Hopeful signs of a Renewed Disney/Pixar Relationship

[Sarangel]

From the Business Times:

Disney hopeful of renewing Pixar ties
By Nic Hopkins



THE Walt Disney Company and Pixar Animation Studios, which fell out spectacularly a year ago, appear ready to renew their lucrative distribution partnership after returning to the negotiating table.
Bob Iger, who will take over as Disney chief executive in October, said that the two sides had recently had “really good” negotiations about cutting a new distribution deal to replace the current agreement.



The latest effort to revive their relationship comes just over a year after the two film studios announced an end to their partnership, which has produced six consecutive global blockbusters and box office receipts of $2.7 billion (£1.4 billion). The deal is scheduled to end with the release of the film Cars in 18 months’ time. It has already produced The Incredibles and Finding Nemo. “I’m not sure I really want to give you odds. We’ve had really good discussions,” Mr Iger told investors at a Deutsche Bank media conference in New York.

He added that it was too early to tell if a new Pixar agreement would be reached. “The fact that we are having a dialogue is a really good thing, and it has been really healthy,” Mr Iger said. “We’d certainly like to find a way to continue to do business with them, and I think the feeling is mutual.”

Disney distributes all of Pixar’s films in exchange for 12.5 per cent of box office revenue, and the two companies split the profits from spin-offs. Disney also has the right to make sequels to the films made under the existing deal.

Disney said last year that the companies had been unable to agree on terms for a new distribution deal that would be financially viable. But the breakdown of their alliance was also blamed on the brittle relationship between Michael Eisner, Disney’s outgoing chief executive, and Steve Jobs, the chief executive of Pixar.

There remain hurdles that could impede a renewal of vows between Pixar and Disney, including the desire among the Hollywood studios to cut a deal with Pixar and Disney’s development of its own computer animation unit with a view to making sequels to Pixar hits. But Dick Cook, the head of Disney’s Hollywood studios who has played a key role in the negotiations, told The Times this year that it was “definitely our desire” to strike a new deal with Pixar.

 

[Duckfan-in-Chicago]

Well, I for one think Disney's #1 goal should be to renew the relationship with Pixar, and was thrilled with the news when I heard they were meeting again.

 

[titan247]

I disagree. Pixar need to go.

But, I DO agree with Iger! The company needs to focus on creating true Disney-quality content. That's what powers everything.

 

[Princeton Charming1]

My fingers are crossed. Come on Bob!!!!

 

[mill4023]

Well, I for one think Disney's #1 goal should be to renew the relationship with Pixar, and was thrilled with the news when I heard they were meeting again.

Agreed. Every Pixar movie has been fantastic. And it's not about the animation, it's about the stories and characters.

 

[raidermatt]

I consider Disney's problems with internal animation to be a higher priority than retaining the Pixar relationship. (Remember that if they don't re-up, Disney still owns all the films and characters through Cars.)

But since things are what they are, and honestly there are no signs that Disney is primed to reclaim the title of "King of Animation", re-upping with Pixar would probably be for the best. Even though the terms of any new agreement are going to be much more in Pixar's favor than the terms of the current agreement. Pixar might even manage to wrestle back some ownership of the movies made under the current agreement.

 

[Duckfan-in-Chicago]

I consider Disney's problems with internal animation to be a higher priority than retaining the Pixar relationship. (Remember that if they don't re-up, Disney still owns all the films and characters through Cars.)

Great. So Disney has the rights to make a bunch of direct to video Finding Nemo sequels with no soul. Disney can fix their relationship with Pixar much easier than they could fix their animation dept. A Disney/Pixar relationship is a win/win for both sides if Disney is willing to give Pixar what they're worth.

 

[YoHo]

Since when is the quickest solution the best solution?


I personally would have no problem seeing both a return to internal Disney quality AND reupping with Pixar. Even with the less then great financial deal, it's still money in the bank and it's money your competitors aren't making and movies your competitors aren't making.

I'd like to have my cake and eat it too please.

 

[raidermatt]

I'm not looking for easy. I'm looking for what would be best for Disney, and the best thing is a strong internal animation division.

Given that Pixar is the best, however, continuing the relationship is in Disney's best interests as well. Its unfortunate that they have fallen so far behind Pixar, but that is the reality of the situation.

If they lack the ability or will to bring internal animation back to life, then yes, the Pixar relationship becomes even more important.

 

[YoHo]

Again, I don't see how the two NEED to have anything to do with each other. I agree Matt that if Disney isn't gonna make their own quality content, then buying Pixar's becomes more important, but what I don't understand is those that feel it MUST be an either/or proposition.

 

[tjkraz]

A Disney/Pixar relationship is a win/win for both sides if Disney is willing to give Pixar what they're worth.

So what is Pixar worth?

Last I heard, Pixar was making some pretty unreasonable demands in their negotiations. If memory serves, Pixar was asking for FULL ownership of all characters created in all Pixar films. Right now the characters are jointly owned with Disney having the rights to initiate anything from film sequels to merchandising to theme park attractions. Pixar was asking Disney to simply give their share of ownership to Pixar.

They had also asked that Disney tear up the contract on the last two films covered by the current contract (The Incredibles and Cars) and include them in a new contract which would certainly be much more favorable to Pixar.

Negotiating ploy? Perhaps. But I think it indicates exactly how far apart the sides are for Pixar to even suggest such terms.

While I certainly would like to see a new deal struck, I'll be sorely disappointed as both a consumer and stockholder if Disney gives any significant ground on either of these points.

 

[Duckfan-in-Chicago]

So what is Pixar worth?

Last I heard, Pixar was making some pretty unreasonable demands in their negotiations. If memory serves, Pixar was asking for FULL ownership of all characters created in all Pixar films. Right now the characters are jointly owned with Disney having the rights to initiate anything from film sequels to merchandising to theme park attractions. Pixar was asking Disney to simply give their share of ownership to Pixar.

They had also asked that Disney tear up the contract on the last two films covered by the current contract (The Incredibles and Cars) and include them in a new contract which would certainly be much more favorable to Pixar.

Negotiating ploy? Perhaps. But I think it indicates exactly how far apart the sides are for Pixar to even suggest such terms.

While I certainly would like to see a new deal struck, I'll be sorely disappointed as both a consumer and stockholder if Disney gives any significant ground on either of these points.

I am a stockholder in Disney too. Their options are a smaller share in the films of a company that is going to make billions, or no share. I don't think it's unreasonable demand for an artistic company like Pixar to want the rights to characters that they created. When they were first starting up they needed Disney more then Disney needed them, now they will both make it without the other, but they're better together. I can't believe Pixar wouldn't want their merchandise sold in the theme parks. This would make Disney a fortune even if they didn't have rights to the characters. Even if Disney just distributed the films, and had no other rights, better them than someone else. The fact that the two sides are talking again to me proves that they both know that they're good for each other. I don't pay attention to contract talk that is leaked out to the media...its all part of the game. Just when things seem their darkest a contract is signed.

 

[YoHo]

So what is Pixar worth?

Last I heard, Pixar was making some pretty unreasonable demands in their negotiations. If memory serves, Pixar was asking for FULL ownership of all characters created in all Pixar films. Right now the characters are jointly owned with Disney having the rights to initiate anything from film sequels to merchandising to theme park attractions. Pixar was asking Disney to simply give their share of ownership to Pixar.

They had also asked that Disney tear up the contract on the last two films covered by the current contract (The Incredibles and Cars) and include them in a new contract which would certainly be much more favorable to Pixar.

Negotiating ploy? Perhaps. But I think it indicates exactly how far apart the sides are for Pixar to even suggest such terms.

While I certainly would like to see a new deal struck, I'll be sorely disappointed as both a consumer and stockholder if Disney gives any significant ground on either of these points.

Given that DIsney seems unable to make a good Animated film to save their life, and Disney exists at all, because of animated films, and Disney needs to keep it's image up to keep selling plushes and keep people going to their themeparks, I'd say it's worth a whole heck of a lot.

 

[SoCalKDG]

Come on guys. Someone go out on a limb. Should Disney give up anything(everything or somewhere in the middle) that they received from the first deal? We all know that the pcts. for the new deal are going to change, but do you give up your existing rights? I'd say only on a limited basis. I'd rather see them give up a higher pct. for new movies, but keep everything from the original deal.

 

[Bandman2X]

First and foremost, Disney MUST rebuild it's own FA division.

That being said, no deal with Pixar will earn Disney zero dollars. Any deal with Pixar will make them something. Disney just has to determine what ROI percentage makes it worth doing. The good 'ol days with Pixar are gone.

Based on the trailer I saw of Cars I think Disney needs to be a little wary of Pixars future offerings. I thought Incredibles was mostly boring. Cars - while I realize it's not complete - looked worse then Incredibles. Maybe Pixars winning streak is coming to an end.

 

[Duckfan-in-Chicago]

First and foremost, Disney MUST rebuild it's own FA division.

That being said, no deal with Pixar will earn Disney zero dollars. Any deal with Pixar will make them something. Disney just has to determine what ROI percentage makes it worth doing. The good 'ol days with Pixar are gone.

Based on the trailer I saw of Cars I think Disney needs to be a little wary of Pixars future offerings. I thought Incredibles was mostly boring. Cars - while I realize it's not complete - looked worse then Incredibles. Maybe Pixars winning streak is coming to an end.

I thought the trailers for Nemo weren't that great and it was their biggest movie ever (#12 all time). Even if you found The Incredibles boring, it was the #4 movie of 2004, 28th all time, and only one Disney FA movie ever made more than it did. 3 of Pixar's other 4 movies are also top 100 all time. The only one that isn't is A Bug's Life, which only made about $163 million. I don't see how anyone can predict that Pixar's streak is coming to an end.

 

[tjkraz]

Their options are a smaller share in the films of a company that is going to make billions, or no share.

No, their options are to retain the current ownership stake and sequel rights to 5 successful franchises (plus 'Cars') and risk walking away from Pixar vs. surrendering a great deal of those rights to enter into a new agreement which will CERTAINLY be less lucrative and be tied to product of undetermined quality.

I don't think it's unreasonable demand for an artistic company like Pixar to want the rights to characters that they created.

Sure it is. Both parties entered into an agreement in good faith. If the films had bombed, Disney would likewise have no grounds to take ownership away from Pixar.

I can't believe Pixar wouldn't want their merchandise sold in the theme parks. This would make Disney a fortune even if they didn't have rights to the characters.

Yes, but the point is that Disney stands to make a lot MORE by sticking with the current agreement, even if it means sacrificing a future with Pixar. Betting years of theatrical or direct-to-video release profits and t-shirt sales against an unknown slate of Pixar films is completely non-negotiable, IMO.

Even if Disney just distributed the films, and had no other rights, better them than someone else.

If they end up with a distribution agreement on all films after Cars with all rights being retained by Pixar, then I totally agree. My point is that it would be ludicrous to consider any measurable concessions to the existing contract.

Pixar couldn't make these types of demands of any other studio, so they need to just get over it and move foward. Nobody can offer them the type of synergy that Disney can--domestic marketing, great international marketing, theme parks, cable network, broadcast network, etc. Pixar knows it's in their best interest to re-team with Disney. There are just too many egos getting in the way now.

 

[Bandman2X]

Incredibles benifited greatly from the success of Nemo and the Pixar name, similar to the way some less-then-the best Disney flicks benifited from LK and the brand name. But as we've all seen, that free pass will only last so long.

Recheck your FA numbers using Adjusted for Inflation. The first Pixar entry is #61.Shrek2 Spidy 1 & 2 both rank much higher. Wanna guess how many Dis flicks beat out Pixar ?

I'm not predicting Pixar will fail in the near future. I just don't think Incredibles was up to their standards and Cars didn't impress me in the least. Time will tell.

 

[tjkraz]

I thought the trailers for Nemo weren't that great and it was their biggest movie ever (#12 all time). Even if you found The Incredibles boring, it was the #4 movie of 2004, 28th all time, and only one Disney FA movie ever made more than it did. 3 of Pixar's other 4 movies are also top 100 all time. The only one that isn't is A Bug's Life, which only made about $163 million.

True but Cars has already been pushed back from a Holiday '05 release to Summer '06. I'm sure that Pixar can spin that decision in their favor if they wish. But if it was really a film to crow about, I think they would have been dying to get it into the marketplace, wrap-up the deal with Disney and put the finishing touches on a new deal.

I don't see how anyone can predict that Pixar's streak is coming to an end.

Could have said the same thing about Disney 10 years ago. Change in public tastes...talent defection...one or two bad scripts / concepts...any number of issues could contribute.

There's already talk that computer generated animation is suffering as a whole. While The Incredibles had an impressive box office, it did significantly less business than Nemo. Polar Express didn't do well, nor did other comp gen projects like Sky Captain. It will be interesting to see where Madagascar ends up.

Even as Disney was still turning-out high-quality animated films, the public began to tire of the same formula and "voice". Emperor's New Groove is one of my favorites, was well-received by critics, but it didn't have much of an impact on the box office.

While Pixar has varied its subject matter well, all of its films still follow the same formula and have an almost identical look to them. The public will inevitably seek something new.

Pixar has made some wonderful films and they have earned all of the praise heaped upon them. But they WILL fail. I just hope Disney doesn't end up paying the price.

 

[crusader]

Disney should cut Pixar loose and throw them to the wolves at WB. Why distribute and market the competitor's brand even more?

They've already grabbed the mint of Pixar and own every hit they've made.

Let 'em go.

Dreamworks is continuing to prove any inherent value Jobs' uses to negotiate right now is questionable which has to be affecting them at every turn. Last I heard they were beefing up their workforce realizing it would require releasing more than one film a year to survive this arena solo.

There's a huge market of talent for hire. I want to see Iger invest in-house, produce the best, and compete head to head.