All eyes will be on a little chicken this weekend as Disney ( DIS) releases its first home-grown, entirely computer-generated feature. If Chicken Little has wings -- and it's far from certain that it will, given the recent uneven results from Disney's once-storied animated studio -- it could help the media giant reassert itself just as high-profile talks loom with Pixar's ( PIXR) Steve Jobs. On the other hand, if the sky falls, Jobs will have a little more leverage when the parties start serious negotiations in coming weeks. "I think it has huge implications," one media analyst says of the movie's box office performance. "I think it might show that they
Disney can't seem to get animation right and need a relationship with Pixar." To be sure, one of the big questions in lotus land these days is what will become of the Disney/Pixar relationship -- and for that matter the Pixar animation studio's future, given its distribution situation. Earlier this week, The New York Times reported that Jobs might consider selling the company, which to date has an impeccable record producing hits such as The Incredibles and Finding Nemo. Pixar would not come cheap, as the Apple ( AAPL) founder seems quite fond of setting his own price points. Pixar stock has spent recent months recovering from a midsummer earnings screwup, but its shares have risen sharply this fall. They rose 99 cents Friday to $53.49, putting them within a dollar of a 52-week high. Disney has done less well, falling 28 cents to $24.62 Friday, leaving it right in the middle of the mid-20s range it has traded in for most of the year. Jobs and newly anointed Disney Chief Executive Robert Iger will look closely at box office returns after this weekend to determine whether Disney's animation studio has regained any sort of a footing in the computer-generated age.
Jobs has said repeatedly that he would like to see a new distribution partner for the studio in place by year's end. The current arrangement between the two studios expires after the release of Pixar's next flick, Cars, which is due in theaters in spring of 2006. But Marla Backer of Soleil Securities says that neither Disney nor Pixar is expecting Pixar-like numbers out of Chicken Little. In essence, unless the movie unexpectedly does enormous box office, Backer believes the two parties will move closer to a new distribution deal. Moreover, Backer says the chicken's showing "has implications for lots of different companies because it will show whether we have an undersupply of family entertainment."