- The Washington Times - Thursday, January 29, 2004

LOS ANGELES (AP) — Pixar Animation Studios is ending talks aimed at continuing its relationship with the Walt Disney Co. and will seek a deal with another studio, Pixar Chief Executive Officer Steve Jobs said yesterday.

Pixar, which co-produced the top 2003 box office draw, “Finding Nemo,” said it will look for an agreement that allows it to retain ownership of future movies.

Under Pixar’s current deal with Disney, the companies share box office receipts and licensing revenue while Disney retains the right to make sequels to movies such as “Toy Story” and “Monsters Inc.”

“After 10 months of trying to strike a deal with Disney, we’re moving on,” Mr. Jobs said. “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.”

Pixar still has two movies to deliver under its current deal, including “The Incredibles,” due in November, and “Cars,” to be released next year.

The end of talks is a blow to Disney Chief Executive Officer Michael Eisner, who faces calls to resign by former board members Roy Disney and Stanley Gold.

Disney Chief Financial Officer Thomas Staggs said the company rejected Pixar’s “final offer” because it would have cost Disney hundreds of millions of dollars to which it is entitled under the existing agreement “while not providing sufficient incremental returns on new collaborations to justify the changes to the existing deal.”

People familiar with the talks said Pixar was seeking a new deal that would pay Disney a flat distribution fee and include the two films left under its current arrangement.

“We have had a fantastic partnership with Pixar and wish Steve Jobs and the wonderfully creative team there, led by John Lasseter, much success in the future,” Mr. Eisner said.

“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,” he said.

Disney’s ticket sales for its own hand-drawn cartoon features have lagged, with “Treasure Planet” reducing profit in fiscal 2002 year by $47 million. Pixar’s performance has helped boost Disney’s share price 43 percent in the past 12 months.

“This is another example of Michael Eisner dropping the ball,” said Thomas Wyman, a fund manager at Husic Capital Management in San Francisco. “I think they got a little too rough with Steve Jobs in negotiation.”

Husic manages about $700 million, including about 20,000 shares of Disney.

Mr. Jobs said in August that Pixar had talked briefly with rival studios such as Warner Bros. and Twentieth Century Fox. He said at the time that Pixar would remain in exclusive talks with Disney until those talks failed.

“We have talked to many of these studios, and we know we can get the deal we want,” he said then. “We have time. The right deal is more important than a quick deal.”

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