Muppets Take On Mickey at Malls

When Walt Disney Co. agreed to buy Jim Henson’s production company and rights to his popular Muppet characters, some observers saw in the deal vaguely sinister motives.

“Disney’s Muppets acquisition mousetraps the opposition,” Malcolm S. Forbes opined in Forbes magazine.

Now there’s a new amphibian on the block that just might make Disney croak.

A beaming Kermit the Frog has been hoisted over the yellow-and-white-striped entrance of the new Muppet Stuff store, which opened Friday in the Westside Pavilion.

Franchised by a Canadian company, it is the second of many planned U.S. stores that will feature Muppet items ranging from plush toys to videos to clothes, manufactured under licensing agreements with Henson Associates Inc. and Children’s Television Workshop, producer of public TV’s “Sesame Street,” which features many Muppet characters.

Meanwhile, in nearby Century City Shopping Center & Marketplace, Mickey, Minnie and Goofy hold court in the Disney Store, part of Disney’s own fast-growing retail chain. Those stores plan to begin carrying Muppet merchandise next year.

In even closer proximity are a Muppet Stuff and a Disney Store in McLean, Va., which opened a year ago directly across from each other in the same mall.

Is this planet big enough for both? It’s a small world, after all.

“I quite look forward to them promoting the hell out of the Muppets,” Lorne Solish, president of the corporation that runs Muppet Stuff, said of an anticipated Muppet marketing push by Disney.

Solish professes to be unconcerned about Disney trying to put the kibosh on Kermit’s stores, despite Disney’s litigious nature. In September, for example, Disney sued a small store in Orlando, Fla., that used the name Mickie’s Gift Shop.

To be sure, at this point neither side is anticipating that Mickey and Kermit will leap into court. Disney, which has not yet concluded the Henson purchase, has maintained that it will honor existing contracts with Henson’s firm. Solish’s Canadian contract with Henson’s firm dates from February, 1985, and his U.S. contract from January, 1987.

With the Henson deal, Mickey Mouse’s parent will corral Kermit, Miss Piggy, Fozzie and other whimsical rivals for the affection of children around the world--not to mention for the disposable income of their doting parents.

Disney will gain a large library of television shows and movies and a 15-year contract for Henson’s creative services. But a key attraction was also all that Muppet merchandise that Disney would be able to sell in its own stores.

The potential for overlap is great. Muppet Stuff’s only exclusive product is a line of clothing featuring Kermit. Aside from that, both retailers will have access to essentially the same merchandise.

Will a glut of Muppet stuff result in a turf battle?

“We’re such small potatoes,” Solish said, scoffing, perhaps wishfully, at the notion that Disney might retaliate.

Indeed, Disney Store outlets range from 3,000 to 5,000 square feet, dwarfing the 900-square-foot Muppet Stuff outlet in the Westside Pavilion. Disney this year is opening 28 Disney Stores, which will bring the chain’s total to 41 by year-end. The units reportedly take in sales of $600 to $800 per square foot annually, three to four times the national retail average. Disney also has a successful mail-order operation.

But Muppet Stuff has big plans. Solish, whose company is based in Toronto, said he hopes to see 100 stores throughout the United States as well as 50 in Canada, where there are now 15. (Solish declined to disclose revenues.)

If the idea takes off in Southern California, Harry O. Schenk and Donna Kozun, the Los Angeles partners who contracted with Solish’s company for the rights to the stores here, plan to open as many as 10 in Los Angeles and Orange counties within five years.

So far, nobody from Disney has contacted Solish, Schenk or Kozun. But Schenk, an attorney, said he suspects that “Disney executives will be in here real quick.”

Harold Vogel, a financial analyst with Merrill Lynch Capital Markets in New York, figures that Muppet Stuff will not interfere with Disney’s march into malls across America. “I am sure it will not slow Disney down in the least,” he said.