Recently, I wrote about Western Publishing’s investment in the building of Disneyland in 1955.
The Disneyland Inc. investment pool consisted of 34.485 percent by ABC (at a cost of $500,000 and guaranteeing up to $4.5 million in bank loans), 34.48 percent by Walt Disney Productions ($500,000), 13.8 percent by Western Printing and Lithography Company ($200,000), and 16.55 percent by Walt Disney himself ($250,000).
I see on the Internet there is much confusion about the actual ABC deal with Disney so, hopefully, this column will clarify most of those issues, especially with the 60th anniversary of the park coming soon.
The American Broadcasting Company television network made its debut on April 19, 1948 as a natural extension of the ABC Radio Network, that was still enjoying popular success.
Yet, by 1949, ABC was on the verge of bankruptcy for a variety of reasons.
Also in 1949, United Paramount Theaters (UPT), which operated a chain of movie theaters, was forced by the U.S. Supreme Court to become an independent company, separate from Paramount Pictures. The government had mandated a split of the movie exhibition business from the five major Hollywood studios that also controlled production and distribution.
In the process, UPT had to sell some of its assets and found itself with an influx of cash to invest.
The president of UPT, Leonard Goldenson, sought to diversify the company by purchasing ABC. On February 9, 1953, the FCC, after determining there was no conflict of interest, approved UPT's purchase of ABC in exchange for $25 million in shares.
In 1949, Robert Kintner had been made ABC’s president, but left by 1956 as Goldenson took more and more direct control. It was Kintner who worked with Walt Disney for the beginning of Disney’s weekly television show. Kinter would then go to NBC where he would later help broker a deal in 1961 between Disney and that network.
With the merger, Goldenson aggressively networked with his personal contacts at movie studios for them to supply series for the television network.
Eventually, Warner Brothers ended up providing television shows, including several Westerns, like Maverick, Sugarfoot and Cheyenne, that were so popular that they helped spark a plethora of similar Western television shows in the late 1950s.
The ABC logo from 1955 looks a bit different than the one today.
Goldenson later did the same with detective shows from Warner, including 77 Sunset Strip, Hawaiian Eye and Surfside 6.
However, it was the Walt Disney anthology series, Disneyland, that put the network in the public awareness and made ABC more than what industry wags referred to as the “Almost Broadcasting Company” because of its lack of affiliates.
Comedian Milton Berle used to joke, “If the Russians ever drop a bomb, let’s all run over to ABC because they’ve never had a hit.”
Disneyland was the first ABC television show to ever make it into the top-10 most-watched programs. In fact, before Disneyland, ABC had not even been able to get a program into the top-25 shows.
Walt Disney said on July 17, 1965 at a gathering of Disneyland employees at the Disneyland Hotel in celebration of Disneyland's 10th anniversary:
“I remember that we were dealing with all three networks … they wanted our television show. And I kept insisting I wanted this amusement park.
“And everybody said, ‘What the hell’s he want that damn amusement park for?’ And I couldn’t think of a good reason except … I don’t know … I wanted it. (laughter)
“I remember we had a session with NBC. They wanted this Disney television show and we were stubbornly insisting we wanted to start an amusement park with it. David Sarnoff was sitting in on this thing and he said, ‘I want your television show, but why the hell do we have to take that damned amusement park?’
“Same thing went with CBS. Yeah, they wanted the television show but the insistence on the backing of this amusement park…
“ABC needed the television show so damned bad (loud laughter from the audience) that they bought the amusement park.”
CBS wanted a show from Disney to also promote their new color system which was inferior to the one developed by RCA, the parent company of NBC. They had no interest in the theme park with president William Paley referring to it as just another Coney Island.
Negotiations promptly stopped when Paley failed to show up for an important meeting with Disney, claiming another urgent commitment, and offending the Disney brothers by this action.
Walt and Roy spent months negotiating with NBC and word was sent that General David Sarnoff, the head of RCA, was finally ready to sign the deal. However, when Roy O. Disney showed up, he discovered that they had decided they still needed more time.
Roy was so incensed that, according to him, he stormed out of the office, picked up the first phone he saw and phoned Goldenson to see if ABC was still interested.
Goldenson responded, “Roy, where are you? I’ll be right over.”
The first rumors of the deal came in March 1954 with an official announcement on April 2, 1954 when the papers had been signed by both sides.
President of ABC Robert Kintner stated, “Walt Disney is undoubtedly the greatest creative force in the entertainment field today. His entrance into TV marks a major and historical step forward for the industry. ABC is very proud of the privilege of working with the Disney organization, which will bring a new conception to television.”
However, Walt still faced three major challenges. First, he hadn’t settled on a format for the series. Second, most of Walt’s creative talent was focused on creating Disneyland the park. Third, Walt had to allay the fears of other movie studios and theater owners that he was still aggressively committed to producing new films and hadn’t surrendered to the enemy of “the idiot box” television that was stealing audiences from movie houses.
Walt and his “friends” in front of an early ABC network camera.
Within a month, Walt and his team had come up with the concept of an anthology series so that different teams could be working on different segments at the same time. The show would be split each week into segments that aligned with the themed lands of Disneyland so that Disneyland the Park and Disneyland the Show would be the same.
Besides offering the highest in entertainment, the show would promote Disneyland and Disney films being released to theaters. Kintner accepted the proposal with no changes.
For a $500,000 investment in Disneyland, plus guaranteeing up to $4.5 million dollars in potential bank loans, and receiving all profits for 10 years from the park's food concessions, ABC owned 34.485 percent of the park, had a commitment for a weekly television show produced by Disney, as well as first refusal on all future Disney television projects.
Interest in the food concessions reflected UPT’s previous experience in American cinemas, where most profit often came from retailing drinks, popcorn, candy, and other items rather than from ticket sales.
The Disneyland television show attracted nearly half of ABC’s advertising billings during 1954, the final year during which the network operated at a loss.
The three-year contract (with an option for four additional years) called for only 21 original episodes each season (later adjusted to 26 episodes in the second and third seasons), with each one repeated once, and 12 broadcast a third time during the summer hiatus.
ABC would pay Walt Disney Productions $50,000 per show the first year, $60,000 the second and $70,000 the third. In addition, they would pay $25,000 per repeat the first year, $30,000 the second and $35,000 the third.
Walt, of course, exceeded the cost of the shows out of his own pocket by filming them in color and insisting on high production standards. Walt had estimated that each program would cost his studio about $65,000 per episode, which was one of the reasons for the use of so much recycled material, like animated shorts and feature films, to significantly reduce the cost of some shows to cover the overruns on others.
The three hour-long episodes of the Davy Crockett series cost nearly $750,000 total, more than three times the industry standard for a similar production. However, during just that first year alone, the cost was spread over two separate network broadcasts and a theatrical release, as well as sparking a merchandizing bonanza of more than $300 million dollars of Davy Crockett items being sold during 1955 that more than covered the extra cost of producing the show.
ABC aired the first episode of Disneyland on Wednesday night, October 27, 1954.
On October 27, 1954, ABC aired the first Disneyland TV show, on Wednesday night, 7:30-8:30 p.m. The first episode was titled The Disneyland Story. The episode explained what to expect on the new television show, as well as what to expect of the new theme park. Approximately 30.8 million American viewers watched the show and the show received critical acclaim.
Walt got a weekly platform to build anticipation for his new theme park and invest audiences into wanting to come since they saw the behind-the-scenes construction progress. In addition, the show was able to define the new entertainment enterprise as a national attraction rather than a local one.
Walt became an established and recognized avuncular television personality and was able to re-introduce audiences to the Disney Studio history and its impressive library of films.
While the show utilized material from the Disney film library, Walt Disney Productions still owned every film, while other movie studios had sold their films directly to television.
Nearly one-third of each episode of the Disneyland television series was devoted directly to studio promotion. All costs not covered by the network’s payments were often charged to the studio’s promotion budget.
The contract with ABC also resulted in ABC doing the largest live-remote television broadcast up to that time on July 17, 1955 when it aired the show Dateline: Disneyland featuring the celebrity-studded opening of Disneyland the theme park.
The Dateline: Disneyland broadcast on July 17, 1955, was the largest of its kind at that time.
ABC also took advantage of airing two other series produced by WDP. October 3, 1955, saw the debut of the original Mickey Mouse Club series, which were five one-hour shows a week with Jimmie Dodd and the Mouseketeers. October 10, 1957 saw the debut of Zorro featuring actor Guy Williams.
The Disneyland television series changed its title in 1958 to Walt Disney Presents, as it was no longer necessary to so aggressively promote the park. The then-current ABC television contract was due to expire in 1961.
NBC (which was aggressively promoting RCA color television sets and needed a flagship color show to help increase sales) approached Walt with the offer to finance color broadcasts of his show.
Walt had always filmed the show in color, at his own expense, and jumped at the opportunity for his series to be seen in color by audiences and have someone else pick up the tab.
ABC did not have the technical or financial resources to broadcast in color, and could not counter NBC’s offer.
In addition, there had been a growing tension between ABC and Disney. Walt and Roy had become increasingly unhappy with the deal that had been made with the network.
Not only did the deal greatly benefit ABC far more than Disney, ABC was meddling with the Disney product. It was insisting that Walt produce more Westerns for his anthology series and Walt hated being told what to do.
ABC was adding more and more commercials to the Mickey Mouse Club, prompting complaints from viewers that were directed at Walt who had no control over that aspect. In addition, ABC cancelled the popular Zorro television series for the upcoming 1959 fall season, and then tried to prevent Walt from offering it to another network.
On July 2, 1959 Roy Disney filed a lawsuit against ABC, asking the court to invalidate the contracts between the two companies under provisions of the federal antitrust laws. Roy felt strongly that it was a “breach of faith” for ABC to claim ownership of those two Disney shows:
“Several weeks ago, the ABC network advised us and announced publicly that they would not televise Zorro or The Mickey Mouse Club over their network next season, and at the same time they told us we could not offer these programs to any other television outlet,” stated Roy O. Disney.
“Subsequently, they have interfered with our attempts to offer these programs to any other networks or independent television station. Although we do not dispute ABC's right to discontinue these, or any other, programs on their own network, we will certainly fight ABC's maneuvers to suppress these programs from public exhibition over other television stations.”
The legal wrangling continued for roughly a year which surprised Roy who had written to Walt that “In all common sense and business reasoning, I can’t believe they will let this go to a big court fight. They have too many things they would rather have kept quiet and not brought out in court.”
Finally, arrangements were made to settle out of court with one of the provisions being Disney buying back the ABC shares in Disneyland for $7.5 million dollars.
The amount was not arrived at by any complicated process. It was pulled out of the air by Roy himself who felt that all the publicity about the financial success of Disneyland had created an inflated idea of the value of the shares. He also hoped it would be attractive enough that ABC, in need of money for expansion, would not argue since it was approximately $1 million profit for each of the first seven years. Roy was vocal in wanting to be rid of the ABC deal even if it appeared financially unattractive for WDP.
Disney had to borrow from Prudential in order to have the cash to pay ABC. About ABC, Roy later said, “They were not likeable, workable people.”
Walt paid out his own pocket to make the Disneyland show in color, which is part of what prompted a move to NBC.
The deal was completed in June 1960 giving WDP complete ownership. In May 1961, Disneyland, Inc. was merged into the parent company of Walt Disney Productions.
“My brother figured we better buy those guys out,” said Walt in 1965. “They had a third interest. They only had a half-million dollars invested in the park. “But my brother figured, ‘If we don’t buy ‘em out now, we’re going to be payin’ a lot more later.’ And it was a smart move that he did it then.”
Despite the settlement, Walt felt that too much time had passed to revive either The Mickey Mouse Club or the Zorro television series and to move on to other projects.
ABC felt no sorrow for the loss of Disney. It had become so strong a presence because of its counter-programming and its targeting a young audience that it no longer needed the cache of its association with Disney.
In September 1960, ABC had started broadcasting one of the first primetime animated cartoon series, The Flintstones, so was able to retain part of the same audience.
“The Disneys turned out to be terrible business partners,” wrote Goldenson in his 1991 autobiography Beating the Odds. “Disneyland had become enormously successful, but Disney kept plowing his profits back into park expansion. I feared that it would be a very long time before we started seeing any return on our original investment. “ABC needed cash to finance its own growth. We made a $7.5 million deal to sell back our share of Disneyland and we parted company. We took $7.5 million in cash and Disneyland’s concession profits for five more years. I felt they would bring in about $2.5 million a year, and I wasn’t far wrong.”
That’s why some articles state that it cost Disney more than $17 million, the same amount it cost to build the entire Disneyland park in 1955, to buy out ABC.
The Disney Company purchased Capital Cities/ABC in 1996 for $19 billion as part of the “circle of life” philosophy. Goldenson had been one of the mentors of former Disney CEO Michael Eisner.
“I met Leonard Goldenson on the first day of my employment at ABC. He was as nice to me then as he was the day the Walt Disney Company acquired ABC 30 years later,” said Eisner when Goldenson died in 1999 at the age of 94. “He showed me it was acceptable to ask an insatiable amount of questions, to support the creative process.”
