Walt Disney Studios is renovating more than just the porn districts on Broadway. In the past three years, the Mouse House has revolutionized the N.Y. legit biz, smashing B.O. records as well as the skepticism of onlookers who professed horror at Hollywood types invading the Temple of the Theater.

But the company’s other Broadway revolution has been conducted more quietly: Disney essentially has taken a business page from its film and animation divisions.

The Julie Taymor-directed “The Lion King” is artistically unlike any other Broadway show. And “King” and “Beauty and the Beast” have forged new ground for legit deal-making in two areas: First, the producer is less concerned about the bottom line of the show than in ancillary income (such as merchandise, CDs and foreign rights), and second, the foreign rights are being offered as part of an output deal.

Rather than selling rights to a single production, Disney is offering international producers a package: You can have our “Lion King,” execs propose, but you have to take five more productions. And while that approach guarantees profits for Disney, the company’s terms are leaving some international producers deep in the red.

In 1994, Disney opened its legit wing with a winner in “Beauty and the Beast,” a production that cost around $14 million to mount. Now comes “Lion King” with a daunting budget of more than $20 million, with some estimates of as much as $25 million.

Upcoming are the already announced Elton John/Tim Rice-written small-scale musical “Aida” (with a title change to come) and a James Lapine-staged version of the animated film “The Hunchback of Notre Dame” (targeting a world preem in Germany late next year).

Two more secret Broadway-bound projects are on the fast track: “Hoops,” a musical about basketball’s Harlem Globetrotters, and “Tin Men,” based on the 1987 Barry Levinson film starring Richard Dreyfuss and Danny DeVito.

While attendance has been high for three years, “Beauty” is still in the red on Broadway, but has turned a profit overseas and through ancillary streams. Given its high cost and big weekly nut, it’s a question mark when or even if Broadway’s “Lion King” will ever go into the black.

But Disney Studios chairman Joe Roth says it doesn’t really matter. “More than anything, it’s the perception,” Roth said. “This is the way you’d like the public to see the company. To take one of its classics and turn it from that form into great art.”

He adds that, as with film, the answers are in the foreign and the ancillary streams of video, merchandising and soundtracks. The foreign comes in the form of output deals with producers in countries including Japan, Australia, Germany, Austria, the U.K. and Latin America.

Package deals

Disney has created package deals for them: The company will provide seven multimillion-dollar musicals over the next decade to a producer, who must choose at least five of them. Such deals are common in the movie business, but are rare (if not unheard of) in theater.

“They’re just film output deals for stage plays,” says one senior exec at Disney. “We cut some amazing deals. If you break even on Broadway, you’re feeling OK. You set up Broadway as the marketing point for the rest of the world.”

Many were skeptical about Disney’s plan to turn its toon hits into stage plays, but the company is two for two, a track record any producer would envy.

“Beauty” faithfully translates the animated film to the stage, and audiences eat it up. But with “Lion King,” Disney went in an entirely different direction, hiring director Taymor, whose avant-garde sensibilities would seem at odds with the corporate mindset.

Eclectic mix

Yet her sophisticated and stylized vision means this is not a “kids’ show”: Taymor combines such unexpected elements as African music, American pop, large swaths of silk, puppets, rippling lighting and Japanese masks to achieve astonishing effects.

Clearly, Disney is willing to experiment, and the experiment is paying off. So it would seem that Disney’s non-formula approach to legit is foolproof. Which means taking five productions that are unseen and unknown could be a sure thing for overseas producers.

But consider the foreign producers who are left high and dry with a show that doesn’t create the revenue that is expected.

Kevin Jacobson, a well-known Aussie producer, eagerly took on the mammoth “Beauty and the Beast” production for Oz. His was a one-shot, not an overall output deal. But Disney forced a significant minimum guarantee and weekly royalty. In the end, Jacobson took a bath, with losses mounting in the millions of dollars.

After fiercely negotiating to get Asian rights to “Beauty,” Jacobson put them on hold because of the sluggish season in Sydney. Reached in Australia, Jacobson wouldn’t comment about the deal with Disney, saying only, “The fact of the matter is that I did agree to the terms and conditions.”

But he noted that the show was an extremely expensive production that wasn’t really viable for a tour. The legit “Beauty” arose out of a brainstorm from Disney chairman Michael Eisner after reading a New York Times review by Frank Rich that favorably compared the movie’s score with the best score of Broadway. (Certainly legit’s potential bottom line didn’t hurt Eisner’s inspiration. For example, “Cats” has grossed in excess of $2.2 billion worldwide and “The Phantom of the Opera’s” worldwide ticket sales exceed $2.7 billion.)

To come up with an approach for a stage musical of “Beauty,” Eisner went to his theme park creative staff and senior execs. Director Robert Jess Roth, choreographer Matt West and scenic designer Stan Meyer went to work under the oversight of Robert McTyre, then Disney senior VP in charge of theme parks.

The 1994 stage musical looked like the animated film come to life. So what if critics sniffed about its theme park trappings and the Broadway community whined about beginner’s luck? Audiences seemed happy and the bottom line was solid.

‘So much more’

But Peter Schneider, then president of Walt Disney Feature Animation, said to Eisner, “Michael, we can do so much more.”

Schneider had in mind a complete overhaul and re-creation of Disney’s stage operations and ambitions (much like the buildup that had reinvigorated the studio’s animation division during the 1980s).

In 1985, the toon division had dwindled to 150 employees; its rich artistic legacy was tarnished by more than a decade of such mediocre projects as “The Black Cauldron.”

Jeffrey Katzenberg, then chairman of the film division, focused on revitalizing the studio’s live-action films, and Eisner was caught up in the company’s theme parks. So the newly hired Schneider was pretty much left to his own devices in the toon biz. “I was lucky,” he says now. “No one was watching.”

And while no one watched, Schneider scoured the theater industry to fill out his executive staff. (In the 1970s, Schneider had worked for such Off Broadway theaters as Circle Rep and Playwrights Horizons before taking legit jobs in Chicago and London.) His Los Angeles contacts had become extensive: Just before signing on with Disney, he had returned to L.A. from London to serve as associate director of the 1984 Olympic Arts Festival.

Three years after Schneider joined, Disney hired Thomas Schumacher, a 10-year vet of L.A.’s performing arts scene, as exec VP of feature animation. After a five-year stint on staff at the Mark Taper Forum, Schumacher worked as a line producer at the Olympic fest and later co-founded the Los Angeles Festival in 1987.

Theatrical infusion

Given their backgrounds, Schneider and Schumacher naturally turned to the theater to meet Disney’s creative demands. Their recruitment of Howard Ashman and Alan Menken, authors of the Off Broadway smash “Little Shop of Horrors,” would result in “The Little Mermaid,” the 1989 Disney feature that kicked off a more vital era of animation for the studio.

Continuing the streak were “Beauty and the Beast,” “Aladdin,” “The Lion King” and, to a lesser extent, “Pocahontas,” “The Hunchback of Notre Dame” and “Hercules.”

According to Disney figures, the 11 features produced during Schneider’s reign (including the computer-animated “Toy Story”) have taken in more than $2.5 billion at the box office and sold more than 200 million videocassettes.

Eisner, according to those close to him, maintained that Schneider was as responsible for Disney’s animation success as Katzenberg, who is in the process of settling a lawsuit concerning the same issue.

While Schneider and Schumacher were busy with animation, Eisner and Katzenberg had taken a newfound interest in theater, and named senior VP McTyre, who hailed from the theme park division, to head a small (25-member) theater division to produce their freshman effort, “Beauty and the Beast.”

When it opened April 18, 1994, at the Palace Theater, “Beauty” became an instant success, a harbinger of the new “family-friendly” Times Square. Ecstatic with the success, Eisner was emboldened to forge ahead with plans to make a permanent Disney home in N.Y.’s theater district. Disney renovated the landmark New Amsterdam Theater on 42nd Street (with low-interest city and state loans funding $28 million of the $34 million project), and buckled down to creating its next stage show, a live version of the 1994 animated hit “The Lion King.”

By late 1996, Disney had revamped its stage operations. The theatrical division initially reported to Chris McGurk, then president of Walt Disney Pictures Group, who was largely responsible for structuring the newly hatched legit foreign output deals.

Following McGurk’s defection to MCA, the Eisner placed the division under the supervision of the animators, namely Schneider and Schumacher. McTyre, relegated to second-in-charge under Schneider, soon left the company. (McTyre is now in London developing a theme park for Knotts Berry Farm.)

The shift from McTyre to Schneider was, insiders say, as much about creative vision as about box office clout — and Schneider and Schumacher had both.

Using repertory theater as their model, Schneider and Schumacher had assembled an animation division that created and storyboarded projects from start to finish, relying on a regular group of illustrators, actors and songwriters through a process that mirrors the theatrical workshop process.

The structures of the animation and theatrical divisions are so integrated that even with the overwhelming success of “Lion King,” Schneider and Schumacher have continued their animation chores: Schneider is president of Walt Disney Feature Animation and Walt Disney Theatrical Prods.; Schumacher is exec VP of both divisions.

“Last week I sat with Elton John on a plane for an hour,” Schumacher said recently, “and we talked about theater and animation.” John, whose songs (with lyricist Rice) from the “Lion King” film were adapted for the stage, had little involvement in the live version: He saw the show for the first time on opening night.

John is taking a more active role in the development of a rock musical based on “Aida.” Much smaller in scale than “Lion King,” the as-yet-untitled musical will be directed by “Beauty” helmer Roth and should be in rehearsals by June. Disney has not yet made a decision on where the show will premiere.

While the animation division has grown from 150 to more than 2,000 staffers since Schneider joined in 1985, theatricals remain lean at about 100 people (the two divisions share human resources and business affairs departments).

Though Schumacher would not rule out Disney someday staging a non-musical play, the company currently is developing only tuners. And Schneider flatly dismisses rumors that Disney will stage a second production of “Lion King” on Broadway.

As for a second theater, that’s another matter: Schneider says Disney “would love” to buy a second Broadway venue. But like Livent’s Garth Drabinsky, who recently expressed a similar interest (Livent owns the newly unveiled Ford Center for the Performing Arts on 42nd Street), the Mouse will have to wait. Landmark theaters, like landmark productions, don’t come along very often.

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