Pixar dumps Disney -- leaving our fave fish up in the air.

By Steve Daly
Updated February 13, 2004 at 05:00 AM EST

Wait a minute,” says Woody the cowboy doll after lighting a fuse in the original Toy Story. ”I just lit a rocket. Rockets explode!” And boom — off it goes.

Last week, Pixar CEO Steve Jobs set off his own firecracker under the Walt Disney Company. He announced that Pixar, creator of five consecutive computer-animated hits, plans to break off its hugely successful distribution partnership with Disney.

The proposed divorce won’t immediately affect moviegoers, since Disney and Pixar remain contractually bound through the superhero tale The Incredibles (coming in November) and the road-trip opus Cars (2005). But Disney insists it will proceed with Toy Story 3 and other Pixar-tale spin-offs — which it can do if Pixar declines to co-fund and craft such sequels itself — without the CG shop’s story minds or visual wizards.

Why are Disney execs willing to say buh-bye when their own ‘toon division is sputtering? Simple: Under Pixar’s last proposal, Disney would have given up a hefty portion of revenues, and garnered a much smaller slice of Pixar’s future slate. As things stand, Disney can still squeeze Pixar for big bucks in the short term. The studio will fund half the budgets of The Incredibles and Cars and get roughly half the profits, as it’s been doing since A Bug’s Life. What Pixar wanted was to finance the movies solo, keep Disney as distributor, and change the revenue split to something more like 90 — 10 — the luxe deal George Lucas got with Fox for his Star Wars movies. But who’s to say that Pixar will keep churning out the megahits?

So Michael Eisner balked, Jobs walked, and Roy Disney squawked. The 74-year-old nephew of company founder Walt, who resigned from Disney’s board in November after trying to oust Eisner, has seized on the Pixar impasse as evidence of managerial mania. ”Michael just wants to make killer deals,” he says. ”If it’s not a killer deal, it’s no deal.” Pixar declined comment, and Disney reps did not make Eisner or studio chief Dick Cook available to respond.

Other suitors are circling, but even leading candidates Warner and Fox aren’t as well-positioned as Disney to market family movies via everything from Happy Meals to theme-park rides. What Disney stands to lose is residual value in Pixar’s characters, who can’t mean as much to audiences without their original creators to give them further life. After all, Disney’s story department has a weak batting average lately, and its in-house CG division is unproven, currently at work on its first all-CG feature, Chicken Little (due in 2005). Morale at Disney, say insiders, is lower than Pluto’s tail after a scolding, what with massive layoffs of 2-D artists — some of whom got the ax shortly before Brother Bear pulled down a Best Animated Feature Oscar nomination. And in a gob-smacking role reversal, Pixar has bought up 2-D animation desks sold off by Disney, sparking rumors it might wish to start its own hand-drawn boutique.

The questions don’t seem to faze Disney animation chief David Stainton (who shepherded the company’s profitable but junky lineup of direct-to-video sequels like Cinderella II). ”This is good news,” Stainton wrote in an internal e-mail after Jobs’ declaration. ”You all are awesome and ready for your close-up!” In other words: Bring it on.