For Disney and Pixar, a Deal Is a Game of 'Chicken'
NY Times - 10/31/05

For Disney and Pixar, a Deal Is a Game of 'Chicken'

LOS ANGELES, Oct. 30 - On Friday, the Walt Disney Company will release "Chicken Little," its first animated film since revamping its animation studio. The company is hoping the movie will return Disney to the glory of its past in animation.

Another company that also has a lot riding on "Chicken Little" is Pixar, the Emeryville, Calif., studio that has a joint venture with Disney to make and market animated films through 2006.

Steven P. Jobs, Pixar's chairman, and Robert A. Iger, Disney's newly named chief executive, have been in talks since early summer to extend an agreement for Disney to continue distributing Pixar films. But according to two people with knowledge of the talks, serious negotiations have not begun, as both sides wait to see how "Chicken Little" performs in movie theaters.

Disney will get some of its pride back if "Chicken Little" is a hit, analysts say. But more important, a hit movie would show Wall Street and Mr. Jobs that Disney need not depend on Pixar for creation of new animated movie characters that could be adapted for theme park rides, consumer products and television. If the movie is not well received by critics or moviegoers - something that looks increasingly less likely given the favorable early word - Mr. Jobs will gain leverage, because Disney would be seen as needing Pixar to help create new stories to refresh its creative arsenal.

Detailed negotiations between Disney and Pixar are likely to begin in mid-November and could be wrapped up by late December or early January, said one of the people. The studios have several issues to grapple with, including who would have creative oversight over new Pixar characters at Disney theme parks and how revenue from rides and other attractions would be divvied up.
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