Disney’s Lukewarm Response in China Flap Is a Wasted Chance for Industry

So Walt Disney Co. finds out it’s a small world after all. Sometimes too small for comfort.

Last week, the company was forced to choose between artistic freedom and its yearning to sell millions of cuddly Dalmatian plush toys after the Chinese government dropped not-so-subtle hints that Disney’s expansion plans there were at risk if the studio releases Martin Scorsese’s upcoming film “Kundun” into U.S. theaters.

The film is about the Dalai Lama, the exiled Tibetan leader who is a thorn in the side of China’s dictators, having won a Nobel Peace Prize in 1989 for drawing attention to China’s occupation and brutal treatment of his homeland. Release the movie into multiplexes in Milwaukee and Palmdale, Chinese leaders hinted, and we’ll have second thoughts about that theme park you might want to build someday near Shanghai.

After doing everything it could to dodge the bullet and distance itself from the film, Disney inexplicably won gushing praise on editorial pages nationwide. One cartoon showed Mickey Mouse standing in front of a line of tanks, reminiscent of the photograph of a lone Chinese dissident boldly confronting tanks during the 1989 slaughter of protesters in Beijing.

Disney made the right choice because it was the only choice, something company executives now privately admit. No studio worth the crystal in its executive dining room could allow a foreign country to dictate whether it could distribute a movie in the U.S. and have any face left in Hollywood. The decision, hailed as a bold one, instead came down to a terse one-sentence statement: “We have an agreement to distribute the film, and we will honor it.” In other words, we’ll abide by the contract.

What makes the incident disturbing is that Disney--and all the Hollywood studios, for that matter--blew a rare opportunity to do something more noble. They could have sent an assertive, unified message to a totalitarian regime that some things matter more than 1.2 billion people with disposable income to spend on entertainment.

The tepid response from Disney suggests a much more troubling concern as huge entertainment conglomerates spread their interests all over the world. As a preemptive move, studios may simply steer clear of projects that might offend authoritarian regimes in markets they want to enter. Indeed, some Hollywood executives say MCA’s Universal Pictures shied away from “Kundun” because parent Seagram Co., the liquor and beverage giant, sees China as one of its big potential markets. MCA sources deny that was a factor, saying the film was rejected because executives doubted it would make any money.

Disney didn’t exactly seize the moment. It treated the issue as it does most unwanted controversies--like a migraine it wished would go away. Reporters were admonished for writing about it. One top executive told a reporter there was no story here, putting it in the genre of a supermarket tabloid piece.

“Kundun” was characterized as a small, inexpensive movie, as if to say that it’s only the big-budget ones that matter. All comments were off the record, of course, because God forbid anyone should attach a name or face to them.

As for details, getting information about the company’s involvement was like pulling teeth with a plumber’s wrench. London’s Financial Times, which lit the fuse of the media controversy, came away under the impression that Disney was claiming no involvement in the production. This paper was initially told that Disney had only an “option” to pick up the film, as in “we don’t have to release it if we don’t like it.” Hardly the vote of confidence a respected filmmaker wants.

After some time and prodding, Disney finally clarified things by acknowledging that it, indeed, would be the domestic distributor and, by the way, it was also helping to bankroll the movie. That’s what the company was trying to say all along, it added. Any contradictory versions were attributed to misunderstandings by company officials, or sloppy reporting.

Even giving Disney the entire benefit of the doubt, there was something missing here: an opportunity to do something that would speak volumes more than any of the self-serving, humanitarian awards Hollywood executives routinely hand out to each other every year.

Rather than adopting an elusive strategy, how about something like this: “Yes, we are the domestic distributor of ‘Kundun.’ Not only that, but we are also helping to finance the movie. We are proud to be involved in a film about such an important topic, and to be in business with a distinguished filmmaker like Mr. Scorsese, who we know delivers the goods. If it means we will have more trouble selling ‘Toy Story’ videos in China, then so be it.”

Add the names of Chairman Michael Eisner and President Michael Ovitz to it because nothing resonates like a statement from the top.

In tandem, the other studios--through the Motion Picture Assn. of America trade group--could have put aside the petty differences that obsess them daily and backed Disney in a Burbank minute, burning up the fax machines with statements of support. When confronted with a First Amendment issue, the bitterest of rivals in the broadcast and print media find themselves on the same side because they correctly perceive that a threat to one is a threat to all. Instead, the MPAA, which has been at the forefront of criticism of China’s piracy of U.S. entertainment products, declined to take a position.

The heart of the problem is that Hollywood executives have salivated for too long over China’s enormous numbers, tripping over each other to boast about who is making the most progress toward tapping a population that is nearly five times larger than that of the United States. “Do the numbers” is the common refrain, as in multiply the number of people by the amounts they might want to spend on Hollywood product.

No one seems willing to put down their calculators for a minute to ask whether there is some sort of Faustian deal being cut here. In the end, of course, China’s people will want what Hollywood turns out. But if Chinese officials are convinced for now that Hollywood is willing to do just about anything to do business in their country, who can blame them?

Daewoo Going Hollywood? Korean industrial giant Daewoo, one of the financing partners in an unsuccessful bid for Metro-Goldwyn-Mayer with producer Creek, is in talks with MCA about providing a chunk of money that could finance as many as 12 films, sources say.

Under some of the scenarios discussed, they said, the conglomerate could finance as much as one-third of the budget of some films, owning a piece of each film as well as getting Korean rights.

Daewoo is said to be interested in a strategic partnership in Hollywood, as well as building a library of rights to films in Korea that it believes will increase in value over the years.