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Topic: Disney now gets it: Less merchandise/More Quality, Totally overhauling licensing business< Next Oldest | Next Newest >

RichKoster Offline

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Posts: 5119
Joined: Aug. 2001
Posted: Nov. 21, 2003 1:00 am/pm Quote

Renovating This Old Mouse

Disney is totally overhauling its licensing business, using big discount stores and fewer middlemen. It's also ditching its own shops


Quick quotes:
...1997 earnings of nearly $900 million, on revenues of nearly $4 billion.

Then, like Sleeping Beauty, Disney dozed off. It didn't notice that rivals such as Nickelodeon were stealing the hearts of children with more contemporary characters like SpongeBob SquarePants. Disney got to where it was willing to slap a license on just about anything to make a buck -- or several. As the market sagged, thanks to overpriced Mickey ice-cube trays and Donald Duck door handles, Disney merchandising execs saw business shrink by about half, to 2002 earnings of $394 million, on revenues of $2.4 billion.

So far, earnings have been down for this fiscal year as well. "For a long time, they commanded the marketplace," says former Disney marketing executive Carole Francesca, now president of Broad Street Licensing Group. "But the business matured, and they extended it so far that the market got tired of it."

...Andy Mooney, the 48-year-old Disney Consumer Products president recruited in 2000 from Nike, has been completely rethinking how to handle licensing and product sales.

He has slashed its 3,000-odd licensees by one-third, stepped up licensing of nonmovie properties such as its Lizzie McGuire and That's So Raven! TV shows, and hired a team of designers to work with licensees like Kellogg and Gillette to create fewer but better cereals, toothbrushes, and other products. "For years, we've been focusing on deals, but now we're focusing on making great products," says Mooney.

...it has signed deals to license a new line of "classic" Winnie-the-Pooh clothes and bedding to Target and kids' clothes to Kmart. Next up: a licensing deal with megadiscounter Wal-Mart to create lines of baby clothes and Easter candies, as well as merchandise based on Disney Channel cartoon hit Kim Possible.

To beef up sales, Disney has gotten tough on some of its longstanding manufacturers. In repackaging characters such as Sleeping Beauty and The Little Mermaid's Ariel as "Disney Princess" dolls, Mooney's group bypassed Mattel for some of the line, whose retail sales have grown to $1.3 billion in three years. Mattel still retains rights to most Disney dolls. But a new three-year deal being negotiated would require Mattel to meet certain sales targets to win renewal for two more years.

...Disney is rolling out its biggest marketing guns for Mickey Mouse's 75th birthday, including his first new flicks in years.

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