let out a relieved breath, already picturing the cash that would've gone to Disney flowing his way instead.
And not just from Pixar—there were all those classic Disney animated films too!
Jobs went quiet for a long moment before saying slowly, "Dunn, let's be real. Right now, Disney's still Pixar's best partner. I don't think you can keep Pixar's stock price stable."
Dunn's face tightened. "What's that supposed to mean?"
"Let's talk in person. Pixar?" Jobs sounded hesitant.
Dunn frowned. "Is that necessary? This is simple—I cover the buyout, and Pixar ends the Disney contract."
"No," Jobs said firmly. "I have to look out for all of Pixar's shareholders. I can't let Apple's problems drag down another public company. That kind of move would kill investor confidence. You know my reputation on Wall Street… it's already shaky. I can't afford to tank it further."
Dunn paused, then nodded. "Fine. Tomorrow morning, Pixar HQ."
…
"What?!"
In the president's office at Pixar, Dunn stared at Jobs, stunned. Even John Lasseter, sitting nearby, was so shocked his jaw dropped, speechless.
Jobs shrugged casually. "It's my final decision. And I'm confident I can convince all of Pixar's shareholders to go along with my plan."
Lasseter blinked, still dazed. "Steve, you know Pixar's got a huge future ahead! Sure, our stock price is high right now—PE over 60—but we're a company that blends tech and animated films."
Dunn wasn't exactly calm either. "Steve, a decision like this… I mean, yeah, I'd agree to it, but as your friend, I've gotta be straight with you—Pixar's stock is undervalued right now."
Lasseter jumped in. "Exactly! We could wait a few years before making a move like this!"
"No."
Jobs' tone was unshakable. Once he made up his mind, there was no turning back—almost like when he'd been ousted from Apple years ago and sold off all his shares in a fit of rage. "Selling Pixar to Dunn's studio is what's best for Pixar's future. Pixar's been my heart and soul for over a decade. I want it to thrive."
That's right—Jobs was planning to sell Pixar entirely to Dunn!
To protect the stock price and his credibility on Wall Street, Jobs had made a bold, almost reckless decision.