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As “Cars” zooms toward completion, Disney & Pixar inch toward a new agreement

What a difference a year (and a half. Or thereabouts) makes.

Do you remember how angry & frustrated Pixar CEO Steve Jobs sounded back in January of 2004? When Steve went public with his decision to break off Pixar’s contract extension talks with the Walt Disney Company?

Mind you, Jobs wasn’t the only one spreading doom & gloom back then. If you listened to what Bob Iger was saying throughout most of 2004 … Well, Disney’s then-second-in-command was also a bit of a downer. Take — for instance — this extract from Iger’s speech at the Royal Television Society:

“It would be nice (if the Walt Disney Company could) continue (its professional) relationship with (Pixar) to infinity … But yeah, I think we’ve outgrown one another in a sense …

Deals like this have a certain longevity or life span. When Pixar started, it needed the might of the Walt Disney Co. in terms of marketing clout and distribution clout and money just to pay for those films. As it grew, it weaned itself from its need for Disney. It now sees itself as able to pretty much go out on its own, not needing funding or marketing support.”

So the conventional wisdom last year was … The Walt Disney Company and Pixar Animation Studios are never going to be able to mend this rift. One of the most successful partnerships in show business history is going to break up. All because Steve Jobs hates Michael Eisner.

Then — on September 9, 2004 — Eisner announced that he would be stepping down as CEO of the Walt Disney Company as of September 30, 2005. Then — on March 14th of this year — Disney’s board of directors announced that Bob would be replacing Michael as the Mouse House’s Big Cheese.

And who was one of the very first people to send Iger an e-mail congratulating him on his new promotion? Pixar CEO Steve Jobs.

From that day to now, there has been this very slow but steady thawing of the relations between these entertainment giants. A sense that maybe — just maybe — if the planets could align properly, that Pixar and Disney might possibly get back in business with one another.

Sometime, this renewed sense of hope came from statements that Bob & Steve would release to the media. Take — for example — this snippet from one of Iger’s very first interviews with the press after being named Disney’s CEO-to-be. When asked whether he might reach out to Steve and try to get the Disney/Pixar contract talks going again, Bob replied:

“I will certainly make an attempt and look forward to some dialogue provided (Jobs is) willing. I’ve always valued creative partnerships. This one has been incredibly successful for both companies.”

As it turns out, Steve was willing to get a dialogue going. Over the next months, Jobs & Iger spoke regularly on the telephone as the two CEOs tried to feel each other out. Get a sense of where the other executive stood on the whole just-how-big-a-share-of-the-profits-pie-is-Pixar-now-entitled-to-have issue?

Clearly, Steve must have liked what he was hearing. For — as part of Pixar’s quarterly earnings conference call in May — Jobs was quoted as saying:

“I’ve been getting to know Bob a little bit, and he seems like a terrific guy. If (Disney comes) wanting to strike a new deal, we’ll see how things go.”

Of course, this is not to say that there weren’t a few bumps in the road. Certainly, executives at the Walt Disney Company caught off guard this past Spring when they learned that Wall Street analysts had reportedly been told that — starting in 2009 — Pixar Animation Studios would begin beefing up its release schedule. That — from 2009 on forward — the Emeryville-based studio would be putting two new animated pictures out in the multiplexes each year.

Some have since suggested that the Mouse House’s June 21st announcement that a Disney-produced “Toy Story III” would be released to theaters in the Summer of 2008 came about as a direct result of Pixar’s two-pictures-a-year-in-2009 announcement. A little bit of corporate ***-waving, if you will … But me? I’m not entirely sure if I buy into that theory …

Anyway … By June 7th of this year, Iger made it official. At the Deutsche Bank conference in NYC, Bob admitted that:

“We’ve opened up talks again with Pixar. We’d certainly like to figure out a way to continue to do business with them. I think that’s mutual. We’ve gotten to understand the issues that are most important to both sides.”

Mind you, Iger was very careful to categorize these negotiations as “informal talks.” Both in an effort to not get the hopes of the investment community up too high (With the keen understanding that — should this deal actually fall through — that these failed negotiation might then cast a very long shadow over his first few years as head of the Mouse House) as well as to save Eisner from any additional embarassment (After all, it’s really gotta be kind of embarassing to Michael that Steve simply refused to do business with him. But — now that Bob’s the new designated Big Cheese — Pixar’s CEO is perfectly happy to re-open negotiations with Disney).

Anywho … To put it bluntly: When Iger was talking with the folks at Deutsche Bank Conference, he was vague but upbeat. When asked what he thought the chances were that Pixar and Disney would actually get back together, Bob replied:

“I’m not sure I really want to give you odds. We’ve had really good discussions.”

And those discussions have obviously continued. Given the upbeat language that Steve Jobs used earlier this month, when he was asked by investment analysts (during Pixar’s most recent quarterly earnings conference call) about whether the two entertainment giants would ever be able to work out a new deal. Pixar’s CEO said that he was ” … cautiously optimistic” about the current status of the negotiations. That the two companies have had ” … productive and professional” talks to date, but then added that ” … “there are (still) a lot of hurdles.”

But — that said — Steve went on to say that ” … I like…Bob Iger and *** Cook a lot” and that he hoped to have a new distribution deal signed by year’s end.

Now please note that this is a distribution deal, folks. NOT a co-production & distribution deal (I.E. The sort of business arrangement that the Walt Disney Company currently enjoys with Pixar Animation Studios). Which means that — should Pixar agree to stay in business with the Mouse — Mickey is going to have to settle for a much smaller piece of the pie.

And — in his own comments to investment analysts last week — Iger did confirm that the Walt Disney Company is currently negotiating with Pixar Animation Studios with the hopes of securing a long-term distribution deal. NOT a co-production & distribution deal.

Still, Bob tried to put the best possible spin on this situation. Getting out the none-too-subtle message to Wall Street that Disney’s CEO-to-be understands that it’s probably best for the Mouse House to settle for a much smaller piece of the Pixar profit pie than have to deal with the alternative. Which is have Walt Disney Feature Animation (which is still in rebuilding mode) have to face Pixar Animation Studios as its direct competition starting in 2007.
 

And again Iger was careful not to build up investors’ hopes too high. Rather than making this seem like a done deal, Bob just stressed how impressed he was that the two companies were talking once more. How he thought that the mere fact that :

” … we are having a dialogue is a really good thing, and it has been really healthy. We’d certainly like to find a way to continue to do business with (Pixar Animation Studios), and I think the feeling is mutual.”

At the very least, Mr. Jobs would love to continue to do business with Disney’s marketing department. As part of this month’s quarterly earnings conference call, Steve mentioned that he had seen the Mouse’s plans for promoting “Cars” and had been absolutely wowed. Pixar’s CEO went on to say that Disney’s marketing department was planning “its most comprehensive marketing campaign yet” for a Pixar Animation release.

Speaking of “Cars” … I know, I know. A lot of you were put off by that film’s teaser trailer. But I guess I should let you know that this new John Lasseter film is now just weeks away from officially being completed. And — based on the word that’s been coming out of Emeryville — this may just be Pixar’s biggest hit yet.

While I was out in LA attending SIGGRAPH 2005, I got to speak with a few folks who are intimately familiar with this film. And they shared quite a few secrets about this particular Pixar production that have yet to make it out onto the Web. Intriguing little tidbits like:

There’s a lot more that I could say about “Cars” (Like revealing the great running gag that Cheech Marin’s character has in this film. Or how weird it is that Paul Newman’s car somehow actually looks like Paul Newman whenever that character talks. Or how Dan Whitney’s tow truck character steals virtually every scene that he’s in) … But it wouldn’t be fair to spoil all of this Pixar picture’s surprises.

So all I can safely say is … We’re all in for one hell of a ride come June 9, 2006. That — in spite what you may think of that “Cars” teaser trailer — rest assured that John Lassetter has done it again. This film has all the visual wit & style, humor & heart that we’ve come to expect from a Pixar Animation Studios release … and then some. Trust me, folks. This film is going to break box office records when it hits theaters  summer.

And Bob Iger knows this. Which is why Disney’s CEO-to-be is working so hard right now to make sure that “Cars” isn’t the very last Pixar Animation Studios production that Walt Disney Pictures ever released. That Jobs, Lasseter and their team of technicians & artists stay right where they are. Which is inside the walls of Mickey’s magical kingdom. Rather than be being on the outside … Where they could then give the Mouse some pretty serious competition.

“But — if Disney gets Pixar to sign a new distribution deal, what then happens to that version of  ‘Toy Story III’ that Disney Circle 7 Studios is prepping?,” you ask. “You know, the one where Woody & the gang have to go to a toy factory in Taiwan in order to rescue Buzz?”

Well, here’s the interesting thing: The way I hear it, Jobs & Lasseter reportedly aren’t actually against the idea of making another “Toy Story” movie. More importantly, that they could even allegedly live with the idea of Disney’s own CG artists doing the bulk of the work on this picture.

So what’s the problem? Steve & John supposedly just hate the screenplay that Disney’s own story people have come with for “Toy Story III.” You see, for years now, Lasseter has been talking about doing a “Toy Story” sequel. Only this film wouldn’t be built around Buzz or Woody. But — rather — would prominently feature an adventure involving Jessie. Where the yodeling cowgirl …

Hmmn … Maybe I’ve revealed enough of Pixar’s secrets for one day. So why don’t we save that Jessie / “Toy Story III” story for another time, okay?

Your thoughts?

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