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Barron’s: Pixar Loses Out as Disney Talks End

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Monday, February 2, 2004

NEW YORK (Reuters) - Pixar Animation Studios Inc. may have assumed risks and disadvantages when lengthy negotiations to renew its movie distribution deal with Walt Disney Co. broke down last week, according to a report in the latest edition of Barron’s.

Shares of Pixar rose 3.4 percent to $66.39 on Friday while those of Disney fell 1.8 percent to $24, a day after the firms announced they had failed to extend a pact that has yielded such blockbusters as “Finding Nemo” and “Toy Story.”

Barron’s said Pixar has probably capped its earnings power for the next three years because its next two movies, “The Incredibles” and “Cars,” will be released under the existing deal, which effectively gives Disney more than 60 percent of any profits.

The report cited a Morgan Stanley analyst who said the possibility of negotiating more favorable terms on those two movies is now off the table.

Pixar will face Disney as a rival in the increasingly competitive animated film business and Pixar’s new partner is unlikely to be as strong as Disney in family entertainment, Barron’s said.

In the future, starting with its as-yet unnamed 2006 movie, Pixar will probably bear all the production and marketing costs, Barron’s said.

Talks between Disney and Pixar, which is run by Apple Computer Inc. co-founder Steve Jobs, broke down Thursday after 10 months.


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