Applause, Disney parting ways
Toy maker ending 22-year deal
By Brent Hopkins
Staff Writer
WOODLAND HILLS -- Mickey Mouse has been sent packing.
Though the iconic character and his familiar Disney cohorts have made plush-toy maker Applause LLC hundreds of millions of dollars over the past two decades, Applause has severed ties with The Walt Disney Co.
Bob Solomon, chairman and chief executive officer of the toy company, said Wednesday that he'd had enough. After six months of trying to work out a way to extend their 22-year-old licensing deal, Applause walked away, choosing instead to focus on its own Dream Pets characters.
Disney executives refused to comment Wednesday.
Solomon described the decision in unusually personal terms.
"This is like breaking up in a lovers' relationship," he said. "I'm sad and torn by a piece of me passing. But I think for the time being, it's the best thing for both. Who knows, maybe down the road something else will work out."
After relaunching the Dream Pets line in April, Solomon has become unusually focused on the characters, which his R. Dakin & Co. subsidiary first manufactured in 1957. He announced a deal with Sega Toy Co. earlier this week that will make Sega the exclusive distributor and licensing agent in Japan, and traveled to the Licensing International 2004 trade show in New York to discuss possible video game, publishing and apparel deals. He's even taken to calling himself "chief dream officer."
Though Applause has many other recognizable licenses left in its portfolio, chiefly The Simpsons, Curious George and Raggedy Ann and Andy, Disney's was the marquee name. Applause manufactured stuffed animals, figurines, change purses and other Disney-branded merchandise, selling to gift shops and specialty retailers. Solomon said the partnership gave him tens of millions in revenue every year but that the two parties differed in terms of strategy.
"Either they're not getting what they need in terms of creativity or it's just a bad business arrangement," said Stevanne Auerbach, an author who follows the toy industry with her Web site DrToy.com. "It's a loss to both of them if they can't work it out. ... It's unfortunate, because they supported one another in a very strong way and did very well together."
Though toy experts said Disney has less of a dominant presence in the industry than in years past, the decision to dump some of the world's most recognizable characters still came as a surprise. David Joyce, a senior equity analyst with the Miami-based brokerage Guzman & Co. who follows the media company's stock, doubted that the cut would affect Disney's financial performance much, but said it was unorthodox.
"Companies trip over themselves to land a deal with Disney," Joyce said. "Perhaps the purchasing power of Disney pushed the margins down to uneconomic levels or they're too demanding with their brands. There's lots of micromanaging, because Disney's whole value comes from its characters and they want to protect them very carefully."
Solomon declined to offer specifics for why he elected to end the partnership, but left the possibility of reconciliation open. Though he said Disney revenues had been a significant part of his wholly owned company's sales, he thinks that the added focus on Dream Pets will eventually reap bigger profits.
"I love the Disney characters from the deepest corner of my heart and all they joy they bring to children," he said. "But it's one thing to love them and it's another thing to love the way we're doing business."
Toy maker ending 22-year deal
By Brent Hopkins
Staff Writer
WOODLAND HILLS -- Mickey Mouse has been sent packing.
Though the iconic character and his familiar Disney cohorts have made plush-toy maker Applause LLC hundreds of millions of dollars over the past two decades, Applause has severed ties with The Walt Disney Co.
Bob Solomon, chairman and chief executive officer of the toy company, said Wednesday that he'd had enough. After six months of trying to work out a way to extend their 22-year-old licensing deal, Applause walked away, choosing instead to focus on its own Dream Pets characters.
Disney executives refused to comment Wednesday.
Solomon described the decision in unusually personal terms.
"This is like breaking up in a lovers' relationship," he said. "I'm sad and torn by a piece of me passing. But I think for the time being, it's the best thing for both. Who knows, maybe down the road something else will work out."
After relaunching the Dream Pets line in April, Solomon has become unusually focused on the characters, which his R. Dakin & Co. subsidiary first manufactured in 1957. He announced a deal with Sega Toy Co. earlier this week that will make Sega the exclusive distributor and licensing agent in Japan, and traveled to the Licensing International 2004 trade show in New York to discuss possible video game, publishing and apparel deals. He's even taken to calling himself "chief dream officer."
Though Applause has many other recognizable licenses left in its portfolio, chiefly The Simpsons, Curious George and Raggedy Ann and Andy, Disney's was the marquee name. Applause manufactured stuffed animals, figurines, change purses and other Disney-branded merchandise, selling to gift shops and specialty retailers. Solomon said the partnership gave him tens of millions in revenue every year but that the two parties differed in terms of strategy.
"Either they're not getting what they need in terms of creativity or it's just a bad business arrangement," said Stevanne Auerbach, an author who follows the toy industry with her Web site DrToy.com. "It's a loss to both of them if they can't work it out. ... It's unfortunate, because they supported one another in a very strong way and did very well together."
Though toy experts said Disney has less of a dominant presence in the industry than in years past, the decision to dump some of the world's most recognizable characters still came as a surprise. David Joyce, a senior equity analyst with the Miami-based brokerage Guzman & Co. who follows the media company's stock, doubted that the cut would affect Disney's financial performance much, but said it was unorthodox.
"Companies trip over themselves to land a deal with Disney," Joyce said. "Perhaps the purchasing power of Disney pushed the margins down to uneconomic levels or they're too demanding with their brands. There's lots of micromanaging, because Disney's whole value comes from its characters and they want to protect them very carefully."
Solomon declined to offer specifics for why he elected to end the partnership, but left the possibility of reconciliation open. Though he said Disney revenues had been a significant part of his wholly owned company's sales, he thinks that the added focus on Dream Pets will eventually reap bigger profits.
"I love the Disney characters from the deepest corner of my heart and all they joy they bring to children," he said. "But it's one thing to love them and it's another thing to love the way we're doing business."
