Could it be that D-Day -- the day that Disney-MGM managers have been dreading for more than a decade now -- is just a few months away?
"Which 'D-Day' are you talking about, Jim?," you query. "Surely not the World War II version." Nope, the D-Day that I'm talking about is Delete Day. As in: The day that WDW personnel have to go around Disney-MGM Studio theme park and remove every single reference to the word "MGM."
"Why will Disney have to do that?," you sputter. Because the Walt Disney Company's 20-year-long licensing agreement with the MGM/UA corporation will be expiring this June. On June 27th, to be exact. Which means that -- as of that date -- the Mouse will lose any & all rights to use the "MGM" name as well as Leo the Lion's likeness in a theme park setting.
Clearly, this is a moment that Mickey is not looking forward to. Whereas over at MGM ... The way I hear it -- for years now -- MGM/UA execs have been counting the days down 'til the Disney licensing deal expires. So that they can finally put this whole embarrassing episode behind them.
"What's so embarrassing about MGM/UA licensing the use of its name to the Walt Disney Company?," you ask. Well, let's start with the financial terms of this deal. Where Disney got the license to use the "MGM" name as well as Leo's likeness for what basically amounts to chump change.
"What do you mean by 'chump change'?," you continue. Well, under the terms of this 20-year-long agreement, Disney only had to pay MGM/UA $100,000 a year for the use of that studio's name during the first three years of this agreement. Starting in the fourth year (I.E. The year that Disney-MGM would actually open its gates and begin operation as a really-for-real theme park), this annual licensing fee would then jump up to $250,000 a year. And then -- with each subsequent year -- that fee would continue to creep up in $50,000 increments. Until it eventually topped out at $1 million a year in the 20th year of the agreement.
Now keep in mind that -- in addition to these licensing rights -- this agreement that Disney's lawyers hammered out with MGM/UA's executives also gave the Imagineers access to up to 250 titles from the MGM/UA film vault. Which WDI could then use as inspiration for settings and/or attractions to be featured in the studio theme park.
"But why would MGM officials ever agree to sell off the rights to such valuable intellectual property at such low, low prices?," you sputter. Well, you have to understand that -- back in the mid-1980s -- Frank Rothman (I.E. the then-chairman & CEO of MGM/UA Entertainment) was actually thrilled to make this deal with Disney. Why for? Because MGM/UA was swimming in a sea of red ink back in 1985. $59 million dollars worth, to be precise. So any & all cash that was coming in the company's coffers at that time was thought of as a good thing.
At least that's what Rothman thought until MGM owner Kirk Kerkorian finally learned about the exact terms of the Disney licensing deal. Kirk was simply stunned that Frank had sold off the rights to the MGM name & logo for such a ridiculously low fee. Which was why Kerkorian immediately ordered MGM's lawyers to find a way to break the deal that Rothman had just signed with the Walt Disney Disney.
After repeatedly pouring over the 31-page contract, MGM/UA's attorneys finally found a loophole that they thought that they could work with. It seemed that the Imagineers had neglected to mention -- as part of the original agreement -- that the Walt Disney Company actually intended to make movies at its soon-to-be-opening studio theme park. WDI also allegedly forgot to tell MGM's lawyers that Disney planned on building two huge luxury hotels (I.E. The Dolphin & the Swan) directly across the street from Disney/MGM.
This -- to MGM/UA's way of thinking, anyway -- put the Disney/MGM Studio theme park project in direct conflict with the movie studio and luxury hotels that MGM was already operating. Not to mention putting the kibosh on the movie-themed theme park that Mr. Kerkorian was thinking about building as part of the $1 billion dollar MGM Grand casino project that he had planned for Las Vegas.
Feeling that MGM/UA's lawyers had raised enough legitimate concerns about the licensing deal that Rothman had cut with Disney to finally bring this case to trial, MGM/UA and MGM Grand, Inc. (I.E. Kerkorian's company) then filed a $100 million breach of contract suit against the Walt Disney Company in Los Angeles Superior Court in May of 1988.
Disney -- in turn -- filed a counter-suit against MGM. And -- after several years of legal wrangling -- this non-jury trial finally got underway in the Fall of 1992. With Judge Curtis R. Rappe presiding, attomeys for the Walt Disney Company, MGM/UA and MGM Grand Inc. each began to plead their cases. All with the hope that his Honor would then see the validity of their company's claims to the MGM name.
Of course, what added additional pressure to these proceedings was the fact that -- by October of 1992 -- Kerkorian had already broken ground for his MGM Grand theme park. Which was why it was now crucial for MGM/UA's lawyers to come out ahead in this case.
After listening to testimony from both Kerkorian as well as Disney CEO Michael Eisner, Judge Curtis delivered what many saw as a Solomon-like judgment. MGM/UA and MGM Grand Inc. would be allowed to use the "MGM" name as well as the Leo the Lion logo as part of their then-still-under-construction theme park and casino complex. PROVIDED that the Las Vegas theme park did not resemble in any way the faux studio backlot setting that the Imagineers had created in Central Florida.
Disney -- in turn -- would still be able to call its Central Florida studio theme park "Disney-MGM" for the full 20-year-term of the company's original agreement with MGM/UA. Judge Curtis even awarded the Mouse the rights to call any other studio theme parks that the corporation built 'round the world "Disney-MGM."
"So -- if that's really the case -- then why isn't the 'Walt Disney Studios' theme park in Paris called 'Disney-MGM'?," you query. Sadly, Kerkorian's attorneys took Mickey back to court in the Fall of 1997. They pointed out that Disney's original agreement with Rothman included language that specifically stated that the theme park rights to the MGM name would revert back to the parent corporation if the Walt Disney Company failed to begin construction of any theme parks that were to feature the MGM name after the ninth anniversary of the original signing date of this deal had passed.
Given that -- due to Euro Disney SCA's continuing financial problems -- Disney had missed its original target dates for the start of construction on the "Disney-MGM Studios Europe" project (I.E. The studio's production facilities were originally supposed to be open by the Spring of 1994, with the actual theme park wasn't slated to open 'til April of 1995), the judge in this case had no choice but to return the theme park naming rights to MGM's parent company. Which is why DLP's second gate wound up being called "Walt Disney Studios."
Anyway ... The really ironic part of this whole convoluted court case is that -- after Kirk fought so long & so hard & spent so much of MGM's money in an effort to regain the MGM theme park naming rights -- Kerkorian's "MGM Grand Adventures" theme park turned out to be this huge disappointment. Though this $120 million theme park featured seven rides and five shows when it opened in December of 1993, MGM GA never quite caught on with the folks who frequented Las Vegas.
After seven years of struggling, "MGM Grand Adventures" finally closed its doors in December of 2000. As I understand it, most of the rides in the 33 acre theme park were then quickly sold off. As for the rest of the park ... Well, I hear that MGM GA's highly themed "lands" -- like New York Street, Paris Street and Old England Street -- are now being used for corporate functions & private parties at this resort.
But -- in spite of the failure of Las Vegas' "Grand Adventure" -- MGM/UA management still strongly believes that a theme park that is built around this historic Hollywood studio's library of memorable motion pictures & colorful characters could be a huge financial success. Particularly in those parts of Asia (I.E. India & China) that both Disney & Universal are currently considering as possible expansion areas for their theme park empires. Which is why this company is most anxious to get back the exclusive rights to use the MGM name in a theme park setting.
As for the Walt Disney Company ... Given that MGM/UA was actually acquired by the Sony Corporation back in September of 2004, there's reportedly already been some talk between these two multimedia giants. To see if there might be some way to prolong the licensing agreement that allows the Walt Disney Company to use the "MGM" name in a theme park setting. At least for another couple of years.
Of course, in order to get Sony to do something like this, Disney would have to make some sort of huge concession to the Tokyo-based electronics giant. This may explain why -- back in December of last year -- in spite of the fact that virtually every other major studio (I.E. Paramount, Warner, Universal & New Line Cinema) in the business had announced that they would soon begin releasing movies in the HD-DVD high definition format, the Walt Disney Company suddenly revealed that it would be releasing its films in the Blu-ray format. Which (not-so-coincidentally) is the same DVD format that the Sony Corporation favors.
Did Disney deliberately decide to go with Blu-ray just because it wishes to retain the "MGM" name at its Florida studio theme? Most likely not. But -- that said -- one can't help but think that the folks at Sony will now look favorably upon the Mouse. All because Mickey & his marketing might have decided to get behind the high definition DVD format that their corporation is championing. Rather than the one that Sony's rivals (I.E. Toshiba & NEC) are currently pushing.
As to whether this somewhat generous / politically advantageous gesture will now make it possible for Disney to negotiate an extension of its MGM licensing deal ... Who can say?
But what I can tell you is that Disney-MGM managers have already allegedly begun preparing the staff at that theme park for what may happen on the evening of June 27th. When Disney employees would then have to sweep through that theme park and remove each & every reference to "MGM."
Just so you understand the scale of what we're talking about here: That would entail everything from replacing all the highway signs out along I-4 and World Drive that direct guests to the studio theme park right down to changing the name tags & business cards of each & every Disney-MGM cast member. Every poster, every brochure, every t-shirt and baseball cap would have to be replaced. The projected costs for this property-wide change-out that we're talking about here could easily climb into the millions.
Not to mention all the hassles involved with reeducating the public -- not to mention WDW cast members -- about the theme park's new name (I.E. "It's not the Disney-MGM Studio theme park anymore. It's now just called the Walt Disney Studios"). It may take years for the new name for this 14-year-old theme park to be accepted & absorbed.
So is it any wonder that the Walt Disney Company is still hoping that the Sony Corporation might eventually be persuaded to allow the Mouse to continue to use the MGM name? Because otherwise ... Well, things could get pretty confusing around Orlando come the morning of June 28th.