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A Successful Negotiation

Jason LaCelle

Siena Heights University

LDR655-OB Negotiations as a Process

Dr. Robert Cote

April 24, 2024

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A Successful Negotiation

Not all negotiations are successful. There are some very disastrous negotiations.

However, a successful negotiation is a strategic discussion that resolves an issue in a way that all

parties find acceptable. It is a process of give and take, where each party may need to make

concessions. Though these concessions may seem like sacrifices, they are investments in a

mutually beneficial outcome. A successful negotiation is one where the outcome is beneficial,

the process is collaborative, and the relationships between the parties are either maintained or
Steinel & Harinck, 2020
strengthened ( ). It is not just about what is achieved but also how it is

achieved. In the case of the Disney-Lucasfilm merger, most, if not all, of these things happened,

causing this merger to be considered a very successful negotiation.

The Merger

On October 30, 2012, The Walt Disney Company made a significant move by agreeing

to acquire Lucasfilm Ltd. in a stock and cash transaction. Lucasfilm was best known for its

successful Star Wars franchise, which was 100% owned by its founder, George Lucas. The deal

was valued at 4.05 billion dollars, and Disney paid approximately half of this amount in cash and
Cuevas, 2012
issued around 40 million shares of stock at closing ( ).

Preparation

A crucial element for a successful negotiation is preparation. To prepare for a

negotiation, it's essential to have a clear goal you want to achieve. It's also a good idea to have a

secondary goal in case you cannot reach the primary one. Additionally, it's important to

distinguish between wants and needs and identify what is non-negotiable. Researching your

opponent to gain insight into their negotiation style and determine their wants and needs is also
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recommended. One effective method to do this is BANTA. A prepared negotiator always knows

their best alternative option if they fail to reach a deal during the upcoming negotiation.

BATNA

In the context of the Disney-Lucasfilm merger, the term BATNA refers to the Best

Alternative to a Negotiated Agreement, which is the best alternative course of action a party can
Steinel & Harinck, 2020
take if negotiations fail and an agreement cannot be reached ( ).

For George Lucas and Lucasfilm, strengthening the BATNA involved enhancing the

value of the Star Wars franchise before the sale. Lucas appointed Kathleen Kennedy to head

Lucasfilm and began laying the groundwork for a new Star Wars trilogy. This included hiring a

respected screenwriter for the next installment and discussing roles with the original cast. These

moves likely increased the value of Lucasfilm, not only for Disney but also for other potential
Shonk, 2023
buyers, giving Lucas a strong position in the negotiations ( ).

For The Walt Disney Company, the BATNA would have been to walk away from the

deal without acquiring Lucasfilm. This would have meant forgoing the opportunity to expand

their portfolio with the Star Wars and Indiana Jones franchises. However, Disney’s strong

financial position and its history of successful acquisitions like Pixar and Marvel likely provided

it with confidence in its negotiating stance (Shonk, 2023).

Ultimately, both parties reached an agreement that was beneficial for them. Lucas was

able to ensure the continuity and legacy of his franchises, while Disney acquired valuable

content to bolster its entertainment offerings. The negotiation process, heavily influenced by the

concept of BATNA, demonstrates the importance of having a strong alternative and how it can

be leveraged to improve the terms of a deal.

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Negotiation Process

The Disney-Lucasfilm merger involved a complex and thorough process that took over a

year to complete due to several factors:

 Due Diligence: Due diligence is a thorough and time-consuming process. It involves a

detailed review of the target company’s business, including financial performance, legal
Bacon, 2023
obligations, contracts, and other critical operational details ( ).

 Negotiations: Negotiations in such high-stakes deals can be lengthy. Both parties need to

agree on the terms, valuation, and structure of the deal. For Disney and Lucasfilm, this

included discussions on the future of the Star Wars franchise and the role of George
Bacon, 2023
Lucas post-acquisition ( ).

 Regulatory Approvals: Acquisitions of this magnitude require regulatory approval to

ensure compliance with antitrust laws and other regulations. The Disney-Lucasfilm deal

would have been subject to scrutiny by regulatory bodies, namely the Hart-Scott-Rodino
Cuevas, 2012
Antitrust Improvements Act ( ).

 Finalizing Details: Finalizing the details of the transaction, such as the transition of

leadership and the integration plan for Lucasfilm into Disney’s operations, would also

require careful planning and agreement.

 Strategic Planning: Disney likely used this time to develop a strategic plan for

leveraging Lucasfilm’s assets, including how to incorporate the Star Wars franchise into

its existing business units and how to maximize revenue streams.

These factors, among others, contributed to the duration of the deal. It is an

exemplification of the intricacy of mergers and acquisitions, particularly when it involves

companies as substantial as Walt Disney and Lucasfilm. The time taken to finalize the deal
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reflects the meticulous consideration and negotiation processes that both Disney and Lucasfilm

undertook to ensure a successful acquisition.

Success

The overall success of the Disney-Lucasfilm merger has been considered to be highly

positive. Some key points that highlight the success of the merger:

 Financial Success: As of the six-year anniversary of the acquisition, the Star Wars

movies alone had grossed over $4.8 billion at the box office, surpassing the initial

investment of $4.05 billion. This does not even account for the additional revenue from

merchandise, licensing fees, and other products (Libbey, 2018).

 Strategic Acquisition: Analysts have called the purchase one of the smartest acquisitions

in history, noting that Disney has more than made back its original investment through

various revenue streams. The acquisition has been a significant contributor to Disney’s

growth and expansion in the entertainment industry (Whitten, 2018).

 Content Expansion: The merger has led to the creation of new Star Wars content,

including a new trilogy, spinoff films, animated series, and planned live-action series.

This expansion has kept the franchise fresh and relevant for new generations of fans
Libbey, 2018
( ).

 Theme Park Enhancements: Disney has also leveraged the Star Wars brand in its theme

parks with the construction of Star Wars Lands, which promise to offer immersive
Libbey, 2018
experiences for visitors ( ).
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Summary

In summary, while the exact concessions made by each party are not detailed, the

negotiation was a complex process that required patience, trust-building, and a focus on long-

term strategy. Both Disney and Lucasfilm aimed to reach an agreement that would benefit the

future of the Star Wars franchise and Disney's shareholders. In the end, both parties reached an

agreement that was beneficial to them. Lucas was able to ensure the continuity and legacy of his

franchises, and Disney acquired valuable content to bolster its entertainment offerings. The

negotiation process demonstrates the importance of having a strong desire for a win-win

collaborative style of negotiations to create a successful deal.

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References

Bacon, T. (2023, October 30). 11 years ago today, disney bought lucasfilm for $4.05 billion - but

has it been a success? ScreenRant. HYPERLINK "https://screenrant.com/star-wars-

disney-lucasfilm-purchase-success/"https://screenrant.com/star-wars-disney-lucasfilm-

purchase-success/

Cuevas, A. (2012, October 29). Disney to acquire Lucasfilm ltd. - the walt disney company. The Walt Disney Co

Libbey, D. (2018, October 31). Disney has already made its money back after buying Lucasfilm.

CINEMABLEND. HYPERLINK "https://www.cinemablend.com/news/2460444/disney-

has-already-made-its-money-back-after-buying-lucasfilm"https://

www.cinemablend.com/news/2460444/disney-has-already-made-its-money-back-after-

buying-lucasfilm

Shonk, K. (2023, December 5). Star wars stories: George lucas and a strong batna, passed over. PON - Program

Steinel, W., & Harinck, F. (2020, September 28). Negotiation and bargaining. Oxford Research Encyclopedia of

Whitten, S. (2018, October 30). Disney bought Lucasfilm six years ago today and has already

recouped its $4 billion investment. CNBC. HYPERLINK

"https://www.cnbc.com/2018/10/30/six-years-after-buying-lucasfilm-disney-has-
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recouped-its-investment.html"https://www.cnbc.com/2018/10/30/six-years-after-buying-

lucasfilm-disney-has-recouped-its-investment.html