''Nemo'''s Pixar swims away from Disney partnership. After 10 months of renewal negotiations, the $2.5 billion partnership between the computer animators and the studio splits up

By Gary Susman
January 30, 2004 at 05:00 AM EST
Finding Nemo: © PIXAR/Disney

After ”Finding Nemo,” computer animation pioneer Pixar will be finding a new distributor, while Disney, the company’s longtime distributor, hopes to find a way to fill a gaping hole in its future animation profits. In a surprise announcement on Thursday, Pixar announced it was ending its decade-old partnership with Disney — one that produced such instant classics as ”Toy Story” and ”Nemo” and grossed some $2.5 billion at the box office — because the two firms, after months of negotiations, had failed to come to terms on a renewal of their deal.

”After 10 months of trying to strike a deal with Disney, we’re moving on,” Pixar chief Steve Jobs said in a statement. ”We’ve had a great run together — one of the most successful in Hollywood history — and it’s a shame that Disney won’t be participating in Pixar’s future successes.” Disney CEO Michael Eisner responded with his own statement, saying: ”Although we would have enjoyed continuing our successful collaboration under mutually acceptable terms, Pixar understandably has chosen to go its own way to grow as an independent company.”

Under the deal’s current terms, Disney owns the copyrights to Pixar’s films and characters, receives half the profits from their box office and merchandising, and earns a 12.5 percent cut of ticket sales as a distribution fee. Pixar had been seeking a deal more like the one George Lucas has with 20th Century Fox, which distributes his ”Star Wars” movies: The animators wanted to own the films, receive all the profits, and pay Disney a flat distribution fee.

The announcement means Pixar can shop for a more favorable distribution deal with another studio, but it will also have to compete with Disney in the animation marketplace. Disney will now have the right to cash in on potential sequels to the existing Pixar hits without having to share future earnings with Pixar. Disney also gets two more Pixar movies under the old deal — ”The Incredibles,” due in late 2004, and ”Cars,” due next year. After that, however, Disney has very little on the drawing board — literally. The company recently shuttered its Orlando animation studio and laid off most of the Disney animation staff. And for the first time in many years, the studio that has been synonymous with animation since launching Mickey Mouse and ”Snow White and the Seven Dwarfs” decades ago has no hand-drawn animated projects in the works.