Newspaper article The Evening Standard (London, England)

How Hollywood Is Redrawing Animation; TAKEOVER TARGET DISNEY, BEDEVILLED BY A STRING OF FILM FLOPS, IS FEELING THE HEAT AS A CLUTCH OF RIVALS MUSCLES IN ON THE ACTION

Newspaper article The Evening Standard (London, England)

How Hollywood Is Redrawing Animation; TAKEOVER TARGET DISNEY, BEDEVILLED BY A STRING OF FILM FLOPS, IS FEELING THE HEAT AS A CLUTCH OF RIVALS MUSCLES IN ON THE ACTION

Article excerpt

Byline: BOYD FARROW

WHEN Finding Nemo is proclaimed Best Animated Feature at the Oscars ceremony on Sunday - it is the biggest shoo-in of all time - it will be a bittersweet occasion for the embattled Walt Disney Company. The film's coproduction company, Pixar Animation Studios, said last month that it would not be renewing its creative partnership with the Mouse House when it expires in 2005, thereby ending a relationship that has yielded five of the 10 biggest-ever grossing animated films.

These include Toy Story, Toy Story 2, A Bug's Life and Monsters Inc, winner of the inaugural Best Animated Feature Oscar. Finding Nemo, the most commercially successful animated film of all time, is in part responsible for increasing Disney's earnings by 8% in 2003. Investment bank Lehman Brothers estimates that Pixar will have accounted for 45%, or $1.1 billion ([pounds sterling]588 million), of Disney's entire operating income from 2000 to 2005.

This will be weighing on the shoulders of Disney shareholders, who are digesting the implications of Comcast's $60 billion takeover bid, especially when they consider that some of Disney's recent in-house animated film projects have flopped while others have been yanked from production schedules. Under the terms of the deal with Pixar, the San Francisco-based company pays for the movies' production costs and Disney pays $100 million to market and distribute each title. Once Disney has recouped a distribution fee, both companies share equally in the profits.

However, Pixar chairman Steve Jobs believes his company, which is worth an estimated $4 billion, is now a bigger animation force than Disney. He wanted to hire Disney's marketing and distribution structure in the way that George Lucas hires 20th Century Fox to release his Star Wars films. When Disney would not play ball, Apple Computer cofounder Jobs told chief executive Michael Eisner that he would have no trouble finding someone else who would.

But Pixar is not the only studio to have scented Disney's blood in the animation arena. Ever since Toy Story's release in 1995 proved that computer animation could produce blockbusters relatively cheaply and quickly, every Hollywood mogul has been in a frenzy to create his own digital magic kingdom.

Sony Pictures Entertainment quietly opened its own computer-animation unit last year to create movies in collaboration with Imageworks, its digital effects unit.

Fox has created an arm called Blue Sky to make computer-animated fare such as the well-received Ice Age while Warner Bros has beefed up its computeranimation division to cash in on its own rich heritage, such as Scooby-Doo.

But, the company really hoping to hurt Disney is DreamWorks, founded in 1994 by Steven Spielberg, David Geffen and former Disney studio chief Jeffrey Katzenberg. …

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