Disney, MGM Disagree Over Use of Name : Proposed Studio Tour May Be Scaled Back

MGM/UA Communications and Walt Disney Co. appear to be squaring off over Disney’s decision to call a proposed Burbank attraction “The Disney-MGM Studio Backlot.”

MGM/UA agreed two years ago to sell Disney the right to use its name and themes from classic MGM and United Artists films at a studio tour attraction in Florida, scheduled to open next year. But MGM/UA Chairman Lee Rich said he does not believe that the agreement entitles Disney to use the MGM name outside of Florida.

“We were very upset about it,” Rich said. “We’re going to do anything we can to get them not to use it.”

Won’t Back Down

The proposed $611-million Disney attraction in Burbank has run into obstacles on several fronts. In the most recent development, Disney notified Burbank city officials last Friday that the project, as now constituted, would not generate sufficient profit for the company and may have to be scaled back. Disney projected an 8.96% return on the cost of the Entertainment Marketplace portion of the project.

But Disney Chairman Michael D. Eisner insisted Tuesday in a telephone interview that Disney still considers the project exciting. “In the next six months, we are resizing and redoing, basically, the same concept,” he said.

Eisner also said he won’t back down from using the MGM name. “We do have that right; (it is) absolutely crystal clear.”

In addition, Eisner said, Disney would be free to use the MGM name overseas if it decides to build a studio tour abroad. “We’re not doing anything yet over in that area; I wouldn’t be surprised,” the Disney chairman said.

Until now, the Burbank attraction’s fiercest opponent has been not MGM, but MCA--the entertainment giant that has been operating its own studio tour for 23 years at company headquarters in nearby Universal City.

MCA has accused Disney of proposing the Burbank tour as a “blackmail” tactic to dissuade MCA from building a Florida studio tour not far from Walt Disney World near Orlando. MCA has also filed two lawsuits against the City of Burbank contending that it conducted illegal closed-door negotiations with Disney.

In its report submitted last week, Disney said that it may have difficulty attracting major retailers to the center and that its revenue and expense projections “did not meet corporate thresholds for an investment of this magnitude.”

On Tuesday, Eisner declined to say what return the company seekson the Burbank project, but he noted that Disney’s stated goal is to improve overall profit annually by 20% or more.

Both Eisner and Rich noted that the agreement between MGM/UA and Disney was negotiated before Rich took the Culver City studio’s helm.

“One thing about public corporations,” Eisner said. “You have to live with previous people’s deals.”