Pixar Perfect at Disney

"Pixar's culture of collaboration and innovation has its roots in Disney Animation. Our story and production processes are derivatives of the Walt Disney 'school' of animated filmmaking," said Catmull. "Just like the Disney classics, Pixar's films are made for family audiences the world over and, most importantly, for the child in everyone. We can think of nothing better for us than to continue to make great movies with Disney."

While the $7 billion price tag on Pixar is being questioned in some circles, investors have mostly reacted positively, sending Disney shares up 2% on Tuesday to over $26. Part of the reason may be the more than $1 billion Pixar brings with it in cash, plus the feeling that Pixar would demand much better terms in any renewed distribution agreement.

Most of all, though, Disney didn't want to risk losing the Pixar goldmine to rivals such as Time Warner (TWX Quote) or News Corp.'s (NWS Quote), a view Wall Street seems to share.

Disney has the added incentive of getting additional revenues from Pixar DVDs, merchandise and licensing agreements. The box office numbers are just the bean from which the sprout grows. In Pixar's case, the sprout has grown giant.

Some will wonder whether Pixar, which has enjoyed massive success with each of its six major films, is doing the right thing. Nobody bats a thousand for life, and some analysts have questioned whether Pixar will be able to maintain the high standard to which audiences are accustomed to on a ramped-up production schedule. Those concerns are amplified by those familiar with the two companies' cultures.

"The Disney animation product was badly corrupted during Eisner's reign," says one leading L.A. animator. "Unlike at Pixar it was micromanaged by middle managers and not run by creative authors, as is evidenced by the craven and cynical product they've been turning out."

This person says that Disney miscalculated badly on the industry's transition to computer-generated animation, thinking that Pixar would always be there to pick up the slack. While he says Jobs and John Lasseter will maintain creative control, he also believes that some people may be "discounting the fact that a significant portion of Pixar's animators are former Disney people." The idea of going back to Disney will be "difficult for them to put it mildly," he says.