[url=http://money.cnn.com/2005/03/14/news/fortune500/disney_pixar/index.htm?cnn=yes]CNN[/url] said:
NEW YORK (CNN/Money) - With Walt Disney Co.'s ABC network on the rebound and its theme parks once again drawing hordes of thrill-seekers, incoming CEO Robert Iger has one key item on his immediate to-do list: To buttress a movie division that's facing the loss of two major ventures.
One of the losses -- the decade-long reign of Bob and Harvey Weinstein at Miramax Film, owned by Disney (Research) -- is all but guaranteed. After many months of tumultuous wrangling over terms of their exit, the Weinsteins are expected later this year to leave Disney and the acclaimed, but costly studio they founded in 1979 and sold to Disney for $80 million more than a decade ago.
The status of the other venture -- a lengthy and hugely lucrative co-production and distribution deal with Pixar Animation Studios -- is far less certain. Pixar Animation CEO Steve Jobs, who called off negotiations over a new contract after sparring with outgoing Disney head Michael Eisner, told analysts last month that he was waiting until Disney picked a new CEO before deciding what to do about a new distribution partner.
For Jobs, Sunday's announcement that Iger will replace Eisner as head of the world's second-largest media company means "it's fish or cut bait time," Dennis McAlpine, an independent media analyst, said Sunday.
As for Iger, "the first thing he's going to have to do is reconcile the agreement with Pixar (Research): either keep them or let them get away," added McAlpine.
Richard Greenfield, an analyst with Fulcrum Global Partners, worried in a note sent to clients Sunday that Iger will feel pressure to cut a new deal with Pixar, but under terms that could be less-favorable to Disney, "as an early sign of his capabilities as CEO."
A long and profitable marriage
Pixar and Disney first teamed in 1991 and, under a production deal whereby they split costs and profits, have churned out six blockbuster animation films that together have grossed $3.2 billion at the worldwide box office. One of them, "Finding Nemo," is the 10th highest-grossing film ever, and another, "The Incredibles," just won an Oscar for best animation film of the year.
Pixar and Disney have one more film to release -- "Cars," due out in 2006 -- before their current contract officially expires. Talks over a new deal ended abruptly more than a year ago after Jobs walked away from the negotiating table in part because of his dislike for Eisner. Jobs, who felt that Pixar had proved itself, wanted to pay Disney a lower distribution fee and did not want to share the profits any longer.
Since the talks broke off in January 2004, however, speculation has been rampant within the industry and on Wall Street about whether the two studios would renew discussions and strike a new deal. Those rumors were further fueled last fall when Eisner, under fire from shareholders upset about Disney's slow growth in recent years, said he would resign. On Sunday, Eisner said he would leave the CEO post this September and quit as a Disney director next year.
This much is clear: the view among some analysts is that Disney needs Pixar more than Pixar needs Disney.
That's especially so since Disney is about to lose the Weinsteins, the creative minds behind a string of Oscar-winning films including "Shakespeare in Love" and "Chicago." With the exception of "The Incredibles" and "National Treasure," Disney had a disappointing 2004 at the box office.
It's not known whether Iger, a veteran of Disney's ABC television unit, and Jobs have discussed any deal -- or whether they even like each other. Both companies have moved forward with post-separation plans. Disney is building its own in-house computer animation division, which faces its first big test with "Chicken Little," due out in November.
The company, which owns the rights to the Pixar library, has announced plans for a "Toy Story 3" and plans to roll out sequels to "Finding Nemo," "Monsters," "The Incredibles" as well as "Cars."
Jobs, for his part, has said Time Warner (Research)'s Warner Bros., News Corp. (Research)'s Twentieth Century Fox and Sony Corp. (Research)'s Sony Pictures all have the global distribution network to meet Pixar's needs. Time Warner is the parent of CNN/Money.
Speaking to analysts in February, Jobs said Pixar had held off on signing a new distribution deal because of the CEO vacancy not just at Disney but also at a few major Hollywood studios, including Paramount Motion Picture Group. Paramount, owned by Viacom (Research), tapped talent agent Brad Grey as its new head in January.
Among the rumored candidates for the Disney job were Peter Chernin, the president of Fox Entertainment, and Jeffrey Bewkes, chairman of Time Warner's Entertainment & Networks Group.
"We clearly have slowed down the process of picking a new partner to see how this (Hollywood) game of musical chairs will end and who the new CEO of Disney will be," Jobs said last month.
Looks like that game is now over.
