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Last Updated: Tuesday, 18 November, 2003, 14:10 GMT
Mickey Mouse Business
By Rafael Behr
BBC News Online business reporter

Mickey Mouse
Can Mickey compete in today's streetwise playgrounds?
He is the figurehead for a company worth more than $47bn (27.9bn) and an international superstar with hundreds of film and television credits to his name. Not bad for a septuagenarian rodent.

But Mickey Mouse, who celebrates his 75th birthday this week, is not looking forward to a peaceful retirement.

Disney, the global media group that built an empire on the Mickey brand, is emerging from a difficult patch and there are plans to mobilise the mouse to secure a recovery.

Results for the fourth quarter, due later this week, are expected to show a healthy rise in operating profits - possibly up from $539m to $855m.

But Disney got lucky this year with movies.

Finding hits

Pirates of the Caribbean was relatively low-budget for a Hollywood blockbuster at $70m, yet is set to be one of the year's biggest films.

Finding Nemo, the feature-length animation by computer animation studio Pixar, which shares profits 50-50 with Disney, has broken box office records.

The heart-warming tale of itinerant fish has already taken $340m in North America, making it bigger than The Lion King - a high water mark for Disney flagship features in the booming 90s.

A hit on that scale trickles wealth through the rest of the group with high demand for merchandise - everything from toys and DVDs to clothes and video games - boosting a retail division that has performed patchily in recent years.

Monsters Inc
Pixar is the creative brain behind hits like Monsters Inc
But hitting the jackpot with high-earning blockbusters masks underlying vulnerability.

Disney is still grappling with ABC, the television network it bought in 1996. The channel has consistently underperformed in the high-stakes US ratings war.

Rollercoaster ride

The group has also been hit by weak attendance at its flagship theme parks - the white-knuckle ride and fast food playgrounds that are the main interface between the oversize mouse and his adoring fans.

Weak tourist demand, exacerbated by post-September 11 nerves about trans-Atlantic travel, has taken a toll. In the 2002 fiscal year operating profits at the parks division fell by 26%. They were down a further 22%, to $732m by June this year.

The situation is toughest at Paris-based Euro Disney.

The European venture made a net loss of 56m euro ($65m) last year, double the figure for the previous year - with local industrial action adding to the post-September 11 blues. Euro Disney is also labouring under a burden of up to 2.3bn euro in debt.

Company insiders lament that the Paris venture - in which Walt Disney Corp has only a 39% stake - may be permanently handicapped by Northern Europe's dour climate which saps the "magic" from a product road tested in sunny Florida and California.

But elsewhere, theme park revenues, Disney says, are picking up. Costs have been cut across the division by more than $250m since September 2001.

Plans are afoot to expand the relatively lucrative Asian side of the operation with a new $1.8bn facility in Hong Kong due to be ready by 2006. Disney is already big in Japan.

Heavy hitters

Michael Eisner
Eisner oversaw boom years but critics say he has stayed too long

Confident that a general recovery is underway, Disney is now hoping that a Mickey-led relaunch will see a return to the glory years of 1984-1997 when, under bullish chief executive Michael Eisner, the groups value rose from $2bn to $67bn.

Optimists point to a general recovery in the US market, especially in advertising revenues, and to consistently high earnings for cable sports channel ESPN.

Detractors say the rot is deeper. Mr Eisner has been at the helm for three decades, providing stability and leadership.

But, say his critics, the long tenure has stifled emerging talent, micro-managing creativity out of the group and raising the stakes dangerously high when the time comes for succession.

Meanwhile, the once mighty Walt Disney animated feature has been eclipsed by Pixar's output. The profit sharing deal expires in 2005 and Disney will have to compete with rival studios in the renegotiations.

Pixar has consistently delivered hits such as Toy Story and Monsters Inc., putting it in a good position to drive a hard bargain - possibly even asking Disney to settle for a straight marketing and distribution partnership.

Mighty Mouse?

Disney can scarcely afford to lose its stake with the cuddly characters that win children's hearts and empty their parents' pockets.

Hence the Mickey revival. 75 years on, the company is embarking on an 18-month campaign to put the mouse back at the heart of the brand.

Mickey Mouse in Steamboat Willie in 1928
It hasn't been an easy ride

Mickey already accounts for up to 20% of the value of Disney consumer products. Now he is expected to cross back over from pyjamas and lunchboxes to the screen, with new video and feature films.

It is a risky strategy. Mickey is iconic to older generations, but that is not necessarily an advantage in the playground. He was retired from front line features 10 years ago precisely because his high-pitched voice, big-buttoned pants and inane smile were felt to be too anodyne to capture the imagination of an increasingly streetwise generation.

At 75, the world's favourite mouse still has some work cut out for him.

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