All shook up

Disney tapped into TV to sell his park to America and created a new business model

Walt Disney shook up the entertainment world with his landmark animated features. But in pursuit of his dream for Disneyland, Walt rocked the business world with his creative thinking.

Terms like experiential marketing and embedded programming are commonplace today — but their origins date back to Walt Disney’s plan for Disneyland in 1955.

Back then, Disneyland was considered a financial longshot and often called Walt’s folly. Even Walt’s brother Roy had serious doubts about Disneyland and the ability to fund it.

Convinced that Roy wouldn’t warm to the idea unless he saw more concrete plans, Walt financed the early planning stages of Disneyland himself. He came up with conceptual plans and showed them to Roy. Eventually, Roy came around, accepting that Walt was determined to get the park off the ground, so he committed to help him.

One problem: Where were they going to get the money for Walt’s lofty plans?

As usual, Walt would launch a truly original concept.

He would use television to not only help fund the park but also to attract patrons.

Indeed, his vision would turn out to be the first real success of embedded programming. Walt wanted to create a weekly television program that would showcase a Disney movie after which he would host a segment where he described his plans for, and progress with, Disneyland.

As a result, Roy Disney headed to New York in 1953 to pitch the show concept to one of the three major networks. In exchange for producing the television show each week, the Disney brothers sought a commitment of financial help for the park, says Jeffrey Siegel, a financial historian and columnist.

It was not an easy sell. Both NBC and CBS refused. But the fledgling net ABC agreed to the deal. Disney would produce a weekly television show for the Alphabet web called “Disneyland,” which would be a natural extension of the park and Disney films. In return, ABC would invest $500,000 in Disneyland and own a roughly 34% stake.

“When you go back and look at that footage, here’s a man who was an incredible visionary who understood the power of mass communication and of television,” says Michael Mendenhall, Disney’s executive vice president for global marketing.

“He embedded his message within that program to educate people about what he was doing with the park. He was going to take the idea of passive entertainment where you watch something and absorb it to interactive entertainment, which was really experiential marketing at its best,” he adds.

ABC would also guarantee a loan of $4.5 million, according to “Building a Company: Roy O. Disney and the Creation of an Entertainment Empire,” by Bob Thomas.

The ABC loan was tied to sponsorship leases at Disneyland. ABC would advance funds as money came in from other sponsors. Sponsors paid the first and fifth years of their five-year leases in advance, Siegel says. Funds from the ABC loans kicked in, dollar for dollar, as lease payments came in.

In addition to the ABC ownership, Walt Disney Prods. invested $500,000 for a roughly 34% share; Western Printing, who published Disney Books since the 1930s, invested $200,000 for about 14% ownership, and Walt Disney personally invested another $250,000 for a 17% share.

Final financing came from a Bank of America loan of $11 million, with Banker’s Trust of New York as a co-lender, Siegel says. For collateral, Disney put up portions of its film library.

Walt’s dream was taking off, but it was no doubt a risky and expensive gamble.

He had to clearly convey to companies that he would create an environment for park visitors to experience his brand in a unique, interactive way. In doing so, they would identify with the brand and want to re-create that experience even when they were not at the park — by buying more of the sponsors’ products and services.

“They must have thought he was crazy at first,” says independent media analyst Dennis McAlpine. “But that never stopped Walt.”

Walt’s talent as a communicator was evident. Mendenhall says Walt was able to sell his vision to potential sponsors because of his skills as a great storyteller.

“This man was an extraordinary visionary,” he says. “And one of the best storytellers. I think Walt had a great story to tell. (He convinced them that) you always see things passively and he wanted to take his children somewhere where he could have fun with them, and not just watch them have fun.”

Walt’s spiel worked. Sponsors included top companies of the time: Coca-Cola, Carnation, Swift, Frito-Lay, Pendleton, Gibson Greeting Cards, Bank of America, Eastman Kodak, TWA, Richfield Oil, Kaiser Aluminum and Monsanto.

Some of those sponsors are still around today, 50 years later.

Coca-Cola is one of them.

Brad Taylor, Coca-Cola’s global director of marketing in charge of the Disney account, says the reason the partnership endures is because the two companies share common values and goals.

“When you think about Coke and Disney, you think about trusted quality and good times with family and friends,” Taylor says. “Those are attributes of both brands that are particularly strong and have been strong since day one. That still holds true today and holds true in every place where Disney has parks.”

Like other sponsors, Coke works closely with Disneyland in the planning stages of its park marketing programs.

In Coke’s case, it’s the refreshment stands.

“We start an input session where we talk about what we want to achieve and they talk about what they want to achieve and we arrive at a destination for a site we both agree on,” Taylor says. “Then Walt Disney Imagineering goes off and designs and builds (the stand) so that it fits within their storylines and, more importantly, withstands the elements.”

Coke will have a special edition bottle for Disneyland’s 50th at the parks.

Taylor adds that the sponsorship contracts are multiyear, and that each country in which Disney and Coke team up consists of a separate contract. Taylor says Coke will be among the sponsors of Hong Kong Disneyland, which opens in September.

Fifty years separate the opening of the original Disneyland and the park in Hong Kong, but the strategy remains largely the same. Disney has launched a TV show in Hong Kong, much like the one Walt started in 1955.

The reason: Hong Kong poses a unique challenge to Disney’s marketing team, says Jay Rasulo, Disney’s president of theme parks and resorts. The southern Chinese audience, which will account for at least a third of its business if not more, is not that familiar with Disney stories. This was not a problem in Europe and Japan, where people were familiar with Disney movies and characters.

Disney also formed a partnership with the China Youth League. Through the group, Disney offers videos, books and other creative material and activities in these youth palaces that are all Disney themed.

“There are 50 million to 60 million kids who are part of the China Youth League, so it’s a very big deal and an interesting way to get access in a market that gives us little access,” Rasulo says. “There are only 20 Western films allowed into China every year, of which we have three or four. Still, that’s not very much and we are not on TV in Mainland China so we have to seek alternative ways to get the stories out, particularly to the southern Chinese market.”

As for attracting sponsors to the park in Hong Kong and elsewhere, Mendenhall says Disney still follows Walt’s lead. It looks for partners whose products and brands align with the Disneyland vision.

“We look for companies that are constantly innovating, constantly striving to bring the best in family entertainment, constantly using technology that will push these experiences forward,” he said.