How Star Wars Conquered the Universe: The Past, Present, and Future of a Multibillion Dollar Franchise

by Taylor, Chris

  In August 2009, some three years after he bought Pixar, Disney CEO Iger made his second surprise acquisition: Marvel, maker of comic books Lucas had been reading since the 1960s, the company that admitted it had been saved from its tail-spin in the late 1970s by the Star Wars comic. Despite losing the Star Wars license, Marvel had roared back in the late 1990s, when the company made the leap to the silver screen with the X-Men trilogy and Spider Man; now it was worth $4 billion to Disney. Once again, critics suspected it was overvalued (after all, the X-Men and Spider Man franchises were both licensed to other movie studios; Disney couldn’t use them). Once again, the supposedly overvalued company was left to run its own business, and once again, it found a string of box office successes (most notably the Iron Man series and The Avengers, which became the third highest grossing movie in history). And once again, there was a prominent Star Wars influence: Kevin Feige, president of Marvel Studios, was obsessed with the original trilogy and had gone to USC specifically because it was Lucas’s alma mater.

  If Iger had intended for his acquisitions to get George Lucas’s attention, he could have picked no two better companies to buy than Pixar and Marvel. These were companies Lucas loved—and one that he had birthed himself—and he could see that Iger was willing to let them retain their respective idiosyncrasies. Disney also was clearly on the hunt for powerful characters with deep ties to the now-dominant nerd culture; with the Marvel deal it had just bought a universe with five thousand of them. Lucasfilm had many thousands more than that in the Holocron.

  Iger had known George Lucas since 1991, when Iger was head of ABC TV and commissioned Young Indiana Jones. Lucas turned sixty-five in 2009; the chances of him staying on at Lucasfilm for as long as Iger was contracted into his job—until 2015—were slim. By then Lucas would be seventy-one. From the outside, he already seemed uninterested in running the Star Wars hit machine any more, at least not beyond a single animated TV show.

  And there was something else Iger knew about Lucas. After all these years, George had fallen in love again, and he’d fallen hard. Her name was Mellody Hobson; she was the chair of DreamWorks Animation, president of a $9 billion Chicago investment firm, and a friend of the Obamas. Lucas met her at a business conference in 2006. While very little is known about their relationship—least of all which conference that was—Lucas has indicated that they began dating around 2008. By 2009, Lucas let her meet the artists on the third floor at Skywalker Ranch. She burst in gleefully: “Hello boys, it’s take your girlfriend to work day.”

  But before Lucas popped the question to Mellody, he would have to decide what to do with the advances of a most persuasive suitor of his own: the Walt Disney Corporation.

  Iger popped the question to Lucas on May 20, 2011. Lucas had just turned sixty-seven a week earlier.

  The two men had come together at Disney World to inaugurate the second version of Star Tours. Lucas had decided to change everything about the ride, to make it new. Prior to 2011, the ride had been set during Return of the Jedi and called the Endor Express; you could call this upgraded version the Everywhere Express. The simulator could offer segments in eleven locations in the Star Wars universe, which in random combination would lead, Disney boasted, to fifty-four distinct Star Wars experiences. It was set between Episodes III and IV and thus would now feature characters, scenes, and planets from the prequel trilogy. The cultural shift in what constituted Star Wars was assured at Disney, with which Lucasfilm had been working on the ride since 2006.

  Lucas and Iger had a packed schedule ahead of them that day. They had to appear at the opening ceremony for the ride, which was to be a scripted spectacular. Here’s how it would go down: Emcee Anthony Daniels, alongside Chris Bartlett—contractually unacknowledged inside his Threepio costume—would welcome visitors. Stormtroopers would then invade the set, clearing the way for Darth Vader. Two Jedi would be seen on the screen racing through Disney World to save everybody from the Empire, lightsabers drawn to draw the blaster fire, faces covered in robe hoods. The screen Jedi would appear to run up to the doors of the stage. “Reveal yourselves, Jedi,” Vader would say, and out would come Iger and Lucas, brandishing lightsabers. “Prepare to meet your Maker,” Iger would tell Vader, indicating Lucas. Pause for audience laughter.

  Vader would insist Iger and Lucas didn’t have the power necessary to remove the energy shield he’d placed around Disney World. “Don’t worry,” Lucas was to say, his only scripted words in this whole unusual bit. “Artoo will know what to do.”

  With their lines securely in their heads, Iger and Lucas met for breakfast at the Hollywood Brown Derby, a complete replica of a famous old Tinseltown landmark restaurant. If one was trying to woo George Lucas, where else would one take him but a replica restaurant that evoked nostalgia, glory days, the glitter of movie history past? Iger did everything but get down on one knee with an R2-D2 wedding ring.

  The men were dining alone; one of the perks of running Disney is you get to close down restaurants in theme parks and eat in them at will. Lucas ordered the omelet, Iger the parfait. Then, with the wait staff out of earshot, the Disney boss turned to business. Would Lucas ever consider selling his company?

  Lucas played it cool. (Pay attention, would-be fiancés with cold feet.) “I’m not ready to pursue that now,” Lucas said. “But when I am, I’d love to talk.”

  The seed planted, the pair headed out for the morning’s festivities. When the big reveal came and the Jedi team strolled on stage, Lucas held his lightsaber casually, one hand in his jeans pocket. Iger held his two-handed with stiff shoulders, as if cradling something very fragile.

  What was Lucas waiting for? Star Tours was complete. Clone Wars was chugging along under the watchful eye of Filoni. There was no other major Star Wars production on Lucasfilm’s plate.

  But that was precisely the problem. Lucas didn’t just want to hand over his intellectual property to Disney—or any other investor, for that matter—with only a skeleton crew to keep the franchise running. Because Paramount owned the rights to distribute the Indiana Jones movies, that series was considered “revenue neutral” to the lawyers. Star Wars was pretty much the only asset Lucasfilm had. Even after all these years, the company was really still the Star Wars Corporation.

  No, if Lucas was going to sell Lucasfilm, it would be the spiffiest Special Edition–style Lucasfilm it could possibly be. It was time to change everything around and make it new, one last time.

  Step 1: secure a successor. Lucas said he “ruminated on it endlessly” until the answer occurred to him: Kathleen Kennedy, Spielberg’s long-time production partner and one of the most accomplished producers in Hollywood. There was no other candidate. “Why didn’t I see this before?” Lucas would recall thinking. “She’s always been standing right there in front of me.” The two met for lunch in New York; after catching up on family and friends, Lucas told her he was “moving pretty aggressively” to retire. Would she be willing to take the reins at Lucasfilm—and to potentially help him hand it over to another company?

  Kennedy didn’t need much time, if any, to think about it. “Once I realized what he’d said, I answered pretty quickly,” she says. “I kind of surprised myself.” She’d never seen herself running a studio. She already ran a successful production company with her husband, Frank Marshall: Amblin Entertainment, which they had cofounded with Spielberg and through which they had produced his movies ET: The Extraterrestrial, Jurassic Park, and Lincoln, along with a host of other films by directors like Martin Scorsese and J. J. Abrams. Amblin had produced a lot of movies with Disney and its subsidiaries, too. Kennedy accepted on the spot: it would “afford me the ability to take my skills and be part of something bigger,” she said. New Star Wars movies were “something bigger” than every blockbuster motion picture she’d been involved in thus far.

  Step 2 for Lucas: pop the old ship back into hyperspace. “I’ve got to build this company up so it functions without me,” Lucas later said he thought at the time, “and we n
eed to do something to make it attractive.” And one surefire way to doll up Lucasfilm would be to get a few more Star Wars films into the rotation.

  Lucas had stated explicitly that Episodes VII, VIII, and IX were not to be made. He’d never really thought of any stories for them. But how hard would it be to whip up a few more little space things? So one evening, casually, on the phone to his son, Jett, during dinner, Lucas revealed he was writing again. That’s good, said Jett, who knew his father was happiest when he had his head in a creative project. Your personal movies, right? No, said Lucas. More Star Wars. “Wait,” said Jett. “Back up. What?” Even the Creator’s son believed Star Wars movies were over.

  Lucas called the old gang: Hamill, Ford, and Fisher. Negotiations commenced. Fisher, who had been told to lose ten pounds to play Leia in 1976, agreed to lose thirty-five pounds to play her this time around. Empire and Jedi screenwriter Lawrence Kasdan, who had refused to help Lucas rewrite Episode I, was brought on board as a consultant, although he was not initially slated to cowrite Episode VII. Lucas wanted a younger screenwriter: Michael Arndt. He had independent movie bona fides; Arndt was so aggressively independent, in fact, that he had been fired as the writer of his first movie, Little Miss Sunshine, which he had sold to Fox Searchlight. (He was later rehired.) Lucas had to admire Arndt’s tenacity and the award-winning mix of drama and comedy it had yielded—not to mention the fact that the last scene of the movie was written just weeks before the premiere. Clearly, this was a man after Lucas’s heart. Arndt had also been the main writer on the top-grossing Pixar movie of all time, Toy Story 3. He was a known quantity at Disney.

  By June 2012, Lucas was finally willing to take the next step. Kennedy was announced as cochair of Lucasfilm on June 1. She had watched Lucas agonizing over whether he was ready. Now he was. He picked up the phone and called Iger.

  Immediately, lawyers and accountants began combing Lucasfilm’s property to assess its worth—and to make absolutely certain that Lucas actually owned everything he thought he owned in the Star Wars universe. Up to twenty lawyers at the LA office of Skadden Arps went through the surreal process of making files on 290 “primary characters” from the Star Wars universe, from Admiral Ackbar to the bounty hunter Zuckuss. It wasn’t that anyone was seriously questioning whether Lucas owned the rights to these characters. But crackpot claims had been made over the years, and due diligence had to be done. The firm plugged away at it throughout July and August; they scrutinized chains of title dating all the way back to the days when United Artists or Universal could have bought into the franchise for a song but didn’t.

  The investigators quickly gave each character a code name, because the buzz in the office was already beginning. The head of the office, Brian McCarthy, had helped shepherd Disney’s purchase of Pixar. This experience was different. “I was shocked by how many people knew the intricacies of whose father-in-law was married to whose sister,” McCarthy told the Hollywood Reporter. Even after all these years, even in Hollywood, power players could still be shocked by how widely, intimately known the franchise had become.

  At Disney, Iger confided to his direct reports that while they didn’t have a deal yet, they were close. Nothing was to leak. “Trust became important,” Iger said in 2013. Trust had always been important at Lucasfilm, which was used to the lockdown atmosphere. Indeed, the company was able to simultaneously work on new movies and the Disney deal, both in secret. Kennedy was running a small story development team. With notable exceptions, nobody was told of the impending deal—though staffers certainly had their suspicions. A hiring freeze and a marketing freeze were put in place by September 2012. “The writing was on the wall,” said social media manager Bonnie Burton. “We were getting reorganized constantly. There was talk behind closed doors that was pretty loud. I kind of thought Disney was going to buy us, because the only other people who could afford Lucasfilm were, like, Sony or Microsoft.”

  Some Lucasfilm employees knew more than others. Leland Chee, keeper of the Holocron, first got curious when he was asked to come up with a definitive number of characters in his database. Brand communications manager Pablo Hidalgo was told of the sale in advance: he’d just finished a mammoth book, The Essential Reader’s Guide, which covered every Star Wars novel and short story ever published, and was now tasked with strange little assignments to explain Star Wars inellectual property. What he didn’t know was that there was a whole lot of new intellectual property coming down the pike.

  Then, on June 29, 2012, Hidalgo was brought into a meeting with his boss, Miles Perkins. Ostensibly, the meeting’s purpose was to update the company’s “messaging” to its fans. And why was messaging being updated?, Hidalgo wondered. “We’re making seven, eight, and nine,” Perkins said casually.

  Hidalgo needed to sit down. He guessed his reaction was being gauged. And when it came, he says, his reaction was “something that’s unprintable”—presumably spoken through a giant smile.

  Star Wars was back from the dead. Again.

  There was just one hitch. Lucas was refusing to give Iger any treatments for Episodes VII, VIII, and IX before the deal closed. They would be great; Disney would just have to trust him. Disney wanted to trust, but it also wanted to verify Lucas’s assurances that the treatments were solid—or indeed that there were treatments in the works at all. The company easily could have dug up claims that Lucas had made on multiple occasions, one of them in front of thousands of people, about never having written any such treatments.

  But Lucas was playing hardball. “Ultimately you have to say, ‘Look, I know what I’m doing,’” he told BusinessWeek. “‘Buying my stories is part of what the deal is.’ I’ve worked at this for 40 years, and I’ve been pretty successful. I mean, I could have said, ‘Fine, well, I’ll just sell the company to somebody else.’”

  Lucas didn’t relent until he got, in writing, an agreement on the broad outlines of the deal. He was to get forty million shares of Disney stock and another $2 billion in cash. Even then, Lucas also had to have it in writing that the treatments he’d cobbled together could only be seen by three people at Disney—Bob Iger, new chair Alan Horn, and VP Kevin Mayer.

  Iger’s reaction to the treatments was muted. “We thought from a storytelling perspective they had a lot of potential,” he told BusinessWeek. For a man well versed in marketing, that was either a deliberate underselling or the most damning faint praise in Disney history. Either way, it would have been hard to quit the deal at that point, with an agreement in writing and a full evaluation sweep going on at Lucasfilm. And it would be no skin off Lucas’s back to turn round and sell the whole spruced-up company to someone else. Besides, even if the treatments were wretched, no Star Wars movie had ever failed to make a killing.

  With the deal nearing, activity at both companies reached a fever pitch by October 2012. Bob Iger watched the six Star Wars movies back to back in a weekend and took notes. Kathleen Kennedy convinced Howard Roffman to come out of semiretirement and manage the coming explosion in licensing—it was, after all, always the consumer products division of Lucasfilm that minted the most money. Between October 11 and 14, during some tense phone calls from New York Comic-Con, Hidalgo learned that the sale was a go. He emailed “Star Wars” Insider to get it to hold its front cover. He couldn’t tell them why—yet.

  On Friday, October 19, 2012, George Lucas sat down to film what would be, in a way, his final feature as head of the company that bore his name. This time he would not be behind the camera but in front of it, along with Kathleen Kennedy. His aim was to officially pass the torch but also to get ahead of the story—and to remove all need to do TV interviews about the announcement by shooting an extensive conversation with the principals involved, a conversation he would then give freely to the world. It was to be one last triumph of media management for Lucasfilm before its landscape changed forever.

  Lynne Hale, Lucasfilm’s PR chief, would oddly play an uncredited role in the interview, asking smiling questions in the styl
e of a TV anchor. The whole thing was to be edited down to about half an hour and released in five short episodes on YouTube.

  As the camera rolled, Lucas talked about the media giant to which he was selling his company almost like it was a nuclear bunker. Disney was “the steadiest of all the studios,” he said, a place where the Star Wars legacy could survive for generations. He praised the company for “nurturing a brand, licensing, that whole package of keeping them on a steady footing.” It was almost like Isaac Asimov’s classic science fiction series Foundation, a favorite of Lucas’s, in which a visionary plots out the thousand-year future of his civilization. Lucas foresaw Kennedy picking her own successor, still backed by the strength of the Mouse House. “Ultimately,” said Lucas, “when it’s the end of the world and we’re all going to die, the last thing to go will be Disney.”

  Like Obi-Wan telling Luke that what he’d been told about Darth Vader was true from a certain point of view, Lucas found a loophole in his earlier claims that there would be no more Star Wars movies. “I always said I wasn’t going to do any more, and that’s true, because I’m not going to do them,” he said. (Those “explicit instructions” he’d mentioned in 2008 had apparently gone by the wayside.) “That doesn’t mean I’m unwilling to turn it over to Kathleen to do more.” The loophole, apparently, was the exact size and shape of one of the best producers in the business.