Question: What company takes its name from Walt Disney and has mushroomed in size since Disney started it years ago?
Six miles from Disney's Burbank headquarters, in an unlabeled two-story office building in North Hollywood, is the late Disney's other, more obscure corporate offspring: Retlaw Enterprises Inc. (Retlaw is "Walter" spelled backward.)
Disney formed Retlaw in 1953 to give his family a slice of income from some of his other company's lucrative operations, including Disneyland. The slice turned out to be worth hundreds of millions of dollars.
Today Retlaw owns six television stations, about 1,150 acres of land in California and a jet leasing firm, and it still gets a share of the income from old Disney films released by the studio. Retlaw used to own the monorail and steam railroad at Disneyland before Walt Disney Co. bought them back in 1982.
Walt Disney died in 1966, and today Retlaw is owned by his widow, Lillian, 91, and their two publicity-shy daughters, Diane Disney Miller, 56, and Sharon Disney Lund, 53, who is the only one of the three on the Walt Disney Co. board of directors. Lillian and Sharon each own 30% of Retlaw; the remaining 40% is owned by Diane, her husband, former Walt Disney Co. chief executive Ronald W. Miller, and their children.
The Disneys all lead very private lives, and they are especially reticent when it comes to Retlaw. They declined to be interviewed or to provide photographs for this story. The one Retlaw officer they allowed to speak, Vice President and Treasurer Robert L. Wilson, read from a statement that he could not discuss Retlaw's finances or the Disneys individually.
"It's just a desire of theirs to keep their private lives separate," Wilson said.
Retlaw initially owned the merchandising rights to Walt Disney's name, the engineering division that designed Disneyland, and the two Disneyland trains. But the privately held Retlaw has since cut most of its ties to Walt Disney Co. and become a conservative broadcasting and real estate firm. It is probably worth in excess of $150 million.
Retlaw's TV stations, all CBS affiliates, are KJEO in Fresno; KMST in Monterey, Calif.; KEPR in Pasco, Wash.; KIMA in Yakima, Wash.; KIDK in Idaho Falls, Ida., and KLEW in Lewiston, Ida., the town where Walt and Lillian were married in 1925.
Retlaw's real estate includes 580 acres of farmland worth more than $8 million on the eastern edge of Palmdale in the Mojave Desert; 220 acres of vacant land in Riverside County, and 330 acres of avocado groves in Escondido and Riverside County.
Retlaw has other revenue sources as well. It draws annual payments--often $600,000 or more--from Walt Disney Co. for 26 Disney live-action movies, notably "Mary Poppins." The films were produced by Disney in the 1960s, and the payments reflect 10% equity stakes Walt Disney bought in the films as part of his management contract with Walt Disney Co.
Retlaw's small jet charter service is at Van Nuys Airport, where the company leases out its one corporate jet when its executives aren't using it. Retlaw also is planning to move its headquarters to a new $18-million three-story office complex and aircraft hangar it is scheduled to begin building early next year on the airport's west side.
Creating Retlaw reflected Walt Disney's vision for providing riches for his family. But it also strained relations between him and his brother, the late Roy O. Disney, and later between Walt Disney's heirs and Roy Disney's son, Roy E. Disney, who today oversees Shamrock Holdings Inc., a big investment firm in Burbank.
In the 1920s, Walt and Roy O. Disney co-founded the Disney studio, with Walt the creative partner and Roy the financial man. According to John Taylor's 1987 book "Storming the Magic Kingdom," an account of takeover threats against Walt Disney Co. in the mid-1980s, Roy vehemently objected to Retlaw's creation. He felt betrayed that Walt was diverting a portion of the company's income to Walt's side of the family.
Retlaw was first called Walt Disney Inc., then WED Enterprises. It was initially endowed with the merchandising rights to Walt Disney's name and likeness. WED licensed the rights back to the Disney company in exchange for 5% to 10% of the income from each of Disney's merchandising deals, and it could invest up to 15% in new Disney projects.
The rights were obviously valuable in light of Disney's phenomenal growth. Between 1953 and late 1981, Disney paid WED/Retlaw a total of $45.6 million in "name" royalties, with $25.6 million representing merchandise and $20 million covering the company's projects, namely Walt Disney World in Florida.
WED also held Walt's creative team, which designed Disneyland and many of its attractions, including the monorail. In 1965, however, Walt sold WED Enterprises' design and architectural group to what was then known as Walt Disney Productions.
But Walt, who loved trains, kept the steam train, the monorail, the name rights and other assets under the ownership of his personal company, which then adopted the name Retlaw. Retlaw received net revenue of $75 million from the monorail and railroad between 1955 and late 1981, according to Securities and Exchange Commission filings.
Even Retlaw's sale of the Disney name rights to Walt Disney Co. nearly 30 years later was marked by family friction. Only one of Walt Disney Co.'s directors voted against the deal--Walt's nephew Roy E. Disney, who complained that the company paid too much to get the rights back, according to Disney's 1982 proxy statement.
Roy Disney declined comment. But Retlaw's Wilson said he was "not aware of any" continuing animosity between the families.
In early 1982, Retlaw's stockholders sold most of its remaining properties--the rights to Disney's name, the monorail and the railroad--to Walt Disney Co. for 818,461 shares of Disney stock, which was worth $42.6 million then and is worth $300 million today, adjusted for a stock split in 1986.
The Disney stock was paid not to Retlaw, however, but to Lillian, Diane and Sharon Disney, Wilson said. Wilson declined comment on whether the Disneys still own those shares, which would represent about 2% of Walt Disney Co.'s total market value today. None of the Disneys individually, nor Retlaw, own 5% or more of Walt Disney Co., however, because such ownership would require a public filing with regulators.
Nonetheless, Forbes magazine estimated last year that the Disney heirs control about $850 million worth of Disney stock overall, a figure that would now be closer to $600 million after accounting for the sharp slide in Disney's stock price this year.
Lillian, Diane and Sharon Disney leave the day-to-day operations of Retlaw to professional managers, but they are not passive owners, said Ben Tucker, executive vice president of Retlaw Broadcasting Corp. in Fresno. They study quarterly financial reports from their divisions, ask questions and make decisions rapidly, he said.
Retlaw's strategy seems to focus on passive, patient investments. It does not rapidly swap properties but rather buys real estate and TV stations and waits for them to appreciate over several years.
However, Retlaw has recently sold some agricultural land such as a cattle ranch in Wyoming, and is shifting some of those assets into commercial and industrial real estate such as the Van Nuys Airport office building, Wilson said.
Retlaw began acquiring TV stations with its purchase of the Fresno station in 1968. Its last purchase was the Idaho Falls station in early 1988. Retlaw paid about $37 million for the six stations, but today stations of similar size would sell for a total of roughly $100 million, estimated Bishop Cheen, senior analyst at Paul Kagan Associates, a media research firm in Carmel.
Retlaw is on the prowl for more stations, said Ben Tucker, executive vice president of Retlaw Broadcasting Corp. in Fresno. The Disneys want stations in small- or medium-size towns in the West, particularly near "strong agriculture-based economies that will sustain us for the long run," he said.
Besides being patient, the Disneys are tough negotiators, Thomas (Bud) Pickle said. He was part of an investor group that unsuccessfully tried earlier this year to buy Retlaw's Palmdale farmland for $8.2 million, or $14,140 per acre--a lofty price in the Antelope Valley.
"They're very difficult to negotiate a contract with," Pickle said. The general partner of Pickle's group "was trying to get them to discount the price" because of softening real estate conditions, he said, but "they refused to do it."