Disney in 10-Year, 5-Film Deal With Pixar

The Walt Disney Company announced an unusual 10-year partnership yesterday with Pixar Animation Studios to jointly make five films in a deal that reflects the value Hollywood increasingly places on the lucrative field of animated movies.

Disney and the fledgling studio will equally share the costs, profits and logo credit on the five films. The studios will essentially be sharing a brand, as the movies will be called Disney-Pixar productions.

Disney also announced that it would buy one million shares of Pixar, and would acquire warrants that if exercised would lift the Disney stake in Pixar to 5 percent. Disney executives said that they had no current plans to buy more than 5 percent of Pixar.

The profit-sharing arrangement between Disney and Pixar covers not only the box-office revenue from the five movies, but also the sale of related products like home videos, toys and computer games. With hit animated films, far more than in live-action movies, the profits from these spinoff products can surpass the earnings from the movies themselves.

Pixar, a pioneering computer-animation studio, made the hit film ''Toy Story'' with Disney. ''Toy Story'' was made under a previous three-movie contract between the two companies, signed in 1991. Under the previous contract, Pixar would make the movies, while Disney provided advice, financing and distribution. For its efforts, Pixar received 10 to 15 percent of the total profits from the movies.

With yesterday's announcement, the 1991 contract is scrapped and replaced by one that gives Pixar 50 percent of the profits on future movies. The first, tentatively called ''Bugs,'' is scheduled to be released during the 1998 holiday season.

Clearly, the terms of the new contract are far more generous to Pixar than in the previous one. Pixar's stock price jumped $6.875 yesterday to close at $21 a share.

After ''Toy Story,'' the leading box-office moneymaker in 1995, Pixar's value as a partner rose sharply -- not only for Disney but also for the other major studios now rushing into the animation field. Steven P. Jobs, the co-founder of Apple Computer Inc., who is chairman of Pixar, had talked to other studios in recent months.

''But we wanted to stay working with Disney,'' Mr. Jobs said. ''Our collaboration has worked well in so many ways. Disney was the preferred partner.''

For Disney, the new deal tightens its link with Pixar and extends the partnership for a decade, insuring that rival studios do not gain access to Pixar's proven skills. Several studios, including Dreamworks SKG, the News Corporation's 20th Century Fox and Warner Brothers, a unit of Time Warner Inc., are all investing heavily to make animated feature films, hoping to emulate Disney's creative and business success in the field.