Animated discussions ahead at Disney

Cars is the next of the computer-generated animation features following in the traditions of Toy Story and A Bug's Life.

LOS ANGELES - Walt Disney's board of directors will meet tomorrow amid speculation it may buy Pixar Animation Studios in a deal that could revive Disney as the world's dominant animation studio and give computer pioneer Steve Jobs a powerful new platform.

Sources familiar with the talks said the meeting was a regularly scheduled board meeting. It was not clear whether the board was prepared to vote on a merger proposal.

The Wall Street Journal reported last week that Disney proposed to buy Pixar in a stock transaction worth more than US$6.7 billion ($9.8 billion), making Pixar chief executive Jobs its largest individual shareholder and possibly giving the man who also co-founded Apple Computer a seat on Disney's board.

Disney, for decades the pre-eminent maker of such hand-drawn animated films as Cinderella and Lion King, has struggled in recent years to maintain its position in an industry that has embraced computer-generated (CG) films.

The two companies were in the midst of renegotiating their distribution agreement, which expires in June with the release of Pixar's Cars, when rumours of the purchase surfaced.

Disney could not be reached for comment and a Pixar spokesman declined comment.

Media industry watchers have speculated that the merger talk was driven by Disney's lack of confidence in its upcoming slate of animated films.

Disney's first CG release, Chicken Little, has performed respectably with worldwide box office sales of US$279 million since November 4, but less than Pixar's lowest-grossing film, A Bug's Life, which reaped US$363 million worldwide.

"Disney is perhaps revealing a slight lack of confidence to want to mimic Pixar's success internally," said Anant Sundaram, a professor at Dartmouth College's Tuck School of Business.

"If that assessment is true, then it is a somewhat unfortunate admission from a once-great company that fundamentally created, and defined this space."

Analyst Rich Greenfield of Pali Research said that the potential deal could signal that Disney "was increasingly concerned with its upcoming [internally generated] animated films".

Disney chief executive Robert Iger pledged in the company's fourth-quarter conference call in November that "animation is, and will remain, at the heart and soul of Disney".

Although Disney has not produced a blockbuster animated film on its own in years, the six films Pixar and Disney made together since the 1995 release of Toy Story, have grossed more than US$3.2 billion.

Pixar was on the verge of finding a new distributor for its films when Iger, who took over in October for longtime Disney CEO Michael Eisner, made a priority of smoothing over relations with Jobs, who had publicly clashed with Eisner.

The Disney board also may approve a buyer for the company's ABC Radio assets.

- REUTERS