Pixar angling to take bite out of Disney (http://www.sunspot.net/technology/bal-pixar0625,0,7232968.story?coll=bal-technology-headlines) - Los Angeles Times, 6/25/03

QuikQuote: If Pixar makes a similar agreement with Disney, the studio probably will get "between $50 to $100 million a movie from fees" versus several times that under the current deal, said Jeffrey Logsdon, a media analyst with Gerard Klauer Mattison.
Jobs also is seeking to have the new contract apply to a pair of forthcoming Pixar movies, "The Incredibles" and "Cars," that still are owed Disney under the current deal, sources said.

From 1998 to 2001, Pixar films accounted for an estimated 45% of Disney Studios' operating income.

Wow.

I don't care how much "pain" it causes - losing Pixar will be the single most damaging thing Eisner will ever do to the Disney company.

AVP

Originally posted by AVP
I don't care how much "pain" it causes - losing Pixar will be the single most damaging thing Eisner will ever do to the Disney company.

The problem is that there is really no way for Disney to retain Pixar at the same level of revenue that they were bringing in. The previous deal was made at a time when Pixar was a very small player in the industry. As a result, Disney was able to easily arrange a deal that was very favorable to them. Now that Pixar is such a huge success, they are in a position to negotiate a deal (with Disney or someone else) that will allow them to retain a much larger percentage of the revenues.

Ultimately, what Disney has to look at closely is whether or not they can negotiate a deal that is still worthwhile to them. Losing Pixar to another studio would be damaging, but it could be even more damaging if they end up in a situation where they are having to devote a very large portion of their distribution and marketing efforts towards films that are returning too large a percentage of the revenue to someone else.

There is a fair chance that the main value to Disney of keeping Pixar's films will be the basic promotional and "face-saving" value of keeping the Disney logo on their films. This is essentially similar to what happened to Fox with their distribution deal for the "Star Wars" prequels. What Disney has to look at is whether or not that perceived value is worth the costs associated with the deal.

One thing to keep in mind is that Pixar is bound to have a failure sooner or later. No producer has yet managed to maintain such a high level of success indefinitely. Disney has to weigh the risk of possibly being contractually obligated to put a large amount of their distribution effort behind a film where their piece of the revenues might not even be enough to cover those very basic costs. Under normal circumstances, even a flop usually returns enough money to the company to cover the bulk of the distribution costs.

-Jeff

Disney should be looking at why 45% of their revenue is coming from another studio.

Physician heal thyself.