Walt Disney Co. may soon own Pixar Animation Studios, but in at least one key area -- sequels -- the media giant has already ceded control to the company it is buying.
Last year, when Bob Iger took the reins at Disney, he inherited a small animation unit that his studio had created expressly to produce sequels to Pixar hits.
Staffed with artists who had no connection to the original films, the operation -- nicknamed Pixaren't -- was seen by many in the animation community as Disney overstepping its bounds. As Pixar and Disney weighed whether to extend their long-term distribution deal, some believed Disney was saying, in effect: We can do this without you.
Apparently, Disney can't.
The announcement this week that Disney would buy Pixar for $7.4 billion promised sweeping changes at the Burbank entertainment company, whose entire animation group would soon be handed over to Pixar's creative director, John Lasseter, and Pixar President Ed Catmull.
In remarks made during a Tuesday conference call with analysts, Iger and Pixar Chief Executive Steve Jobs implied what other sources confirmed Wednesday: that Disney's 150-plus-person Pixar sequels unit -- which is housed in a Glendale warehouse and is already at work on "Toy Story 3" -- will soon be no more.
"We feel very strongly that if the sequels are going to be made, we want the people who were involved in the original films involved in the sequels," Jobs said.
Iger sounded the same note.
"It was really important to me that the people who made the films originally, who had the vision, who knew the characters and the essence of these films get a shot at making any films that were derivative," the Disney chief said.
"While Disney might have been able to make them, Pixar making them is just so much different," Iger added. "Not to take away from the talent of other people who might have been picked to make them."
Although Disney is planning to shutter the sequels unit, which is officially named Circle 7 after the street where it is situated, that does not necessarily mean all of its employees will be let go. Some are expected to be absorbed into Disney's core animation division.
On Wednesday, Disney Studios Chairman Dick Cook said, "All of the sequels to Pixar movies will be made by Pixar. We are clearly going to look at all of the talent that has been assembled and figure out where we go from here."
Already, the Circle 7 group has spent months in pre-production on "Toy Story 3," the third installment of the successful Buzz Lightyear and Woody adventure series. Under director Bradley Raymond, who made Disney's direct-to-video sequel "The Lion King 1 1/2 ," models are being built and the script by Jim Herzfeld and Jared Stern is being revised.
As conceived thus far, the story follows what happens when Buzz is recalled to the toy factory in Taiwan and has to be saved from doom by his fellow toys.
Now, it looks as if all or some of that work may be in vain.
Lasseter, the creator and director of the original "Toy Story" movies, has made no secret of his protective feelings for the successful franchise. In fact, he shared long ago with close associates a different story line that he envisioned as the final chapter in a trilogy.
Lasseter and Catmull were unavailable for comment Wednesday because they were visiting Disney's Burbank studio, addressing the animators who would soon report to them.
In a move some saw as symbolic, Tuesday's announcement of the acquisition deal was made from Pixar's Emeryville, Calif., headquarters, where Lasseter and Catmull will continue to be based.
The issue of sequels had long been a major bone of contention between Jobs and former Disney chief Michael Eisner. Although Disney had the right to control them under its 15-year co-financing and distribution agreement with Pixar, Jobs had made clear that it would do so at its peril.
Last year, Eisner gave his blessing to launch the Circle 7 Pixar sequel unit. A month later, Jobs told analysts, "We have made the decision not to actively participate in creating sequels to our films co-financed by Disney."
Jobs has repeatedly said that despite the success of 1999's "Toy Story 2" -- which grossed more than $245 million domestically -- he would rather have Pixar focus on creating new stories than work on sequels.
One of the first cracks in the companies' otherwise solid partnership came in 2001 when Eisner and Jobs had a public spat over a proposed "Toy Story 3" sequel.
Eisner insisted on standing by the letter of Disney's contract stipulating that sequels did not count toward the films Pixar owed the studio. Jobs argued that they should count.
Now, when it comes to sequels, it is Pixar that will decide what counts.