But Who Gets The Kids?

By Desa Philadelphia, Jeffrey Ressner and Sonja Steptoe

A 13-year marriage is an eternity by Hollywood standards. Still, it came as a shock last week when Pixar and Disney announced an end to their long and lucrative partnership. As a team, they had given moviegoers some of the greatest animated films in history, from Toy Story to last year's Finding Nemo, hauling in a total of $2.6 billion at the box office. The two studios have a profit-sharing deal, but Pixar wanted to end it early and pay Disney a straight distribution commission. Despite 10 months of negotiating, the two were still at loggerheads. Finally Pixar CEO Steve Jobs abruptly ended the talks, saying Pixar would pick up its toys and go elsewhere.

What led to the breakup? Sources close to talks, speaking to TIME on condition of anonymity, blamed it in part on strained relations between Jobs and Disney CEO Michael Eisner and in part some intractable business differences. Among the reasons for the bad blood: right after the success of Toy Story 2, Pixar creative head John Lasseter wanted to make Toy Story 3. Disney refused, unless the film would not count as one of the five included in the Pixar-Disney deal. That left Lasseter and Jobs fuming. They were also annoyed by the length of the talks, during which weeks would go by with no response from Disney. A deal was "eminently doable, had it gone quickly," insists a Pixar insider. Jobs, knowing other studios would jump at a chance to get in business with Pixar (Warner Bros. and 20th Century Fox are considered front runners), finally had enough. Folks on the Disney side insist that Eisner (already facing a call for his ouster as CEO) made a wise business decision-- which, after all, still allows Disney to keep its share of the next two Pixar films, The Incredibles and Cars, even if it misses out on future ones. Says a Disney source: "This was about what Jobs wanted Disney to give up on those next two films--which was significant in value--and what he was offering Disney on pictures thereafter, which wasn't that significant in value." Now all Eisner must do is sell it to his critics. --By Desa Philadelphia, Jeffrey Ressner and Sonja Steptoe