Disney animated about Pixar deal

Disney “definitely” wants a new deal with computer animation powerhouse Pixar, a report says.

April 25, 2005: 4:01 PM EDT

NEW YORK (CNN/Money) – In a sign that Pixar Animation Studios is being wooed by the Walt Disney Co., a top Disney official told a British newspaper that the world’s second-largest media company is “definitely” interested in striking a new deal with the computer animation company.

“This has been probably the most successful relationship in the history of Hollywood,” Dick Cook, the head of Disney’s film studios, told the London Times. “It’s definitely our desire to further the relationship with Pixar for years to come, and develop it even more, and we’re hopeful they feel the same way.”

Cook’s comments come more than a year after Pixar (Research) broke off contract renewal talks with Disney (Research) in a spat over financial terms and signs that the chief executive officers of both companies weren’t getting along.

The falling-out fueled speculation that the sought-after Pixar would bolt from Disney to sign a new deal with one of its competitors.

Warner Bros., Sony Pictures, and Twentieth Century Fox were mentioned by Pixar executives as potential partners. (Warner Bros. and CNN/Money are both Time Warner properties.)

A lot has changed since Pixar walked away from the negotiating table in January 2004.

Disney CEO Michael Eisner, who clashed with Pixar chief Steve Jobs, is scheduled to step down in September. His successor is Robert Iger, Eisner’s No. 2 and a reputed consensus-builder.

To some analysts, Iger’s promotion to CEO in March increased the odds considerably that the two companies would renew talks and possibly broker a new deal. Just a month earlier, in February, Jobs had told analysts that it was unlikely that Pixar and Disney would partner again.

At the same time, Jobs had made it clear that he was waiting to see who would replace Eisner before making a decision on how to proceed.

Pixar co-founder Ed Catmull told The Times after Iger’s ascension was announced that Pixar “will resume negotiations with Walt Disney” once Eisner steps aside. But he also made it clear that Pixar will talk with other potential partners, too.

There are plenty of reasons why both Disney and Pixar would want to rediscover their spark.

Together, the studios have produced six animation films, each of which has been a blockbuster at the box office, and a huge moneymaker in terms of DVD and merchandise sales. Their current deal is set to expire with the release of “Cars” in 2007.

Under terms of their current deal, the two companies co-finance movies and split the profits. Disney distributes the films in exchange for 12.5 percent of the box office gross.

Disney also has the right to make sequels to any film made under the deal. The studio has already announced plans for a “Toy Story 3” and is reportedly considering sequels to “Finding Nemo” and “Monsters, Inc.”

Pixar thinks the existing deal is tilted too heavily in Disney’s favor. Based on its blockbuster success, Pixar argues it should keep the profit itself and cut the fees its studio partner charges.

Today, Pixar has an advantage it didn’t have during earlier contract renewals with Disney: it now has the financial heft to fund its own productions.

It also has until summer 2007 to find a distributor — Disney or someone else.