Jobs ready to sell Pixar: Report
Newspaper says animated studio head open to the right deal; receptive to offer from partner Disney.

October 31, 2005: 9:08 AM EST

NEW YORK (CNN/Money) - Steve Jobs, the chairman and CEO of Pixar Animation Studios, would be open to a sale of the company at the right price, according to a published report.

The New York Times reports Jobs, who owns about 50 percent of Pixar (Research), would want a strong premium to its current $5.9 billion market capitalization to consider a sale, but he would be open to an offer from its long-time partner, Walt Disney Co. (Research) The paper attributed Jobs' willingness to consider a sale to "two people with knowledge of the talks" now taking place between Disney and Pixar about possibly extending their partnership.

But the paper reports that in talks about a new version of their partnership, Disney CEO Robert Iger has yet to make an offer to acquire Pixar. The paper reports that Disney is hoping that its new animated feature, "Chicken Little," due in theaters this weekend, will give it greater leverage in talks with Pixar.

"Chicken Little" is the first offering from Disney's animation studio since it was revamped to produce computer-generated features that have a three-dimension look, rather than the traditional hand-drawn two-dimensional cartoons.

Pixar has produced only CG features and nothing but blockbusters since it started producing movies in 1995, while many of the Disney-generated animated movies during the period were considered box office flops.

The Times reports that if "Chicken Little" is a hit, it would show Wall Street and Jobs that Disney need not depend on Pixar for creation of new animated movie characters that could be adapted for theme park rides, consumer products and television.

The movie has gotten generally favorable early word, but if it is not well received by critics or moviegoers, the paper reports that Jobs will gain leverage in his talks with Disney because the media conglomerate would be seen as relying on Pixar to add new stories to its creative arsenal.

If the movie performs poorly, Bernstein & Co. media analyst Michael Nathanson told the paper, "investors might want to see a Pixar deal right behind it." Still, he added, "it's all about numbers, and both sides - Disney and Pixar - are looking for leverage."

Pixar has strong cash reserves and no longer needs Disney's to help finance films, so it is looking for a distribution agreement for a far larger percent of the box office than the 50 percent it receives under the current deal with Disney.

But while there are likely to be other studios willing to distribute Pixar films, analysts see Disney as best positioned to promote future Pixar films and its characters due to theme parks and strong merchandise sales channels.

Jobs would evaluate any Pixar partnership based on where he could get the best deal for the studio, the paper reports, not on his developing friendship with Iger. Jobs often sparred with Iger's predecessor, Michael Eisner. The Disney Channel and ABC, other units of Disney, recently signed a deal to distribute shows on the new video version of the Apple Computer (Research) iPod. Jobs is also Chairman and CEO of Apple.

The Times reports that detailed negotiations between Disney and Pixar are likely to begin in mid-November and could be wrapped up by late December or early January, said one of the paper's sources. The studios have several issues to grapple with, according to the paper, including who would have creative oversight over new Pixar characters at Disney theme parks and how revenue from rides and other attractions would be split.

Pixar has strong cash reserves and no longer needs Disney's to help finance films, so it is looking for a distribution agreement for a far larger percent of the box office than the 50 percent it receives under the current deal with Disney.

Disney really couldn't go on without them

Pixar has produced only CG features and nothing but blockbusters since it started producing movies in 1995, while many of the Disney-generated animated movies during the period were considered box office flops.

The Times reports that if "Chicken Little" is a hit, it would show Wall Street and Jobs that Disney need not depend on Pixar for creation of new animated movie characters that could be adapted for theme park rides, consumer products and television.

It's amazing to me how far behind Chicken Little's animation seems compared to other CG animation. I saw a preview for Chicken Little right before a preview for DW's new "Over the Hedge" and Over the Hedge's animation looked twice as good as Chicken Little's.