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HOLLYWOOD BREAKUP

Rival Movie Studios Line Up to Court Picture-Perfect Pixar

January 30, 2004|Sallie Hofmeister and Meg James | Times Staff Writers

Now that the studio behind the blockbuster "Finding Nemo" has cut bait with Walt Disney Co., Pixar Animation Inc. can expect to find itself at the center of a feeding frenzy.

"There's nothing closer to a sure thing," said one studio executive who expects to be lining up with other Hollywood rivals to court the remarkably successful Pixar.

Warner Bros., 20th Century Fox, Sony Pictures Entertainment and Metro-Goldwyn-Mayer Inc. said Thursday that they would pursue Pixar and its picture-perfect record.

All five of Pixar's feature-length animated films -- produced in partnership with Disney -- have stuck box-office gold. "Finding Nemo" ranks as the highest-grossing animated movie of all time.

"Every other studio will be falling all over themselves to cut a deal with Pixar," said John Tinker, research analyst with Blaylock & Partners.

Industry executives and analysts said Warner Bros., a division of Time Warner Inc., has the best shot at cinching the film distribution deal, given its vast experience with family-oriented fare from its "Lord of the Rings" trilogy and the "Harry Potter" series. News Corp.'s Fox studio, which was behind the animated hit "Ice Age," is considered a strong contender.

"They are probably the two most likely candidates," said independent analyst Christopher Dixon.

Pixar on Thursday ended talks to extend its 13-year partnership with Disney. Under Pixar's deal with Disney, the two companies share costs and profits associated with the films, which are produced by Pixar and distributed and marketed by Disney. Disney also earns a 12.5% distribution fee of each film's revenue.

Pixar walked away from the negotiating table because it wanted to retain full ownership of future movies and pay only a flat distribution fee.

That could be worth an estimated $50 million to $100 million a movie for a new partner -- but wouldn't kick in until Pixar delivers two more movies it owes Disney under the current contract: "The Incredibles" is expected in theaters in November, while "Cars" will be released next year.

Warner Bros., Fox and Sony executives met informally last year with Pixar.

"We remain interested," Warner Bros. President Alan Horn said Thursday.

For his part, Jim Gianopulos, Chairman of 20th Century Fox Film Corp. said: "We're certainly interested in pursuing our discussions and we would make an excellent choice."

Analysts handicapping the contest say Time Warner's studios have proved its marketing and licensing clout. Since its release in December, "Lord of the Rings," released by the company's New Line unit, has brought in about $340 million in the U.S. and Canada.

Some analysts and industry observers questioned whether the break-up could be labeled a negotiating tactic, although some are doubtful that the two sides could come together again after contentious negotiations were followed by such a public parting.

What Disney brought to the partnership was incredible promotional clout boosted by its theme parks and retail stores. Warner Bros. lacks theme parks and stores, but Dixon said it could come close to matching Disney's marketing prowess.

While Warner Bros. has shuttered its in-house animation unit, its library of cartoon characters includes the Looney Tunes gang -- Bugs Bunny, Tweety Bird and the Road Runner -- and Hanna-Barbera characters such as Scooby Doo.

Warner Home Video is also the domestic market leader in home entertainment, selling and renting more DVD and video cassettes than any other studio.

Fox's deal with director George Lucas is the model Pixar chief Steve Jobs says he wants to replicate for his company. Under that agreement, Lucas retains the rights and profit from his "Star Wars" films, including lucrative licensing and merchandising sales, and pays Fox a flat fee to distribute them.

Although several studios might join the fray, analysts largely discounted them. MGM lacks size and marketing reach. Vivendi Universal is selling its U.S. entertainment assets, including Universal Pictures, to NBC. And Jobs, in his role as Apple Computer Inc. chief, might clash with the digital music and electronics interests of Sony.

Times staff writer Claudia Eller contributed to this report.

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