Pixar Animation Studios backs out of talks aimed at continuing its relationship with The Walt Disney Co. and will seek a deal with another studio, Pixar chief executive Steve Jobs said Thursday.
Pixar, which co-produced last year's top-box office draw, Finding Nemo, said it will look for an agreement that allows it to retain ownership of future movies.
Under Pixar's current deal with Disney, the companies share box office receipts and licensing revenues while Disney retains the right to make sequels to movies such as Toy Story and Monsters Inc.
"After 10 months of trying to strike a deal with Disney, we're moving on," Jobs said in a statement. "We've had a great run together -- one of the most successful in Hollywood history -- and it's a shame that Disney won't be participating in Pixar's future successes."
Pixar still has two movies to deliver under its current deal, including The Incredibles, due in theaters in November, and Cars, which will be released next year.
Disney chief financial officer Thomas Staggs said the company rejected Pixar's "final offer" because it would have cost Disney hundreds of millions of dollars it is entitled to under the existing agreement "while not providing sufficient incremental returns on new collaborations to justify the changes to the existing deal."
People familiar with the talks say Pixar was seeking a new deal that would pay Disney a flat distribution fee and include the two films left under its current arrangement as well as new films.
"We have had a fantastic partnership with Pixar and wish Steve Jobs and the wonderfully creative team there, led by John Lasseter, much success in the future," Disney chief executive Michael Eisner said in a statement Thursday.
"Although we would have enjoyed continuing our successful collaboration under mutually acceptable terms, Pixar understandably has chosen to go its own way to grow as an independent company," Eisner said.
Shares of Disney, which had risen 78 cents, or 3 percent, to close at $24.45, fell $1.35, or 5.5 percent, in after-hours trading on the New York Stock Exchange.
Shares of Pixar fell $2.60, or 4 percent, in after-hours trading on the Nasdaq Stock Market after rising $1.05 to close at $64.20 in regular trading.
Last August, Jobs said Pixar had talked briefly with rival studios such as Warner Bros. and Fox. He said Pixar would remain in exclusive talks with Disney until those talks failed.
"We have talked to many of these studios and we know we can get the deal we want," Jobs said last August. "We have time. The right deal is more important than a quick deal."
Disney said in the past it was willing to make a new deal with Pixar that makes financial sense and had expressed optimism about ongoing talks.
On Thursday, Disney said it will release its first in-house computer-animated film, Chicken Little, in 2005 and had other computer-animated films in productions with partners and on its own.
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