Acquired
00:34:02 · Ben Gilbert, David Rosenthal
[00:34:02] S0: And you're very clearly the front man. You know? You're selling. You're the visionary. You're the sort of creative talent, and this is a creative company. Of course, it should be you. [00:34:09] S1: Yep. The other story is that Walt's always had a dream since he got to Hollywood of having his name up on a neon sign. Now that they have their own real studio, he wants a neon sign constructed that says the Walt Disney Studio, which I think does happen. [00:34:26] S0: Yes. We'll put the photo in the email. The Hyperion Avenue Studio has this really cool sign or did for a long time before it got knocked down, and I think [00:34:34] S1: it's a script mall or something today. And in that vein, now that the studio has become a real operation, Walt moves from actually doing a lot of the animation and camera work mostly to overseeing the studio, which you have to with an operation of 25 artists and creative people and camera folks. You need someone who has an overall vision and taste to drive everything. Yep. Now as Walt is transitioning from, you know, sort of doer to [00:35:09] S0: really studio head. And worth knowing the ownership of Walt Disney Studios that would become Walt Disney Productions, that would become the Walt Disney Company, was at this point 60% owned by Walt and his wife and 40% owned by Roy and his wife.
00:35:09 · Ben Gilbert, David Rosenthal
[00:35:09] S0: really studio head. And worth knowing the ownership of Walt Disney Studios that would become Walt Disney Productions, that would become the Walt Disney Company, was at this point 60% owned by Walt and his wife and 40% owned by Roy and his wife. [00:35:24] S1: Yep. So Mintz, the husband of Winkler back in New York, who has sort of already proved his stripes by his dealings with Felix the cat and Pat Sullivan, he senses another opportunity. He thinks that Walt has become superfluous and that it's actually just the animators who really matter. And because the Walt Disney studio doesn't actually own the IP of Oswald the Lucky Rabbit. Universal does. Although the Walt Disney studio was was acting like this was sort [00:36:02] S0: of their creation that they owned. [00:36:04] S1: Yeah. I don't think Walt, or Roy really read the fine print on the contracts here. So in early nineteen twenty eight, Walt and his wife, Lillian, who Lillian also was an early studio employee [00:36:17] S0: In the ink and paint department. [00:36:19] S1: Ink and paint department. [00:36:19] S0: That's right. We'll get to that.
00:36:19 · Ben Gilbert, David Rosenthal
[00:36:19] S0: That's right. We'll get to that. [00:36:21] S1: They make a fateful trip as a couple to New York, where one of the items on the agenda is for Walt to go meet with Mintz and ask for a raise in the amount that the studio is getting paid per Oswald short. So Walt sits down with Mintz, and Mintz is like, well, I don't know about paying you more. I don't think I like that idea. In fact, I'm not even really sure, Walt, what you are doing around here any longer. But I tell you what, I'm a nice guy. I'm willing to let you and your little studio stay involved here and keep making the Oswalds, but we're gonna have to pay you less, not more. Like, $500 per cartoon [00:37:04] S0: less. Which my understanding is that basically wiped out the margin, and they were saying, we'll pay you cost to make these Oswald cartoons. [00:37:13] S1: Yeah. I think Mint had basically calculated, okay. If Walt takes this, then I'm willing to let his studio keep making it. And if he doesn't take it, then it's all equal to me. I'm just gonna steal his animators and go make it myself. [00:37:25] S0: And, crucially, before this meeting even happens [00:37:29] S1: He's already stolen the animators. [00:37:31] S0: Mintz has an ace in the hole. He has, I think, signed contracts with nearly all the animators except Ub Iwerks. Yeah. He has sort of, through an act of subterfuge, gotten in touch with each of them individually and brought them over.
00:37:31 · Ben Gilbert, David Rosenthal
[00:37:31] S0: Mintz has an ace in the hole. He has, I think, signed contracts with nearly all the animators except Ub Iwerks. Yeah. He has sort of, through an act of subterfuge, gotten in touch with each of them individually and brought them over. [00:37:45] S1: Yeah. Only Ub and and I think maybe two or three other animators refused to sign these secret deals with Mintz and stayed loyal to to Walt and to Roy. Once Walt realizes this, there's nothing he can do. Like, it's a free country. He can't force his animators to stay. He doesn't have employment contracts with them. And he also doesn't have any control or rights to the actual Oswald IP, so he has no leverage. [00:38:14] S0: He's got nothing. He's got no customer contract. He's got no employees. He's got no intellectual properties. Suddenly, the enterprise value so that the the entire value of Walt Disney Studios is effectively zero. [00:38:27] S1: Yep. It is a extremely bitter lesson for Walt and for Roy, and it is one that you can bet they never forget for the rest of their lives. And, really, like, everything in Disney's history and all of the enterprise value that Disney has built that we will see all across the rest of this episode traces back to this moment. [00:38:49] S0: It's a hard reaction to this lesson. Totally. [00:38:52] S1: I have a fun bit of trivia for you, Ben. Oh. So as I think you know, Disney eventually does get the rights to Oswald back. [00:39:02] S0: This is gonna be my trivia for you. Oh. Alright. Actually, ask your question. We might have different takes on it.
00:39:02 · Ben Gilbert, David Rosenthal
[00:39:02] S0: This is gonna be my trivia for you. Oh. Alright. Actually, ask your question. We might have different takes on it. [00:39:07] S1: Disney eventually does get the rights to Oswald back in 2006. Bob Iger, one [00:39:16] S0: of his first acts as CEO, did the deal. [00:39:18] S1: Yes. Do you know how Bob got Oswald back for Disney? [00:39:23] S0: So let's see. By this point, Disney had acquired ABC. [00:39:26] S1: Yep. And Which had acquired ESPN. [00:39:29] S0: And who owned Oswald at this point? It was Universal, which was owned by NBC, which is now owned by Comcast. Correct. So there's an ABC asset that Bob effectively trades in exchange for Oswald. And I think that ABC, ESPN, Monday night football asset is Al Michaels. [00:39:51] S1: Al Michaels, the Monday night football commentator, like a sports team trade to NBC in exchange for the IP rights to Oswald the rabbit. [00:40:01] S0: And Oswald is repatriated, and NBC gets Al Michaels and Al is right in the world. [00:40:05] S1: Amazing. So back to 1928. Walt and Roy are basically back at square one here. They have not really just nothing. They actually have less than nothing because Mintz ever the, well, really just kinda weasel is the right word. Yeah. He makes Walt and Walt Disney Studios finish out the current Oswald contract, which still had a few cartoons left to animate on it, and pay all of the animators who had all betrayed him and were all about to defect. Mintz is like, no. No. You've got a contract. You're gonna keep paying these folks while they finish up the last couple shorts on
00:40:05 · David Rosenthal, Ben Gilbert
[00:40:05] S1: Amazing. So back to 1928. Walt and Roy are basically back at square one here. They have not really just nothing. They actually have less than nothing because Mintz ever the, well, really just kinda weasel is the right word. Yeah. He makes Walt and Walt Disney Studios finish out the current Oswald contract, which still had a few cartoons left to animate on it, and pay all of the animators who had all betrayed him and were all about to defect. Mintz is like, no. No. You've got a contract. You're gonna keep paying these folks while they finish up the last couple shorts on [00:40:50] S0: this Just brutal. [00:40:51] S1: Contract. Just brutal. Absolutely humiliating for Walt. And so then, as legend has it, on the long, long train ride back home from New York, Walt is struck by a bolt of inspiration, and he scribbles a sketch for a new cartoon character right there on his drawing pad on the train trip. A character that wouldn't just reverse all the woes of the Oswalds and turn around the company's fortune, but would maybe become one of, if not the most recognized figure in all of human history. But before we tell the story of Mickey Mouse, now is a great time to thank our friends at JPMorgan. [00:41:38] S0: Yes. Our presenting partner. So today, we are sharing a story from one of JPMorgan's partners and a company that you may know, Bill, which is formerly bill.com. Right. Bill is the financial operations platform for half a million small and mid sized businesses, what they