Pixar dumps Disney

[chernabog_ca]

source: http://money.cnn.com/2004/01/29/news...sney/index.htm

Pixar dumps Disney
Studio headed by Steve Jobs says it will seek other distributors for its films starting in 2006.
January 29, 2004: 7:20 PM EST

NEW YORK (CNN/Money) - Pixar Animation Studios Inc. said Thursday it ended talks with Walt Disney Co. to extend a five-picture deal for Disney to distribute Pixar films.

Pixar, the computer animation pioneer founded by Apple Computer Inc.'s Steve Jobs, said it would begin talks with other companies to distribute its films starting in 2006.

"After ten months of trying to strike a deal with Disney, we're moving on," Pixar CEO Steve Jobs said in a statement. "We've had a great run together -- one of the most successful in Hollywood history -- and it's a shame that Disney won't be participating in Pixar's future successes."

The move was a clear setback to Disney, which reaped a financial and critical bonanza from the partnership and has struggled with its own strategy for animation.

Disney said Pixar's final offer would have cost Disney hundreds of millions of dollars from the existing distribution deal and was not sweet enough going forward.

"Although we would have enjoyed continuing our successful collaboration under mutually acceptable terms, Pixar understandably has chosen to go its own way to grow as an independent company," Disney Chairman Michael Eisner said in a statement.

Pixar (PIXR: Research, Estimates) stock rose initially in after-hours trading but later fell back, while Disney (DIS: Research, Estimates) stock tumbled about 6 percent.

Other studios are already expressing interest in forging a relationship with Pixar. A Warner Bros. spokesperson told CNN, "We would love to be in business with Pixar. They are a great company." Warner Bros. has not yet engaged in formal talks with the animator.

Pixar said its five films so far -- including "Toy Story", "Monsters Inc." and "Finding Nemo" -- have taken in $2.5 billion at the worldwide box office and sold more than 150 million DVDs and videos. "Finding Nemo" was highest grossing animated film of all time.

Pixar had complained that the terms of the distribution deal were tilted too heavily in Disney's favor. Under the deal, Pixar was responsible for content, while Disney handled distribution and marketing.

In exchange, Pixar has split profits with Disney and pays the studio a distribution fee of between 10 percent to 15 percent of revenue. Based on its blockbuster success, Pixar has argued that it should keep the profit itself and cut the fees its studio partner charges.

Many observers had expected Pixar and Disney to keep talking at least until the middle of this year and to eventually reach a deal since both had gained so much from their partnership.

"It makes it look like Eisner did something wrong again, but we shouldn't jump to conclusions. This could be a negotiating tactic by Pixar as well," said Patrick McKeigue, an analyst at Independence Investment, which holds Disney shares.

Roy Disney and ally Stanley Gold, who both resigned from the Disney board late last year and called for Chief Executive and Chairman Michael Eisner to step down, placed the blame on Eisner.

"More than a year ago, we warned the Disney board that we believed Michael Eisner was mismanaging the Pixar partnership and expressed our concern that the relationship was in

jeopardy," they said.

Disney noted in its statement that it owns rights to all the Pixar movies, as well as two more animated features yet to be delivered -- "The Incredibles" due this year and "Cars", expected in 2005.

Disney will distribute those two films with Pixar getting its share of the profits. Disney also has the right to finance and produce sequels if Pixar declines to co-finance and produce them under the current agreement.

[Rufus]

Could kinda see this one coming .. if it is a ploy by Jobs and Pixar, it's a pretty savvy one .. sure doesn't make Eisner look too good now does it?! Disney fans can only hope that the Board finally smells the coffee and axes him!

[amr.ramadan]

This sucks. Disney still owns the rights to make sequels to all films created through this partnership, including direct to video presentations and television series!!

[Matt]

Uh, oh... Disney's going under. Into the red!

[Jake]

Yeah, I think they'll make another deal in the future, after all Pixar needs the Disney label on its movies. ISn't there anything they've learned from the recent successes?

[radstar]

they both gonna be fine! disney doesn't need pixar! and pixar doesn't need disney! i love disney movies and i know they will make more! i just wish they would stop making things complicated and just do things they do best!!!! disney is too popular to be going under. there is just no way.

pixar is something new! ya'll know this...

[streetpreacher]

pixar doesn't need disney, people know their name by now. they should be fine no matter who will distribute their films in the future

[trailergod]

lol... this means disney wont earn any money with their animated movies....

[chernabog_ca]

I fear you may be right Chris. Take a look at the last couple of animated movies released by Disney that weren’t done by Pixar. The only one to do well at the box office was Lilo & Stitch.

I think in some small way, Roy Disney can take this as a victory for him. Eisner is ruining this company. I think it’s kind of ironic that just after they close down Feature Animation in Florida and lay off all those animators because Eisner believes that 2D animation is dead, Pixar drops this bomb. Just before Roy left, he was suppose to meet with John Lasseter and Eisner wouldn’t allow Roy to go ahead with the meeting. I wonder if that meeting had anything to do with the talks of renewing their contract. I can see Pixar signing on with Dreamworks given Spielberg’s relationship with Lucas and Lucas’s relationship with Pixar.

Disney’s annual meeting is happening March 3rd and Eisner is up for re-election to the board of directors. Should be an interesting meeting…..

[blugh]

Chernabog, there's no way in hell Pixar is going to work with Dreamworks, considering Dreamworks already has a hella good animation division, although Katzenberg would no doubt love to steal Pixar from Disney. I wouldn't be surprised to see Pixar do a couple projects with Lucasfilm, and eventually going into distribution themselves. They've certainly got the money for it, and they could do it on their own terms.

[editman]

Yayyy! Couldn't be better news. Now Disney will die. Bloody Eisner will eventually get kicked out. Roy will take over again. It'll be like the good old days again and we'll live happily ever after.

[radstar]

Originally posted by chernabog_ca
I fear you may be right Chris. Take a look at the last couple of animated movies released by Disney that weren’t done by Pixar. The only one to do well at the box office was Lilo & Stitch.

animated movies aren't what disney is all about. what about pirates? all of their movies rock.

this is Disney, guys... Disney will always be here. Disney need no stickin badges.... err i meant no stickin Pixar!