General News

Pixar's Success May Dampen Future With Disney

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Jun 03, 2003 | 9:22am EDT

Pixar Studios isn't just the "little" guy anymore.

With the huge success of the Pixar/Disney animated film Finding Nemo, which brought in $70 million in its opening weekend, Pixar topper Steve Jobs may be jockeying into position to renegotiate the current agreement between his animation company and the power-house studio--or perhaps move elsewhere for distribution, Variety reports.

"The impact of Nemo is like a baseball player hitting 60 home runs in the final season of his contract," David Davis, senior VP and box office analyst at Houlihan, Lokey, Howard & Zukin in Los Angeles told Variety. "It looks like Nemo is going to be the most successful of their movies, (so) Pixar couldn't have picked a better time to renegotiate."

The big question is, will the Mouse House be amenable to changing the terms?

Under terms of Pixar's current pact, Disney gets a distribution fee plus a 50 percent share of box office grosses, in exchange for putting up half of the production costs of a Pixar film.

"Disney basically gets 65 percent of the profits for 50 percent of the cost," Dennis McAlpine of investment research firm McAlpine and Associates told Variety.

Before the release of Nemo, Jobs had been in talks with Disney head Michael Eisner about extending Disney's current relationship with Pixar, which still owes Disney two films--The Incredibles and Cars. But with the big Nemo bow, which saw Pixar's stock rise $2.23, or 4 percent, to close at $58.78 after a broadly bullish trading session, the situation has changed drastically. Jobs wants to change the agreement where Disney would only get a distribution fee for handling Pixar films, according to Variety.

And he is unlikely to back down from his demands, McAlpine told Variety, while the Mouse House will surely balk at accepting a mere distribution fee from Disney/Pixar films. "I don't expect anything (to be resolved) until November 2004, after Pixar delivers The Incredibles," the analyst predicted.

This all means Pixar could be looking for a new distributor--very soon. According to the Disney/Pixar pact, the Northern California-based animation studio was able to begin shopping around for a prospective new distributor of future Pixar films back in February, when it delivered Nemo to Disney for post-production.

Disney insiders, however, told Variety the higher-ups aren't sweating it too much. They believe the adrenaline rush of Nemo's success may taper and deflate Jobs' big plans.

Quipped one Disney source to Variety: "He's strutting around like a rooster right now. Only time will tell if he gets his feathers plucked or not."

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