Pressure mounts on Eisner after Pixar breaks off talks

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Whether or not it was a negotiating ploy will become clear soon, but the timing of Steve Jobs' announcement that Pixar would end talks with longtime partner Walt Disney Co. and listen to offers from rival studios was clearly designed to give Disney boss Michael Eisner a major headache.

Mr. Eisner is two weeks away from an analyst meeting, which will be followed this spring by a shareholder meeting where scrutiny of the Disney chief executive likely will be intense. Mr. Eisner will have to contend with ongoing problems at struggling ABC, the company's slowly rebounding theme parks, a dustup with Miramax co-founder Harvey Weinstein over finances and cable-company complaints about the price of Disney programming.

Mr. Eisner's image is still suffering from a public flap late last year with Roy Disney, who resigned from the studio and its board of directors as a protest to what he called Mr. Eisner's mismanagement of the company. Since then, Mr. Disney and fellow former board member Stanley Gold, who resigned at the same time, have tried to marshal shareholders and board members to oust Mr. Eisner. Their campaign has new fuel with the Pixar breakdown.

jobs a contender?

Mr. Jobs, CEO of both Apple Computer Corp. and Pixar, has not commented on any interest in succeeding Mr. Eisner, but there's been speculation that he could be a contender if and when Mr. Eisner leaves.

Disney's board, however, has remained supportive. "I don't view this as the tipping point for Eisner," said Lowell Singer, an analyst at SG Cowen.

Mr. Jobs was unavailable for comment, and executives at Pixar said he stands by the statement he released last week that said he would be looking for another distribution partner after the Disney relationship ends in 2005. Among those in hot contention: News Corp.'s 20th Century Fox, Time Warner's Warner Bros. and Sony.

Wall Street analysts are playing the informal role of Vegas bookies in speculating whether the lucrative relationship between powerhouse Disney and Pixar Animation Studios is actually finished. Pixar's movies accounted for some 56% of the studio's operating income between 1999 and 2003.

"I'd give it about a one in five chance. It wouldn't surprise me if in three months, they were talking again," said David Miller, analyst at Sanders Morris Harris Group, Los Angeles. "Pixar could be playing a game of negotiating hardball."

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