Pixar Says Bye Bye To Disney

[moe.ron]

Jobs disparages Disney as Pixar earnings soar from 'Finding Nemo'

GARY GENTILE, AP Business Writer

(02-04) 17:23 PST LOS ANGELES (AP) --

Boosted by a record quarterly and full-year performance, Pixar Animation Studios chief Steve Jobs on Wednesday explained his company's decision to split with The Walt Disney Co., blasting Disney as weak creatively and unwilling to compromise on a new agreement.

In a conference call with analysts to discuss Pixar's earnings, Jobs took a slap at Disney's recent animated films.

"The truth is there has been little creative collaboration with Disney for years," Jobs said. "You can compare the creative quality (of Pixar films) with the creative quality of Disney's last three films and judge each company's creative ability yourselves."

Pixar announced last week it was ending 10 months of exclusive talks to renew its deal with Disney to produce and distribute films. The company has two more films to deliver on its contract, including "The Incredibles," due out in November, and "Cars," to be released in 2005.

Pixar has been in business with Disney since 1991. The two companies released their first film, "Toy Story," in 1995. The two companies co-finance each film and split the profits evenly, with Disney claiming an additional 12.5 percent distribution fee.

Pixar's latest film, "Finding Nemo," has earned more than $800 million at the international box office to date, surpassing the record previously held by Disney's 1994 film, "The Lion King."

Jobs said he offered Disney better terms than he knew he could get from a rival studio during their negotiations, but said Disney balked at allowing Pixar to fold the last two movies due under the current deal into a new agreement with more favorable terms for Pixar.

Jobs also said the Pixar brand has become more powerful in animation than the Disney brand and expressed confidence about Pixar's chances with a new studio.

Jobs said every major studio has expressed interest in working with Pixar. Negotiations with at least four of them will begin in March and Pixar hopes to have a new deal in place by the fall.

Any new deal would begin with a Pixar film due to be released in 2006.

"Honestly, we're sad about it," Jobs said about the breakdown of talks with Disney. "I'm confident ... Pixar's golden age will continue to evolve without missing a beat."

Jobs criticized Disney's last two animated efforts, this year's "Brother Bear" and last year's "Treasure Planet," as "flops."

"No amount of marketing will turn a dud into a hit," Jobs said.

Jobs said it is unlikely Pixar would ever agree to make a sequel of the five films co-produced by Disney and said he would not want to see Disney exercise its right to make sequels on its own.

"We feel sick about Disney doing sequels," Jobs said. "If you look at the quality of their sequels, such as 'Lion King 11/2' and (the Peter Pan sequel 'Return to Neverland'), it's pretty embarrassing."

Disney called Jobs' remarks "unfortunate."

"It is unfortunate that Steve Jobs has grossly mischaracterized good faith negotiations to reach agreement on an extension of the present, successful partnership that has been beneficial to shareholders of both Pixar and Disney," Zenia Mucha, a Disney spokeswoman, said in a statement. "It's also sad and unfortunate that he has resorted to insults and name-calling in the wake of the disagreement. We expected better of him."

Earlier Wednesday, Pixar said its earnings more than quadrupled in the fourth quarter on the strength of its animated fish tale "Finding Nemo."

Pixar, based in Emeryville, Calif., reported net income Wednesday of $84 million, or $1.44 per share, in the quarter ended Jan. 3, compared to $17 million, or 31 cents per share in the same quarter last year.

Analysts surveyed by Thomson First Call had expected earnings of $1.26 per share.

Revenue rose sharply during the quarter to $165 million compared with $39.4 million in the same period last year on the better-than-expected performance of "Finding Nemo."

The film has also sold more than 24 million home video units.

For the full year, Pixar reported net income of $125 million, or $2.17 per share, compared to $90 million, or $1.68 in 2002.

Revenue for 2003 rose to $262 million, compared to $202 million in 2002.

Shares of Pixar fell 66 cents to close at $63.54 on the Nasdaq Stock Market before the results were released. The shares gained 99 cents in the extended session.

[Rudey]

This is a copyrighted article...remember that before posting stuff like this without permission.

And it's more that they both dumped each other and Pixar's next couple of movies are still making money for disney and not for them.

-Rudey

[33girl]

I have to agree with Pixar though. Disney doesn't have the same level of quality it used to have. Although I prefer classic Bugs Bunny myself.

[G8Ralphaxi]

The Orlando newspapers and news stations have been covering this in a lot of detail and Disney is looking baaaaaad. From what I've read, Eisner has been a really arrogant S.O.B., and while Jobs is certainly stubborn himself, Eisner & his gang are really more at fault for everything falling apart. Pixar felt like they were collaborators with Disney, but Disney treated them like indentured servants.

I own some Disney stock and I'm really getting sick of all this crap. The best stuff Disney's done in the past years has come from Pixar, and they took them for granted and and abused them for years. Of course Pixar is being a pain in the a** now - they got sick of being kicked around.

I'm definitely in agreement w/Roy Disney and Stanley Gold's opinions on this. I am considering voting against retaining Eisner on the next shareholder proxy form. I know I have such a little % of the company but I can't in good conscience support the way they are managing the company right now. This, plus all the shady dealings with the Euro Disney financing is really disappointing. This is NOT the company in which I invested.