Well, it’s been a good ten year run. At least as far as the Walt Disney Company is concerned.
But from McDonald’s side of the fence, life hasn’t always been a “Happy Meal.” At least when it came to the fast food giant’s decade-long decision to become Disney’s primary promotional partner in the restaurant industry. Granting the Mouse the exclusive right to promote its theatrical releases, theme parks and home video releases in the chain’s 30,000 restaurants in 100 countries worldwide.
Of course, back when Mickey D. initially cut this this far-reaching deal with Mickey (I.E. 1996), Walt Disney Feature Animation was just coming off a hot streak. With “The Little Mermaid,” “Beauty & the Beast,” “Aladdin” and “The Lion King” each earning more than the movie that had come out before it.
Mind you, the studio’s Summer 1995 release — “Pocahontas” — hadn’t even come close to earning what “The Lion King” had made back in 1994. But — once McDonald’s executives heard how Disney’s holiday 1995 release — “Toy Story” — had doen at the box office, whatever qualms that they may had had were quieted. The burger bigwigs back in Oak Brook, IL were ready — eager even — to get in bed with Disney. To have Ronald McDonald joined at the hip with Mickey Mouse for the next ten years.
Well, who knew that “Pocahontas” ‘s disappointing grosses weren’t a one time thing. That Disney Feature Animation had actually started on a cold streak. And that each successive release — “The Hunchback of Notre Dame,” “Hercules,” etc. — would earn less than the film that come out before it. Which — given that McDonald’s was now contractually obligated to place promotional material that was based on characters from these films in each of its “Happy Meals” — was making it harder and harder for its franchisees to move product.
Mind you, whenever McDonald’s held an in-store promotion that features characters from any of the Pixar films, the “Happy Meals” just flew the drive-thru window. Which led to record sales at the chain’s restaurants.
Which brings us back to McDonald’s on-going negotiations with the Walt Disney Company. The way I hear it, Mickey D. still wants to be in the cross promotional business with Mickey. Just not in a 10-year-long, exclusive sort of way.
What McDonald’s is looking for this time around is flexibility. The ability to pick & choose which Disney theatrical releases, theme park events and/or home video & DVD releases the restaurant chain promotes.
More importantly, this time around, Mickey D. wants to be allowed to work with Mickey’s competition. As in: To be able to promote DVDs & movies that are not made by the Mouse at its 30,000 restaurants.
Why For? Well, to be blunt, even though all the compliments that Bob Iger & Steve Jobs have throwing lately are a very encouraging sign … McDonald’s executives are still not sure that Disney is going to be able to close the deal with Pixar. As in: Extend its current co-production & distribution deal with the Emeryville, CA. -based studio.
And — given the huge number of “Happy Meals” that McDonald’s moves whenever there are Pixar-related toys inside — the fast food giant doesn’t want Jobs walking across the street and cutting a deal with Burger King.
So what McDonald’s execs are really looking for here is the ability to cut a separate promotional deal with Pixar. Some sort of agreement that would (in theory) allow the burger chain to promote both studio’s animated films & DVDs.
Given that — should Iger & Jobs not be able to come to term — it could be that Walt Disney Pictures & Pixar Animations Studios will be in direct competition with one another in 18 months time … Well, you can understand why Disney execs might be reluctant to agree to that sort of deal with McDonald’s.
And — given that this cross-promotional pact doesn’t officially expire ’til next year — there’s still time to iron out the kinks and/or have Disney cut a deal with Pixar.
But — for now — McDonald’s is putting Disney on notice. As Jim Skinner, the burger chain’s Chief Executive, put it at yesterday’s annual meeting:
“Our deal with (Disney) expires in ’06. And we are looking forward to the opportunity to have flexibility around promotional activities and products.”
So now it’s up to Disney Company execs to see if there’s actually a way to salvage this cross-promotional deal. An arrangement that reportedly puts $100 million a year in royalty payments in Mickey’s pocket.
Given all the money (more importantly, the cross-promotional opportunities) that we’re talking about here, now might be a really good time for Bob Iger to invite Steve Jobs out for a Big Mac, fries and a Coke.
Your thoughts?