Disney's Toy Story 3 (Pixar-en't)

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Disney prepares 'Toy Story' sequel


But proceeding with the project could doom any future talks with Pixar.

As Robert Iger, the newly appointed chief executive of the Walt Disney Co., seeks to repair the company's foundering relationship with Pixar Animation Studios, he could face one key obstacle: Pixaren't.

That's what animators have dubbed a nondescript white warehouse in Glendale, Calif., that Disney has recently transformed into a factory to produce sequels to Pixar movies, including Toy Story, Finding Nemo and Monsters Inc.

Under the companies' existing partnership, which expires with the release of Cars in 2006, Disney has a right to make sequels to all the Pixar movies. Still, Disney's decision to exercise that right is controversial.

As the entertainment giant ramps up its new Pixar sequel division, which is already gearing up for Toy Story 3, some think it could hinder Iger's efforts to make peace with Pixar chief Steve Jobs.

"It does muddy the waters for creating some sort of deal," said Tom Sito, president emeritus of Hollywood's local animation guild and a former Disney animator. "Pixar has very jealously guarded the integrity of their creative properties and are loath to trust them to others who are more economy-minded. It's like somebody else taking your children to school."

Jobs abruptly ended talks to renew Pixar's distribution deal with Disney over a year ago, when the two sides couldn't agree on financial terms. He has repeatedly said that despite the huge success of Toy Story 2, his company shuns sequels in favor of making original stories.

Pixar -- the market leader in animation -- just had its sixth consecutive hit with The Incredibles.

But unless Pixar reteams with Disney and opts to make the sequels itself, Disney can move forward alone -- though it must pay Pixar royalties on any project it makes.

Officials from both Disney and Pixar would not comment. But according to several sources close to Jobs and Pixar's creative guru John Lasseter, the two men are deeply unhappy about Disney's new venture, which will eventually employ up to 250 people for Toy Story 3 alone.

In animation circles, the Pixar sequel unit is being seen by some as an affront to the creative process.

Chris Wedge, the director of 20th Century Fox's new hit movie Robots, who has known Lasseter for more than 20 years, called Disney's move to piggyback on Pixar's creativity "misguided and depressing."

Currently, about 40 people are at work on the unit's first film: Toy Story 3. Disney has a script it likes and is in talks with a director and a producer: Bradley Raymond, who directed Disney's direct-to-video Lion King 11/2, and Roy Conli, who produced Treasure Planet and The Hunch Back of Notre Dame.

One thing Disney doesn't have -- at least not yet -- is a commitment from Tom Hanks and Tim Allen to reprise their voice-over roles as Woody and Buzz Lightyear. Disney has yet to approach the pair.

Production of Toy Story 3, which follows the adventures of Buzz after he is recalled to the Taiwan factory where he was built, is expected to begin next year for release in 2008.

Although other Hollywood studios have courted Pixar as a potential distribution partner, Jobs has not entered into serious negotiations with any of them. He has indicated that he could be enticed to reopen talks with Disney once Michael Eisner, the current chief executive with whom he has clashed publicly, steps down. This week, Disney announced that Eisner will turn over the reins to Iger on Sept. 30, and Iger has said he plans to reach out to Jobs.

Some speculate that the formation of the Pixar sequel unit was designed in part to give Disney more leverage.

But sources close to the studio say Disney executives are simply planning for a post-Pixar future. Making sequels to such enormously popular movies just makes good business sense.

Richard Verrier can be reached at 1-800-528-4637, Ext. 77936, or richard.verrier @latimes.com. Claudia Eller is a reporter for the Los Angeles Times, a Tribune Publishing newspaper.