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Disney's Tough Tactics : Entertainment: Critics view the company as the fiercest of Hollywood's bare-knuckle fighters. Disney maintains it is held to a higher standard than others.

July 08, 1990|PAUL RICHTER | TIMES STAFF WRITER

And Disney asserts that if it drives hard bargains, it rewards its partners well in success. The studio has a loyal core of top talent that has signed on for long-term deals. And Disney knows how to please the stars when it wants to: Disney has on several occasions distributed millions of dollars in advance-profit checks to actors and other creative talent just after the opening of hit films.

As the multitudes throng to Disney's theme parks and line up for its "Dick Tracy" movie this summer, it is obvious that the public's overall impression of Disney remains highly positive. Wall Street analysts, dazzled at the ninefold split-adjusted increase in Disney stock since 1984, are rhapsodic at the mention of Disney's name.

But there are signs that Disney's style may sometimes blemish the image that the company has so assiduously tended.

Disney's image took a beating last January, when a Disney-controlled development body in Florida won all of a $57-million allocation of tax-free state bonds, thus denying them to an agency that planned to develop low-income housing and all other government applicants in a six-county area. The state distributes the bonds on a first-come basis, and first in line this year was Disney's Reedy Creek Improvement District, which was created by the Florida legislature in 1967 to develop and govern the 28,000-acre Disney properties.

A firestorm of criticism ensued. In a state where Disney was once above reproach, a Republican gubernatorial candidate sued to block Disney from using the bonds. A state legislator introduced a bill to limit Disney's ability to reapply for the securities and, before the furor abated, there was new talk of stripping the company of its unique governmental powers.

Tough Negotiators

Disney's style, by all accounts, has been much more aggressive since the arrival in late 1984 of the new management, headed by Chairman and Chief Executive Michael D. Eisner, President Frank G. Wells and Disney Studios Chairman Katzenberg. Installed after a pitched four-month takeover battle, the new team wasted no time expanding Disney's theme park, movie making and merchandising operations and launching new ventures.

Under their leadership, the company's revenue vaulted to $4.59 billion last year from $1.46 billion in 1984, while profit jumped to $703.3 million from $97.8 million. That's a torrid profit growth rate of 48% a year.

Disney was known as a highly controlling, regimented company even under founder Walt Disney, who set strict codes of dress and behavior for employees, fought unions and held the reins tightly on the studio's creative talent.

But the old team's way of doing business was lackadaisical compared to the approach that was adopted when the new leadership moved into the low-slung complex of Disney offices near the intersection of Mickey Avenue and Dopey Drive in Burbank.

Under the old regime, visitors to Disney remarked that the many people lounging around the Disney grounds at all hours of the day made the complex look like a well-tended junior college campus. In the new era, the parking lots begin filling at 6 a.m. and stay occupied seven days a week. Loungers are rarely in evidence.

A key premise of the new regime was that by more fully exploiting Disney properties that are, in fact, American cultural icons, the company could increase annual profit growth to a clip of 20%--or more.

One way to do that was to raise prices, and the new management moved vigorously. The price of a one-day pass per person at its Florida theme park has been hiked about 70%, to $31 plus tax, since the new team took over. But reaching the profit goals required not only raising prices and opening new ventures, but also, some say, an unyielding attitude about all business dealings.

Disney's critics say doing business with the company means facing teams of lawyers who will stake out extreme positions on virtually every negotiating point and often return to try to reargue issues later if Disney isn't pleased with the way the deal has turned out. The company's harshest critics--including Fox's Diller, who is furious at Disney for backing out of a European television venture last year--maintain that it sometimes repudiates deals it doesn't like, or ignores points of agreements after they are made orally.

"Mickey Mouse may be the soul of this company, but you'll find the heart somewhere over in the legal department," says a former Disney TV executive who admires the company's efficiency but believes that Disney sometimes goes too far.

Asked about allegations concerning its negotiating tactics, Katzenberg said, "We aren't perfect. We make mistakes like everyone else. But I am certain there is no such pattern. The people on the line (representing Disney in negotiations) are genuinely honest people."

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