Disney bidding on scraps of bankrupt AI company

There is some history between the two companies. Last month, Disney hired Character’s CEO Karandeep Anand, and the potential new agreement would see more employees from Character join Disney. Disney has also offered to provide transitional services until the sale goes through, which is expected in late November or early December. In a press statement, Colin Adams, Character’s new CEO, called the potential sale—say it with us—”the best opportunity to maximize value for all stakeholders.”

Character.ai is primarily a chatbot company that allowed users to “talk” to bots based on fictional characters. This led to legal trouble, not just for the obvious copyright issues, but also because, as Variety reports, the bot allegedly encouraged self-harm and for impersonated medical professionals. In fact, Disney was one of the companies that hit Character.ai with a cease-and-desist letter in September 2025, shortly before it announced a plan to introduce short-form, user-generated AI slop to its Disney+ app. It had initially planned to use OpenAI’s Sora for that, but that doesn’t exist anymore, so it seems like the new plan is just to bring the plagiarism machine in-house and use it for the Mouse’s own means.