Disney-Pixar deal slowly animating
Is no news good news for Disney?
Bob Iger is probably hoping so, after a third-quarter earnings call in which Pixar CEO Steve Jobs had little to say about progress toward a new distribution deal or the company’s post-“Cars” slate — topics he’d previously said should be ready for discussion by this time.
Instead, Jobs confirmed Pixar is “in deep discussions” with Disney about renewing a deal, and said he hopes the two companies will stay together.
“If we go with Disney, then we’ll be done by the end of the year, but if we don’t, it might be later,” he told analysts on a conference call. “The timing is not our first choice, but it’s worth investing an extra few months to determine whether we continue with Disney or not. It would be our first choice to continue with them.”
Jobs reiterated he is getting along with Bob Iger, a shift from a contentious relationship with Michael Eisner that contributed to tension a year ago, when a renewal looked unlikely.
Disney is in a somewhat stronger position for negotiations following the moderately successful $40 million opening of “Chicken Little,” its first CGI toon, this past weekend. If the pic had bombed, Mouse House might feel more desperate to ensure a future supply of pics from Pixar following next summer’s “Cars.”
Toon studio is looking for a new deal under which it would fully finance pics and pay Disney or another distrib a flat fee, likely around 8% of grosses. It currently splits production costs and profits with Mouse House. Fully financing its pics is one of the reasons Pixar has built up a substantial cash supply, which reached more than $1 billion last quarter.
Jobs also declined to provide details on the next three pics after “Cars,” which are in production for release in the summers of 2007, 2008 and 2009. First pic following “Cars” is believed to be “Ratatouille,” about a rat in an upscale restaurant, though Pixar won’t confirm that.
In the quarter ended Sept. 30, Pixar reported a profit of $27.4 million on revenue of $45.8 million, up 22% and 3%, respectively, from a year ago.
Performance was driven largely by sales of its library titles, including the re-release of “Toy Story” on DVD and particularly strong interest for “Finding Nemo” on various platforms, as well as consumer products. “The Incredibles,” the studio’s most recent release, contributed relatively little as Pixar experienced higher-than-expected homevideo returns last spring after the pic hit DVD in March.
Earnings of 22¢ per share were well above expectations of 8¢-12¢, which chief financial officer Simon Bax attributed largely to one-time occurrences.
In the current quarter, Pixar is expecting earnings per share of 13¢-17¢. “Toy Story 2” will be re-released on DVD domestically Dec. 26, with the company hoping to benefit from post-Christmas sales and gift card shopping. Both “Toy Story” pics will be re-released on DVD internationally in the quarter as well.
Shares in Pixar closed down 4% before earnings were announced at $50.88, following a 3% drop Tuesdayafter the “Chicken Little” opening. However, better-than-expected earnings drove the stock up 5% in after-hours trading.