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MCA Official Accuses Disney Co. of 'Blackmail Tactics'

May 07, 1987|KATHRYN HARRIS | Times Staff Writer

A simmering quarrel between two giant entertainment companies boiled over Wednesday when a high-ranking MCA official accused Walt Disney Co. of using "blackmail tactics" to maintain its dominance in the Florida theme-park business.

MCA's fury was touched off by a Disney proposal to build a $150-million to $300- million entertainment complex and tourist attraction in Burbank, just a few miles from MCA's own Universal Studios Tour attraction.

The two Southern California companies are also in a race to construct competing "studio tour" attractions in central Florida.

MCA Vice President Jay S. Stein alleged Wednesday that Disney had privately offered earlier this year to withdraw from the Burbank plan if MCA would give up its proposed Florida studio tour.

According to Stein, MCA vehemently spurned the offer, which had been relayed to top MCA executives by an intermediary who said he had just met with a high-ranking Disney executive. The incident occurred "six or seven weeks ago," Stein said. He declined to publicly identify either the messenger or the Disney executive.

Two top Disney executives denied Stein's allegations.

"As far as I know, we've never had a conversation with them in that area at all," said Disney Chairman and Chief Executive Michael D. Eisner. "We're going forward with Burbank in the next year. I have no idea what they're talking about. Anything MCA does or does not do--or anything anybody else does or does not do--will not affect our plans." Jeffrey Katzenberg, chairman of the Walt Disney Studios division, called Stein's allegation "nonsense. It sounds to me like it's sour grapes."

Katzenberg alluded to Disney's victory 24 hours earlier at Burbank City Hall, when the city council overrode MCA's objections to give Disney an option to buy a 40-acre site for $1 million to develop the "Disney-MGM Studio Backlot," a combination retail and entertainment complex.

MCA protested the council's decision, saying it was denied equal access to information to formulate a competing proposal for the city-owned site.

Stein, a veteran MCA executive who has run the Universal Studios Tour for the past 20 years, said he recognized the seriousness of his accusation. "There is no doubt in my mind what happened."

Stein's contentions "could present certain competitive issues that would have to be carefully analyzed" by federal antitrust agencies, according to Stanley M. Gorinson, a Washington attorney who headed the special regulated industries section of the Justice Department's antitrust division for nearly five years during the Carter and Reagan administrations.

If substantiated, "the facts could be compared--by at least some people--to the facts in the American Airlines case," Gorinson said, alluding to a consent decree signed in 1985 by American Airlines and its chairman to end a government antitrust suit.

The government filed a civil action against American Airlines in 1983 after its president, Robert L. Crandall, proposed price hikes to a competitive airline in a taped telephone conversation. In the settlement of the case, however, neither American nor Crandall admitted wrongdoing.

Gorinson said the case is viewed as a warning to businesses that just an offer to collude could violate antitrust laws.

MCA's quarrel with Disney dates back to 1985, when an aggressive new management team at Disney announced plans to build a $300-million studio tour on its vast Walt Disney World acreage in Florida.

MCA had purchased more than 400 acres in Orlando and announced plans in 1981 for a Florida version of its popular Universal Studios Tour, but delayed the project when it failed to find a financial partner.

MCA accused Eisner, Disney's new chairman, of capitalizing on his knowledge of MCA's plans gleaned when he was a Paramount Pictures executive considering an investment in the MCA project.

But Eisner and other Disney officials have denied those allegations, insisting that Disney had been considering building its own studio-themed attraction for years.

Disney reached an agreement in 1985 to use themes from MGM's large film library as well as the MGM lion trademark, and said the Florida attraction would be called the "Disney-MGM Studio Tour."

Disney's tour in Florida is scheduled to open in 1988, one year ahead of MCA's attraction in nearby Orlando. Last December, MCA announced that it had found a partner in Cineplex Odeon Corp., the Canadian motion picture theater company 50%-owned by MCA.

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