Pixar Up, Upbeat on Disney

Pixar and Disney may be a step closer to kissing and making up. During an investor conference call on Thursday, Pixar CEO Steve Jobs announced strong earnings bolstered by The Incredibles DVD sales and noted that he thinks incoming Disney CEO Bob Iger "seems like a terrific guy." Jobs’ esteem for Iger is in stark contrast to the contentious relationship he had with outgoing CEO Michael Eisner.

“If conversations turn to Disney wanting to strike a new deal, we’ll see how things go,” Jobs added, referring to the Walt Disney Co., which co-financed and distributed all of Pixars blockbuster animated films to date. While Pixar no longer needs Disney to pitch in on production costs, the animation studio is still quite fond of the Mouse House’s distribution and promotional engine. "We have tremendous respect for Dick Cook and his marketing team at Disney. We work very well with them and think they do a terrific job," notes Jobs.

Despite warmer relations between Jobs and Iger, a partnership renewal is still likely hinge on whether or not Disney is willing to take a distribution fee rather than sharing profits on Pixar productions.

Another incentive for Pixar to reconcile with Disney the opportunity to be involved in creating sequels to its hit films, which Disney owns the rights to. Disney has publicly stated its desire to make sequels, starting with Toy Story 3, with or without Pixar’s involvement. “If we do enter into any negotiation with Disney, all I really want to say is that sequels will play a part of it," says Jobs.

For its fiscal first quarter ended April 2, 2005, Pixar reported revenues of $161.2 million and earnings of $81.9 million, nearly three times what the company pulled in during the same quarter a year ago. The Incredibles accounted for $125.5 million in revenues, selling 17.7 units on home video in the U.S. alone. These results compare to revenues of $53.8 million and earnings of $26.7 million, or $0.23 per diluted share, achieved in the year-ago quarter.

Cars, the next and perhaps last Disney presentation of a Pixar film, is scheduled to race to theaters in June of 2006. “Cars is looking great, and we’re also very excited about the [Sept. 6] ten-year anniversary re-release of Toy Story on DVD this Fall,” says Jobs.

Toy Story falls under the terms of the original 1991 feature film agreement. As a result, revenues from the home video re-release will not be split evenly with Disney. Pixar says it is in discussions with Disney for the U.S. re-release of Toy Story 2 toward the end of the year.