Saggy Baggy Elephant has shown Mickey Mouse the door. After 70 years of publishing books based on Disney properties, kids pubco Golden Books Family Entertainment recently announced that it wouldn’t renew its publishing license with the kids entertainment goliath.
In a press release, GBFE CEO Richard Snyder said that it was no longer profitable for the company to continue its relationship with Disney. Though no one at the company would clarify Snyder’s statement, reportedly Golden Books’ Disney titles had been declining steadily over the last five years, dropping from US$80 million in `94 to projected sales of US$35 million for this year. According to published reports, Disney titles are expected to account for 15% to17% of GB’s total sales for 2000.
During its 70-year partnership, GB had published its instantly recognizable gold spine picture books for every major Disney kids film release, from Sleeping Beauty to Tarzan. Golden Books spokesman Philip Galanes says the decision to part company with Disney reflects the change in children’s publishing, which he says is now being driven primarily by TV properties, not film properties.
According to one industry source, another factor contributing to the split was that Disney was demanding an increase on the 20% royalty fees GB was paying under the terms of the previous agreement, which would have translated into US$2 million spike on top of the US$10 to US$11 million in guaranteed annual payments GB was already on the hook for Disney.
While Disney upping the royalty rate could, in some corners, be interpreted as a move to distance itself from a cash-strapped licensee-Golden Books only recently emerged from bankruptcy protection-Ed Hatch, an entertainment analyst at New York-based investment banking firm SG Cowen, views the split as a wise move on GB’s part, given the changing landscape of kids entertainment. ‘Over the last couple of years the life cycle for film has gotten shorter and shorter, which greatly increases the risk of paying out for a theatrical license. With a TV property you have repetition on a daily basis,’ says Hatch. Publishers aren’t the only ones who have felt the brunt of this shrinking selling window, says Hatch, adding that the trend has also negatively effected toycos like Hasbro and Mattel.
With Disney out of the picture, Golden Books’ Galanes says the company will now focus on building its own character properties and expanding its stable of publishing licenses to kids TV shows, which to date includes Pokémon, Between the Lions, SpongeBob Squarepants and The Power Puff Girls, among others.
For its part, Disney isn’t commenting on Golden Books, nor on if or when it will award the rights it had licensed to GB to another company. At press time, however, a source at Dorling Kindersly, which publishes large-format Disney board books, says DK was planning to meet with Disney in April to discuss expanding the scope of its current agreement to include those rights that Golden previously held. Officially, Golden Books’ agreement with Disney will end on December 31, though the company will be permitted to sell off its remaining inventory until January 31 of 2002.