'chicken' Came First, Deal Could Follow

Pixar prospects: After Disney's $40 million drumstick roll opening for "Chicken Little," insiders have done an about-face and now think Disney and Pixar may indeed have a great future together.

Indeed, the post-video iPod buzz has Pixar's Steve Jobs and Disney's Robert Iger bonding beautifully. By launching a lightweight like "Chicken," its first in-house fully computer animated feature, to way better than expected business Disney has shown it would still be a powerhouse in the genre without Pixar. "Chicken" received a rotten reading of just 36% on the Rotten Tomatoes Web site, which tracked 111 reviews and noted that 71 were "rotten." Nonetheless, the picture performed well above expectations last weekend. Tracking studies had put its likely opening in the more modest $25-30 million range, but right from Friday's numbers -- $10.572 million, which was slightly ahead of the R-rated "Jarhead's" $10.548 million for the same night -- it was clear that "Chicken" was a review-proof film in the hands of the mighty Mouse House marketers.

As Disney produces more computer animated features, it's likely to start turning out some films that will generate better reviews than "Chicken" did and that could do blockbuster business. That's something Pixar needs to reflect on as it decides whether to seek a new distribution arrangement in Hollywood. With stronger animated product of its own in the future, Disney would represent major competition for Pixar. On top of that, under the terms of its existing deal with Pixar, Disney could produce computer animated sequels to earlier Pixar hits like "Toy Story" and "Finding Nemo" and those sequels would be slam dunks at the boxoffice. That's really the last thing Jobs needs to see happen since he's already facing one stiff competitor in DreamWorks Animation and Jeffrey Katzenberg. In fact, DreamWorks' "Shrek 2" with its $441.2 million domestic gross actually tops the list of all-time computer animated hits. Other DreamWorks animated hits like "Madagascar" and "Shark Tale" have done well enough to maintain DreamWorks as a solid competitor. Pixar and Disney's "Finding Nemo" is a strong number two on that list with $339.7 million.

The prospect of Pixar having to contend with Disney as another major computer animation producer with deep pockets is a great reason for Jobs to remain at Disney. Moreover, it's worth pointing out that despite Pixar's amazing track record of hits -- much of which also reflects Disney's outstanding marketing and distribution of those movies -- no studio ever makes only hit movies. It just doesn't work that way. A good example is DreamWorks' just issued third quarter report in which there were losses of 1 cent per share compared with earnings of 26 cents per share a year earlier. This time around DreamWorks had a success story in "Madagascar," but also had a disappointment in "Wallace &