PIXAR BREAKS OFF TALKS WITH DISNEY

Steve Jobs' Hit-Making Animation House Seeks New Partner

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NEW YORK (AdAge.com) -- The uneasy marriage between animation hit maker Pixar and Hollywood old guard Disney is apparently ending. Steve Jobs, Pixar's CEO,
Pixar's 'Finding Nemo' was the highest grossing animated movie in history.

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said yesterday he has ended nearly a year of talks with Disney and is looking for another studio partner.

Megahit machine
The two sides had not been able to agree on the finances of their relationship, which had produced such megahits as Finding Nemo, last year's biggest box office draw and the highest grossing animated movie in history, Toy Story and Monsters Inc. The Pixar productions had been the only real animated successes that the Walt Disney Co. has had in the past several years, with those movies pulling in a combined $2.5 billion worldwide.

"After 10 months of trying to strike a deal with Disney, we're moving on," Mr. 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."

Disney, in a statement released yesterday, emphasized that Pixar aborted the talks.

Michael Eisner
"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," said Michael Eisner, Disney's chairman-CEO. "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."

The deal originally called for five years and seven movies and lasts through 2005, with two more films due during that time. The Incredibles will debut late this year, and Cars in 2005.

Disney retains the rights to the seven Pixar films and could produce sequels, including direct to video, TV series and specials, without the animation house's participation. The studio also can use the characters from those movies in its theme parks and in licensed merchandise.

Distribution, tie-ins
Under the Disney-Pixar deal, Pixar created the films and Disney handled distribution and marketing. Disney's promotions executives also put together elaborate tie-ins with marketers such as McDonald's Corp., Kellogg, Keebler, Frito-Lay, PepsiCo and ConAgra.

Pixar split profits with Disney and paid the studio a distribution fee of between 10% and 15% of revenue. Pixar wanted to rejigger the deal considerably, keeping 100% of the box office and much of the ancillary revenue and paying a small distribution fee. Whether Mr. Jobs will be able to strike such a deal with another major Hollywood studio is unknown. One thing is certain, studio executives say: Mr. Jobs will have no trouble getting meetings.

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