MGM’s Toys Crashes and Burns at Box Office
The Hollywood Reporter, July 30th, 1991
Burbank – Metro Goldwin Meyer Studios and Walt Disney Entertainment are reeling from the disastrous opening of their big budget summer family tent-pole
Toys. The eclectic Robin Williams helmed anti-war family comedy has received generally positive reviews, but with a poor opening weekend (opening at #4) it is well on its way to lose massively. MGM Studios is already expecting to write off at least $30-40 million against the $62 million feature and reported $20+ million marketing campaign[1], whose attendance numbers have yet to significantly increase after a paltry $4.5 million opening weekend.
“The press salted the well,” said director Terry Gilliam, referring to the negative industry and media buzz about the feature’s vast cost overruns, with many in the industry dubbing the piece “Henson’s Folly” even before it opened. And yet its peacenik plot, which some have perceived as anti-military, is openly at odds with the US patriotic fervor following the Kuwait liberation and at war with the prevailing zeitgeist, making its success unlikely in any case. Whether the predictions of failure were prescient or a self-fulfilling prophesy, the stink of failure is all over this picture, and all over the man who spearheaded its production and release.
The passion project of Walt Disney Studios Chairman and Company CCO Jim Henson,
Toys marks a blistering failure for a man who up until that point was largely seen as an unstoppable creative juggernaut. “This will certainly stain Henson,” said entertainment reporter Dagny Hultgreen. “He was the central figure pushing
Toys against the recommendations of his staff in many cases.”
While the massive ongoing blockbuster success of
Spider-Man and strong performance of
Roger Rabbit II promise to keep the studio in the black, Henson will have many uncomfortable questions to answer going forward, both within the studio, and with the Board of Directors…
Cont’d on A2.
Chapter 18: Drama Behind the Scenes
Excerpt from The King is Dead: The Walt Disney Company After Walt Disney, an Unauthorized History by Sue Donym and Arman N. Said
In the summer of 1991 Sid Bass of Bass Brothers called up Bill Marriott, Jr. He wanted to discuss options regarding their continued support of the Walt Disney Entertainment Company. To put it bluntly, he was starting to question the continued competence of the Disney leadership.
“Miller, Henson, and [Roy] Disney are not fulfilling their responsibilities to their shareholders,” he told Marriott, bluntly. And his reasoning was simple: they were placing artistic merit above financial considerations.
Mort had performed well, but not up to the standards of
A Small World or
Where the Wild Things Are.
Maus and
The Song of Susan had been awards darlings, but neither put a penny back into the hands of shareholders.
Toys was a disaster.
The parks weren’t doing much better. With oil prices sky high thanks to the Gulf War, park and (most critically for Marriott) hotel revenues were in a slump. The Disneytown in Philadelphia was doing fairly well in their stead as a lower cost alternative, but was not making enough to make up the difference, and the new ones under construction in Denver and San Antonio were looking like a gamble. Universal Studios Florida had caught them flatfooted and rumors abounded that Warner Bros. and even Columbia were exploring similar ideas. Furthermore, Disneyland Valencia was behind schedule and over budget and projections indicated that even if the launch went smoothly the park would take years to recoup its investment. And finally, and most critically, the recent Wrather buy seemed motivated more by loyalty to the desires of the long-deceased Walt than it did by sound business strategy. Bass could not imagine how the proposed DisneySea park was going to turn a speedy profit on a $2.8 billion investment. Somehow, he doubted that The Lone Ranger and Lassie were going to make up the difference, much less the Spruce Goose, which was a convenient symbol of the impracticality of putting visionary dreams ahead of sound design and investment.
On top of that, Henson and Wells had spent lots of money on environmental initiatives and PSAs, which, Bass felt, was all well and good in its own right (he believed in being a good shepherd of the Earth), but their championing of the “Global Warming” theory and subsequent attacks on fossil fuels hit Bass, whose company was built in large part on fossil fuel harvesting and sales, right in the financial gut.
“They’re a bunch of lovers and dreamers,” he said wistfully to Marriott and without malice, “but their job is to ensure that their shareholders get a good return on their investment. They’d better turn the ship around pretty quick, or I may need to look elsewhere for investment.”
Marriott tended to agree. While the overall investment he’d earned since becoming a White Knight for Disney had been phenomenal, the well (Wells?) indeed looked to be running dry. Hotel revenues were way down on Disney properties. Bill Marriott always prided himself on being a man who listened and a man who cared for his employees, but he was also a man who always considered the needs of his company. He liked Henson and Wells. They were good and decent people and as a man of strong and abiding faith who tried to treat his employees with the love and decency that faith inspired, he appreciated their benevolent management style. But he did mention to Bass that, should Bass consider selling his shares he’d appreciate if Bass gave him advanced notice so that he could consider his own corporate response.
Marriott and Bass weren’t alone in their concerns. Roy Disney’s financial advisor Stanley Gold and brother-in-law Peter Dailey were advising him that while pursuing the “dream” over the “scheme” was noble in theory, in practice it was costing him money.
“Roy,” said Gold, bluntly, “You’re cutting your own throat here!”
Even Dianne Disney Miller was feeling the pressure. “Ron,” she reportedly told her husband, “I can’t hold back the shareholders forever.”
She was right to be concerned. Plenty of investors were starting to grumble, and Frank Wells and CFO Mike Bagnall were growing increasingly concerned that there’d be a shareholder revolt or proxy fight if things didn’t turn around in a noteworthy way. Marriott seemed to understand that the recession and oil prices were the ultimate cause of his losses and appeared to be satisfied with the progress of the new hotels in Spain and the promise of the potential new ones in Long Beach once the economy turned around. But Wells rightly suspected that Bass in particular wasn’t being completely straight forward with him. Wells had a long talk with Sid Bass to help placate the unhappy major investor. He also took the time to talk about the Green initiatives specifically, steering Bass towards green investments as a “high growth potential ground floor industry.”
“Sid,” Wells said, handing him a chart he’d printed out, “the Texas Panhandle alone has the potential for terawatts of power production. Oklahoma and Kansas and beyond too.” He even evoked the “frontier windmills” that allowed the settlement of the Great Plains, directly appealing to the Texan’s frontier nostalgia.
Wells was wise to be suspicious. In fact, Bass’s involvement with the White Knight campaign had largely hinged on Richard Rainwater’s attempts to sell Bass’ Arvida subsidiary to the endangered Disney in a stock dilution scheme. Disney instead chose to acquire Henson Associates. Bass, on the advice of Arvida head Charles Cobb and Rainwater (who had a “hunch”), had joined the White Knight campaign with the hope of expanding Arvida’s involvement in Disney’s many construction efforts. And while the expansions at Walt Disney World had certainly made good and profitable use of Arvida, that partnership had shrunk in recent years. The Spanish park was being primarily developed by Spanish companies, in particular Dragados, while the Port Disney project was, due to the dredging effort and vagaries of Southern California’s strange politics, being largely performed by others, including Chairman Emeritus Ray Watson’s Irvine Company.
If only they’d launched the MGM park!
At the time of the ACC buyout attempt, Bass and the board of directors for Bass Brothers had also left their options open, and had discussed selling their stake to Kingdom Acquisitions. They had opened back door channels to Kirk Kerkorian at Tracinda at the time with the express purpose of fishing for a favorable sale price or, should the KA team win, leverage their stake and partner with Kerkorian in the division and distribution of the remainder of Disney. This was not out of malice, but out of pragmatic business practice. And ultimately, the opportunity to buy out Boesky’s share and cement Bass Brothers into a major position proved not just the simplest path, but the most profitable. The return on investment in Disney since 1984 had been astronomical.
Even with the share price stagnating, Bass could, conceivably, sell his stake to someone else for a considerable profit. Or he could leverage his substantial stake, perhaps in concert with other disgruntled shareholders, to force a proxy fight to oust the “dreamers” in favor of more profit-minded leadership.
He again called up Marriott, who was not yet amenable to such action. “Let’s see how things go with the new parks and hotels,” Marriott said.
Bass also consulted his board of directors and senior executives, who were mixed. Some, particularly the directors who worked with the fossil fuels subsidiaries, urged selling his Disney stock and moving on. They were of the opinion that Wells’s “Green Economy” was madness and that renewable sources could never compete with coal, gas, and oil. And with renewable sources of the time typically having limited efficiencies and high production costs, they had very good reasons to believe so. Others, such as Rainwater and, to a lesser degree, Cobb, urged patience. “The recession will end eventually,” said Rainwater. “Then we can expect more expansion in WDW.” Cobb in particular was confident that there would be a third or even fourth gate at WDW before the end of the century.
Ultimately, Bass, while keeping his options open, decided to follow Marriott’s lead and see how things played out. In a sign of good faith to Wells, he had Rainwater begin quietly buying up infrastructure development rights for hundreds of thousands of acres in the rural Texas North and Panhandle, Oklahoma, and Kansas.
[1] Even with a strong international box office, ultimately grossing $68 million, Disney will still lose over $40 million when distribution, marketing (over $20 million), and the fact that up to half of that gross is going to theaters and other stakeholders are all considered (an upcoming Meta-Discussion will explain how all of this works).