BW online pixar disney article

[BRERALEX]

FEBRUARY 10, 2003

ENTERTAINMENT

Is Steve Jobs About to Move His Cheese?

Pixar's chief could shop for a new deal soon--leaving Disney minus an asset it sorely needs.

What's the best way to tick off Walt Disney Co. (DIS )? Make an animated movie with a mouse as the lead character. That's exactly what Disney's partner, Pixar Animated Studios (PIXR ), is doing. The movie, which doesn't yet have a name, is about a little critter who lives in an upscale restaurant. And, at least for now, Disney has no rights to it at all.

Pixar's planned mouse tale is the latest jab in a year-long sparring match between Pixar CEO Steven P. Jobs, also head of Apple Computer Inc. (AAPL ), and Disney CEO Michael D. Eisner. The fight is over--what else?--money. Jobs wants more of it, especially after Pixar's run of blockbuster animated films for Disney, including Toy Story, A Bug's Life, and Monsters Inc. Without a new and better deal, Jobs could take his hit-making animators to another studio in 2006.

The timing couldn't be worse for Eisner, who is under pressure to rev up Disney's sputtering empire. Pixar lets Disney leverage characters such as Buzz Lightyear (Toy Story) and Flik (A Bug's Life) by using them in theme parks or selling them as toys. Disney hasn't had Pixar-level megahits since its Beauty and the Beast and Lion King days. Can you name any characters from Atlantis: The Lost Empire or Treasure Planet?

Disney's 12-year-old deal with Pixar requires Jobs's outfit to deliver three more films, taking it to 2005. But Jobs has the right to start shopping for a new deal after he delivers his next film, Finding Nemo, an underwater comedy, in mid-February. Already, honchos from Warner Bros. and Sony Pictures Entertainment have made the trek to Pixar's Emeryville (Calif.) digs to schmooze Jobs and John Lasseter, his top creative exec. Says Sony Vice-Chairman Yair Landau: "Sony would clearly love to be in business with Pixar."

That's why Disney may have to keep Jobs happy. Since 1999, Pixar has contributed $682 million in operating income, or 35% of Disney's studio profits, says a Merrill Lynch & Co. report. Under its current deal, Pixar and Disney evenly share the $100 million or more it costs to make most of Pixar's films. Disney takes 12% of a film's gross to distribute, and the companies split the rest.

Disney officials have privately dismissed Jobs's meetings with other studios as typical Hollywood posturing. But Pixar's chairman seems intent, at least, on cutting a deal like the one filmmaker George W. Lucas has with Twentieth Century Fox. Lucas pays the entire cost to make Star Wars films, and Fox gets only a 6% distribution fee. With $340 million in cash, Pixar could easily finance its own works, though it is riskier. Pixar made profits of $235 million from its 2002 hit Monsters Inc. but might have posted more than $500 million if it hadn't had to share, says Jeffrey B. Logsdon, managing director of Gerard Klauer Mattison.

In a sign of diplomacy, Eisner has said a Lucas-style deal is "possible." Still, Disney and Pixar have been stubborn in previous fights. In 2001, the two squared off over whether a third Toy Story installment would count against the five films required in Pixar's current contract, as Jobs wanted. Disney claimed that as a sequel it didn't count, effectively delaying the end of Pixar's contract. The film never got made. The companies declined comment for this story.

Eisner fired a salvo two years back, when, during congressional testimony about Internet piracy, he singled out Apple's "Rip, Mix, Burn" ad campaign, infuriating Jobs. Eisner has since apologized, but Jobs now deals mostly with Disney's more easygoing studio chief, Richard W. Cook. Still, the studios continue to maneuver. To keep Lasseter onboard, Jobs extended his contract and gave him a $1.25 million bonus. Disney signed Shrek producer John H. Williams to make three computer-generated films.

Some in Hollywood figure Pixar won't dump Disney. "Each side has something to offer to the other," says Dreamworks SKG's Jeffrey Katzenberg. That makes sense. But when Hollywood and big egos are involved, it's not that simple.

By Ronald Grover in Los Angeles, with Peter Burrows in San Mateo, Calif.
Entertainment

dont know if anyone saw this yet....its dated the 10th of feb. saw it on ainititcool

 

[DVC-Landbaron]

...............

............... Hmmmmmmmm

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............... Hmmmmmmmmmm


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.... Just sittin' here waitin' for an AV post....


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[pheneix]

You know, I have to post a link to the hilarious thread that is going on at MouseInfo about this very thing.

Spin and excuses, that's the only thing the site is good for these days. Hell, that's the only thing the site has ever been good for to begin with!

http://www.mouseinfo.com/mousetalk/showthread.php?s=&postid=63054#post63054

P.S. Matt, you are fighting a hopeless battle over there. As someone who has sparred with "her" countless times, I can honestly say it is not worth it. Unless of course you just want to post something to see what the spin machine will kick out, in which case I say more power to you!

 

[raidermatt]

P.S. Matt, you are fighting a hopeless battle over there. As someone who has sparred with "her" countless times, I can honestly say it is not worth it. Unless of course you just want to post something to see what the spin machine will kick out, in which case I say more power to you!

You're probably right, but, its such "low hanging fruit", I sometimes can't resist!

 

[DVC-Landbaron]

P.S. Matt, you are fighting a hopeless battle over there.

SIR MATT!!! Are you riding shotgun on someone else's board!?!?!?

 

[Another Voice]

First off Mr. Raidermatt, my sincere admiration on dealing the marketing – er – I mean fan poster on the other site. Their – er – I mean her postings are always very funny. Although I’ve always thought that pay-by-the-word billing led to overwriting and repetition – er – not that that has anything to do with those press releases – er – I mean postings.

Steve Jobs knows Eisner desperately needs Pixar. It’s a fact and everyone in town understands it. Just look at the last annual report from Disney. The Studio division – theatrical films, home video, Broadway – that entire group had a profit of only $273 million. That’s less than what ‘Monsters Inc.’ made in DVD sales alone. Worse, out of every dollar the Studio takes in, it makes only 4 cents in profit.*

So what you really see is that another giant chunk of Disney is losing money, but just as ESPN rescues ABC, Pixar saves Disney Studios. Big hits like ‘Signs’ and low cost grab-the-money drivel like ‘Peter Pan 2’ are far offset by mega flops like ‘Bad Company’ and dwindling interest in video sequels. Even with Pixar, Disney would have been better off taking all that money they put into making movies and buy U.S. Savings bonds instead.

And it’s been this way for years. At the best of times during the Michael-only era, the studio has been a break even business at best. After they moved out of the low cost – high return live action films days starting around ‘Dick Tracy’, only animation allowed the studio to turn a profit. And in the post Katzenberg, post-‘Lion King’ days, the only profitable animation has come from Pixar.

Steve Jobs can do this math as well. So can Michael, only his equitations don’t produce anything like a favorable outcome. Disney as a studio is dead without Pixar, yet they know they will not be able to renew the overly lucrative deal that they have now. The choice is either loose everything and loose most of it. This is where ego is going to come into play.

Will Eisner willing allow himself to be embarrassed by surrendering to Pixar in exchange for a little bit of money, or will his self importance demand that it’s all or nothing?

* - for comparison, the “struggling” theme park operations took in less revenue ($6.5 billion for parks, $6.7 billion for the studio), yet that division turned in a profit over four times what the studio returned (parks - $1.2 billion).

P.S. The business about ‘Monster’ beating ‘Shrek’ box office records is absolutely meaningless. ‘Shrek’ was remarkable because it had a strong box office week and week after week. It was even more remarkable because that summer was a time when movies opened huge its first weekend and then disappeared three weeks later. This is a sign of very, very strong word of mouth and a high repeat viewing. In fact, ‘Shrek’s performance is a model of how you want a movie to play out. ‘Monsters’, however, hit huge and then faded quickly in the typical moderate-hit pattern.

 

[pheneix]

<-- Wishes that AV would post on the RatBoard just so he could see what "Marcie" would have to say...

I'm very interested in what this year's animation wars will be like. I've heard a lot about Sinbad that gives me the feeling that it will fly out of nowhere and surprise EVERYONE with it's performance. Then again, I have heard a lot of stories about how it could go the other way too.

Then of course there is Finding Nemo, a good movie that could potentially be buried by the Walt Disney Company.

>>>Even with Pixar, Disney would have been better off taking all that money they put into making movies and buy U.S. Savings bonds instead.<<<

Ouch. I bet they wouldn't have to take a $114 million write-down on savings bonds either...

>>>I’ve always thought that pay-by-the-word billing led to overwriting and repetition<<<

I don't know, I have managed to get the same lies about Universal Studios time after time again. In fact, I almost want to believe that DCA's attendance is fact higher than at Islands of Adventure!

 

[raidermatt]

SIR MATT!!! Are you riding shotgun on someone else's board!?!?!?

Got a little slow over here, so I thought I'd branch out a bit.

Now I know where they got the idea for the Stepford Wives.

Regarding Pixar, I guess things are always changing in the showbiz world, but right now, Pixar is clearly the king of animated/cgi movies, and has been for awhile.

Even if Disney does manage to make a deal, its not going to be as lucrative for them as the current deal. Pixar's going to want a bigger slice of the pie, and rightfully so.

 

[Cricket2]

Originally posted by BRERALEX
Pixar's planned mouse tale is the latest jab in a year-long sparring match between Pixar CEO Steven P. Jobs, also head of Apple Computer Inc. (AAPL ), and Disney CEO Michael D. Eisner. The fight is over--what else?--money. Jobs wants more of it, especially after Pixar's run of blockbuster animated films for Disney, including Toy Story, A Bug's Life, and Monsters Inc.

Does anyone else think that there is a chance that Disney is waiting to see if this new Pixar solo film takes a dump?

Let's face it, Toy 1, 2, BL and MI were not Pixar films. They were Disney films made by Pixar, or at least that's how the majority of the public sees it. There is still power in saying "Disney...." before any name. Pixar could carry a stigma with their name if they were to go to Sony or whoever in favor of dumping the horse that they rode in on. It could be looked at as almost "evil" by some.

 

[raidermatt]

The Disney name hasn't helped any of its own films reach the same level as Pixar's.

In fact, the Disney name didn't seem to help Return to Neverland, Treasure Planet, or Atlantis at all.

 

[DisneyKidds]

Got a little slow over here, so I thought I'd branch out a bit.

Sheesh Matt, you and that other person look like me and the Baron going at it in the good old days (but a mere six months ago ). She types more than the good Baron. Never thought I'd be able to say that.

 

[DVC-Landbaron]

She types more than the good Baron. Never thought I'd be able to say that.

Hmmmmm....

... It seems I have my work cut out for me!!!

 

[Cricket2]

Originally posted by raidermatt
The Disney name hasn't helped any of its own films reach the same level as Pixar's.

In fact, the Disney name didn't seem to help Return to Neverland, Treasure Planet, or Atlantis at all.

How do you know? It's possible those films would have done even worse minus the "Disney" label. I'm saying that Pixar may not be in the position they are in right now without the added Disney name, so it's entirely possible that they could take a nose dive without it.

I'm not saying it would happen, but could happen. Simply having a high quality product doesn't always cut the cake.

I'll give you the example of "VISIO". It was essentialy the same product before Microsoft bought it, but close to failing. Now that Microsoft has it, it's the #1 topology design tool used today (I don't have figures, sorry ). Since it's sold as a seperate product, you can't say MS shoved it down our throats like IE either. It made money on it's own merits but only after MS took over.

JC

 

[Another Voice]

Yea, the thought that ‘Atlantis’ and ‘Treasure Planet’ would have done worse without the Disney label is kind of frightening, isn’t it. But in reality, there is some buzz that the Disney name may have caused the poor returns.

The Disney brand is now largely associated with direct-to-video releases according to a lot of people in the industry. Their evidence is that even though there is one big animated release every year, there are a flurry of the direct-to-video films. The constant repetition of commercials and other marketing for those films carries over, so there’s a blurry line between ‘Jungle Book 2’ and ‘Treasure Planet’. That’s natural, brand identification works both ways. High quality products pull the low end up – but the lower stuff drags down the top. If your brand yells "cheap kiddie stuff", it's highly unlikely to draw the 15 years old boys which 'Atlantis' was aimed at.

It’s cruel and it’s unpleasant and many people will try to spin all kinds of long arguments why it ain’t so, but that’s what most of Hollywood feels right now. There are a lot of very bright people over at Marvel, Nickelodeon, Blue Sky and Pixar studying “where Disney messed up” to make sure they don’t make the same mistake.

As for the power of the Pixar name vs. the Disney name – look at the marketing and you’ll see where people think it lies. ‘Finding Nemo’ is being marketed as “from the makers of ‘Toy Story’ and ‘Monsters Inc.’”, not from “the same company that brought you ‘The Lion King’ and ‘Tarzan’”. And Disney went to great lengths to tie ‘Lilo and Stitch’ to all their recent mega-hits, but the campaign drew only lukewarm results. When you’re spending $100 million on an ad campaign you go where you know you’re going to get results. “Disney” doesn’t mean all that much to the general public, but “Toy Story” does.

Marketing, meaning everything from ads to the stars to the studio brand, gets people into the theaters the opening weekend. After that it’s all word of mouth.


P.S. Sir Baron up against Marcie – I don’t think there are enough hours in the day to get through those posts.

 

[DisneyKidds]

But in reality, there is some buzz that the Disney name may have caused the poor returns.

Another thing I'm sure you know from your Hollywood experience is that this kind of "buzz" is just a bunch of windbags prognosticating out there a**es, with nothing to back it up. The problem with Atlantis and Treasure Planet had nothing to do with the Disney name and everything to do with storylines that just didn't appeal to people, and wouldn't have no matter who made the films.

 

[raidermatt]

The problem with Atlantis and Treasure Planet had nothing to do with the Disney name and everything to do with storylines that just didn't appeal to people, and wouldn't have no matter who made the films.

Very possible, but doesn't that help prove the point that Disney's name is no longer what it was? How can the name hold up with duds like these coming out?

The point here is that Pixar's name is gaining recognition and reputation. Clearly the Disney name helped when Toy Story came out in 1995, but its also clear that Disney's name has lost a lot of luster since then, while Pixar's has grown.

You can debate whether or not Disney's name actually HURT certain films, but when it comes to the Pixar deal, what's relevant is whether or not it HELPS, and how much.

Regardless of what one thinks, its undeniable that the Disney name is not what it was when the original Pixar agreement was made, and Pixar has now proven it is consistently making more appealing movies than anyone else out there, including Disney themselves. Even if Disney does manage to get the deal done, the terms are going to be much less favorable for Disney when compared to the current deal.

The fundamental question is why did Disney allow themselves to be put into the position of needing an outside studio in order to make consistently appealing animated/cgi films?

They've now signed another deal with a company led by one of the Shrek producers, and the L&S guys formed their own company and now contract with Disney.

They are giving up on creating in favor of simply being a distributor that attempts to capitalize on the value their name.

How one could not view this as sad is beyond me...

 

[Bob O]

Mr Cricket, People do know Toy Story and the other movies you mentioned are PIXAR movies and not disney movies!!!!! People could see by watching that these movies were unlike anything disney ever did and werent just the same old retread animated films. People saw the disney name but were aware then and now that these arent disney films, though people may know know that disney USED to make films of this quality. Give credit where it is due and disney doesnt deserve to take the credit for what they didnt produce!!!(they should juts thank god they signed a nice deal that they have been able to milk while their movies have bombed in comparsion).
These were pixar movies and it is a shame to try and take away the credit and give it to a company that doesnt deserve it.
Whats next, will Spiderman be considered a disney attraction because maybe some ex- wdi people worked on it????

 

[Cricket2]

Originally posted by raidermatt
The fundamental question is why did Disney allow themselves to be put into the position of needing an outside studio in order to make consistently appealing animated/cgi films?

It's tough to compete with the Renderman technology (as far as CGI is concerned). They have no excuse as far as traditional animation.

I'm anxious to see how Madagascar will do vs. Nemo on the tech side

JC

 

[Cricket2]

Originally posted by Bob O
Mr Cricket, People do know Toy Story and the other movies you mentioned are PIXAR movies and not disney movies!!!!!

I'm not trying to take any credit away from Pixar, but do you think they would be the company they are today if it were not for the Disney name/$?

Some people (most people are not as informed as those that read these boards) will not be thrilled to see Pixar move away from Disney to another company. It could leave a bad taste in their popcorn tub which could hurt Pixar more than not leaving Disney in the dust.

JC

 

[Another Voice]

What you say is true, but it’s those windbags that are going to determine if Pixar dumps Disney or not. Hollywood business is run on Newtonian physics – there are no precise calculations that result in the one and only correct answer. No, the business is run on opinions no matter which part of one’s anatomy they appear.

If Pixar believes Disney does not offer value equal to the cost of their association they will dump Disney. It’s that simple. Thousands of fans (and those that get paid) on the Internet can right millions of postings about how much the Disney brand is reason why ‘Toy Story’ made millions, but it’s what Hollywood believes to be true that will drive the decision. The fact remains that “Disney” animated films continue to fail at the box office while non-Disney films can thrive. It is logical to conclude that a Disney sticker on a movie does not guarantee even a minimal level of box office, and it’s also logical to conclude that the absence of the sticker does no harm.

Why, the people at Pixar ask, should they give away more than half their earnings to a corporation that adds no value to their films?