New Disney Deal Big Boost for Pixar

Walt Disney Co. and Pixar Animation Studios, which teamed on the 1995 hit “Toy Story,” have announced a five-picture deal that will equally share costs and profits and give Disney up to a 5% stake in Pixar.

The deal will commence with a computer-animated feature called “Bugs,” based on an Aesop fable and scheduled for a Christmas 1998 release. That picture was to have been the second of three films under a 1991 contract between the two companies.

The new arrangement sweetens the pot considerably for Pixar, which will see its share of movie profits zoom from less than 15% to about 50%. The Point Richmond, Calif.-based studio will also work with Disney on videos, merchandising, interactive media and straight-to-video sequels. Pixar shares soared $6.875 to close at $21 on Nasdaq. Disney edged up 25 cents to $75.625 on the New York Stock Exchange.

“This demonstrates Disney’s interest in being on the cutting edge of animation,” Disney Chairman Michael Eisner said at a news conference, where he was flanked by Pixar CEO Steven Jobs, “Toy Story” director John Lasseter and Disney animation executives Peter Schneider and Thomas Schumacher.

The deal is likely to mean further growth for Pixar, which has doubled its payroll to 300 in the last two years. It it also casts a question mark on Jobs’ much-vaunted return to Apple Computer, the struggling company he co-founded in the mid-1970s. Though nominally a part-time consultant to Apple CEO Gilbert Amelio, Jobs was thought by some analysts to be taking a large behind-the-scenes role.

Jobs downplayed his role at Apple during an interview Monday. “I’m spending almost all of my time at Pixar,” he said, adding that he is advising Amelio only “in my spare time.”

Disney will buy 1 million shares of Pixar common stock at $15 a share. In addition, it will receive warrants that would allow Disney to own about 5% of Pixar.