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Disney, Pixar in Dispute Over Pact

Hollywood: An impasse over a third installment of 'Toy Story,' stemming from a contractual clause, is straining the alliance.

October 22, 2001|CLAUDIA ELLER and JAMES BATES | TIMES STAFF WRITERS

"They are together for better or for worse for three more movies," Reif Cohen said. "There's no way Disney should let Pixar go given their unbelievable track record.'

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Strained Alliance

A standoff between Disney chief Michael Eisner and Pixar Chairman Steve Jobs over "Toy Story 3" is undermining what has otherwise been one of Hollywood's most successful partnerships. At the center of the dispute is whether the sequel to the lucrative "Toy Story" franchise should count as one of the three movies Pixar still owes Disney under their current deal. Eisner says it shouldn't count. Jobs says it should and insists that he will not make the movie under the existing terms of their agreement.

The original "Toy Story," released in 1995 as the first picture under Pixar and Disney's joint venture, grossed $361.5 million worldwide and put Pixar and director John Lasseter on the ap as trend- setting pioneers of computer-animated movies. The film also established Woody (Tom Hanks) and Buzz Lightyear (Tim Allen) as instant classic screen heroes.

"Toy Story 2," originally intended as a direct-to-video sequel, instead went out theatrically in 1999 only after Pixar fought vigorously for it to be seen on the big screen. The picture grossed even more than the original, taking in $485 million worldwide.

"Toy Story 3" is not even in development and is in jeopardy of not being made despite how potentially lucrative it would be to both companies.

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Monster Profit

"Monsters Inc." is expected to be a major hit for Disney and Pixar. The companies split the profit after Disney recoups advertising costs and is paid a 13% distribution fee. Here's an estimated breakdown of what the movie could make (in millions of dollars):

Revenue

Domestic theatrical rentals ($175-million box office)*: $96.3

International theatrical rentals ($200-million box office) : $90.0

Domestic home video and DVD: $180.0

International home video and DVD: $72.0

Merchandise licensing and royalties: $28.0

All television, pay-per-view, cable, music, games: $125.0

Total revenue: $591.3

Costs

Production: $115.0

Global marketing: $100.0

Distribution fee: $76.9

Total costs: $291.9

Accounting adjustment (added to profit): $25.0

Estimated net profit: $324.4

Pixar estimated share of profit: $162.2

* Theatrical rentals are the portion of the box office retained by the studio, which is roughly 50%.

Source: Jeffrey B. Logsdon of Gerard Klauer Mattison

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