‘Nemo’ hit could hurt duo’s dealings

Pixar unlikely to back down from demands

HOLLYWOOD — The boffo bow of Disney/Pixar toon “Finding Nemo” could hinder talks to extend the pic partners’ current film agreement.

“Nemo” rung up $70.2 million between Friday and Sunday, and the bigger-than-expected success could prompt Pixar boss Steve Jobs to dig in his heels in negotiations, observers suggested Monday.

“The impact of ‘Nemo’ is like a baseball player hitting 60 home runs in the final season of his contract,” said David Davis, senior VP and box office analyst at Houlihan, Lokey, Howard & Zukin in Los Angeles. “It looks like ‘Nemo’ is going to be the most successful of their movies, (so) Pixar couldn’t have picked a better time to renegotiate.”

Under terms of its current pact with Disney, the Northern California-based animation studio was able to begin shopping around for a prospective new distributor of future Pixar films back in February, when it delivered “Nemo” to the Mouse House for post-production. Jobs also has been in simultaneous talks with head Mouseketeer Michael Eisner about extending Disney’s current relationship with Pixar, which in any event still owes Disney two films — “The Incredibles” and “Cars.”

Focused on ‘Nemo’

For the moment, Pixar investors appeared focused on the big success of “Nemo,” though analysts believe the company’s stock price could dip by the end of the week on investor profit-taking. Shares rose $2.23, or 4%, to close at $58.78 after a broadly bullish trading sesh.

Longer term, there remains the question of whether Pixar’s greenest pastures lie on Disney’s Burbank lot or with another distrib.

Jobs wants the Mouse to accept new terms awarding Disney only a distribution fee for handling Pixar pics. Currently, conglom gets a distribution fee plus a 50% share of distrib-side B.O., in exchange for putting up half of pics’ production costs.

“Disney basically gets 65% of the profits for 50% of the cost,” said Dennis McAlpine of investment research firm McAlpine and Associates in Gotham.

May be standoff

In the aftermath of the big “Nemo” bow, Jobs is unlikely to back down from his demands, McAlpine said, and the Mouse is unlikely to accept a mere distribution fee from Disney-Pixar pics. “I don’t expect anything (to be resolved) until November 2004, after Pixar delivers ‘The Incredibles,’ ” the analyst predicted.

Such a protracted stall could produce any number of power plays by one or the other of the partners, with the question of sequels a particularly hot issue.

Jobs has refused to make any more sequels until new terms are hammered out. But, under terms of the current agreement, Disney could force the issue by agreeing to pay 100% of production costs, leaving Pixar with a mere “royalty fee” of uncertain value, McAlpine said.

Whether or not such a scenario ever comes to pass, Disney insiders say the heady rush of “Nemo” success may prove fleeting for Jobs.

Quipped one Mouseketeer: “He’s strutting around like a rooster right now. Only time will tell if he gets his feathers plucked or not.”