A major deal between Pixar and the Walt Disney Co is "buzzing" in Hollywood.

This follows an extensive period of negotiation between the two firms regarding a new distribution contract. Apple CEO Steve Jobs is also the CEO of Pixar.

Business Week reports that some rumours claim Jobs will become chairman of Disney, but dismisses these on the grounds that Jobs is too attached to his existing commitments to engage in such a move - though Disney would benefit hugely.

Other rumours claim Disney may buy Pixar - but that deal may work out to be more costly than Disney's shareholders would accede to. Previous rumours of such a deal sliced 1.5 per cent from Disney's shares in 45 minutes, it reveals.

The report explains the importance of Pixar to Disney. The six movies made and released under the distribution agreement between the two firms have contributed heavily to Disney's bottom line in a period when it failed to manufacture its own hits.

That new Disney CEO Bob Iger is likely to want to maintain some kind of relationship with Jobs seems clear. TCW analyst Anthony Valencia told Business Week: "Jobs knows the media side of the business and is a technology visionary."

While the report dismisses the notion of Jobs taking a Disney position, it concludes: "Still, Hollywood is a place that lives for the surprise ending. And as the Disney board prepares for a January 23 meeting at which it's expected to make a go/ no-go decision on the kind of deal it wants to strike with Pixar, anything could happen."