Pixar comes with tough decisions for Disney

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Walt Disney was on Wednesday facing a number of thorny decisions about its film production slate and key personnel following its $7.4bn acquisition of Pixar, the animated film studio.

Disney’s staff had been working on a number of animation projects prior to the deal. However, those projects could be scrapped or revised now that Pixar’s top executives – president Ed Catmull and creative director John Lasseter – will take charge of the companies’ combined animation studio.

On Tuesday evening, Robert Iger, Disney’s chief executive, said he expected Disney and Pixar to each continue making one animated film a year, and pledged to protect Pixar’s creative culture. Mr Iger did not disclose any changes to the production slate, but noted that Mr Catmull and Mr Lasseter would review all projects.

One project that seems likely to be overhauled is Toy Story 3, a Disney sequel to Pixar’s pioneering hit from a decade ago. Under a long-running distribution partnership, Disney held sequel rights to Pixar’s films, an issue that rankled studio founder, Steve Jobs.

Speaking at the deal’s unveiling, Mr Jobs, who is now Disney’s largest shareholder with a 6 per cent stake, said that the sequels were an important issue to him, and that the people who made the originals should oversee follow-ups.

The deal has raised speculation about the future of David Stainton, who has stepped down as president of Disney Animation. The company said he would be pursuing opportunities within Disney studios.

Disney’s shares on Wednesday held stable in spite of the premium it is paying for Pixar, dropping 55 cents to $25.44 on Wednesday.

Wall Street analysts largely applauded the agreement, which Disney is relying on to revive the fading animation department at the heart of its businesses, from films to theme parks and consumer products.

“The Pixar acquisition filled a major strategic gap for Disney and reinforces the company’s commitment to focus its resources on content production,” said Jessica Reif Cohen, a Merrill Lynch analyst. “Given the strength of its assets, we have confidence Disney can continue to demonstrate significant growth over the longer-term.”

The deal also won plaudits from a Disney scion. Roy Disney said on Wednesday: “This clearly solidifies the Walt Disney Company’s position as the dominant leader in motion picture animation and we applaud and support Bob Iger’s vision.”

But there was also concern about Disney’s ability to preserve Pixar’s creativity amid the financial demands of a larger corporate parent.

Vijay Jayant, a Lehman Brothers analyst, said: “The ultimate success of this deal will likely be determined by Disney’s ability to ensure Pixar’s autonomy and entrepreneurial spirit intact.”

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