Publicly Walt Disney

Ch. 3: “Project Mickey” from Divestment to Disneyland

J. Begakis

Before Disneyland, Walt Disney tried and failed at a similar, albeit less risky, investment than a owned and operated theme park.^[1]

In 1938, one year after the successful premiere of Walt Disney Productions (WDP) full-length animated feature film, Snow White and the Seven Dwarfs, Disney announced to the press his plans to build a sports club in Pasadena, CA.

The Pasadena project was Disney’s first attempt to create an entertainment and recreational complex that was physically separate from the WDP animation studios.^[2] 

Disney’s project ultimately failed during contract negotiations with city officials. Though short-lived, with talks beginning and ending within one year, the investment faced considerable opposition from residents.

Yet beyond the price tag, Walt Disney’s failed negotiations with Pasadena city officials exposed WDP to a new reputation risk.

After all, the Pasadena project made newspaper reports soon before contracting arrangements fell through. Walt Disney’s name was featured in national newspaper headlines with news of Pasadena residents calling the proposed sports facility a “public nuisance.”^[3]

In the early 1940s, company executives and shareholders were uneasy about such negative publicity. Within a year of its IPO, WDP was soon reporting reduced revenue on films due to the outbreak of war in Europe.

The company board of directors took immediate steps to conserve capital expenses, including deferring quarterly dividends to stockholders.^[4] Likewise, new brick and mortar investments outside of the studio, like Disney’s ill-fated Pasadena project, required capital that the public company was unwilling to spend.^[5]

As the publicly traded animation and film company saw it, Walt Disney’s pet projects were financial liabilities and a potential threat to the animation studio’s public image. At best, Walt Disney’s plan in Pasadena needed more company oversight to be a success, and at worst, his ideas were flimsy, and his use of company funds was reckless.^[6]

Disney’s failure suggested to the firm that new entertainment business beyond the Burbank studios was too dangerous a brand risk. The potential for the WDP brand to lose value by failing in a new entertainment market was too taxing on the struggling firm.^[7]

A failed investment was one thing, but bad press about Walt Disney might cast a shadow over the animation and film studio’s sterling reputation. And having blundered in public once already, might another bad Disney deal hurt the good Disney name?

Walt Disney was WDP’s greatest asset, at least, he had been. When the Disney brothers incorporated WDP in 1929, Walt’s name was the film company’s most distinct feature.

By the early 1940s, Walt Disney was as visible to moviegoers as were his famous animated characters.^[8] Just as Mickey Mouse was the recognized star of the animation studio, the name Walt Disney was displayed and announced prominently in the opening credits of every animated short and full-length feature film.

Walt Disney’s status as a Hollywood producer rose along with the success of Snow White and the Seven Dwarfs. He continued to appear in popular magazines, attended industry award shows and Hollywood film premieres.

While Roy Disney kept a low public profile as the CEO of WDP until his brother passed away in 1966, Walt Disney made himself visible to the press and public. Disney also enjoyed playing polo with Will Rogers at the Rogers estate in Pacific Palisades, California. Polo was one of Disney’s favorite leisure activities, and where he met several famous faces who became close friends.

By the time WDP went public in 1940, Walt Disney seemed to liked socializing with his Hollywood pals as much, if not more, then he took pleasure in running day to day operations at his film studio.

Yes, Disney’s Pasadena project is lesser known then his company’s success in animation in the late 1930s. However, his failure helps explain why Walt Disney later sought the help of R&D experts to assist him in planning Disneyland.

And on top of that, the consequences of his failure directly affected the existing organizational structure of the young publicly traded company and paved the way for WDP’s new investment strategy.

Next: Divesting in Walt Disney

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^[1] WED Enterprises. 1953. Copyright University of Central Florida Special Collections. 1.8

^[4] “Disney Security Offering Filed: Company Registers Issue of 155,000 Shares Preferred with S.E.C. Disney Security Offering Filed.” Los Angeles Times. Mar 14, 1940., “Disney Confirms Financing Plans.” Los Angeles Times. Feb 23, 1940., “Disney Will be Host at His New Studio.” Los Angeles Times. Aug 27, 1940.

^[5] Already reporting reduced revenue on films due to the war in Europe, directors of WDP voted to defer quarterly dividends to conserve capital. “Disney Passes Usual Dividend: Europe War Loss and Desire to Conserve Capital Prompt Step.” Los Angeles Times. Jun 13, 1941.

^[6] In a minority stockholder suit, Disney is accused of receiving “unreasonable, excessive and out of proportion” compensation from WDP between 1947 and 1951. The same year members of the board directors began negotiating a divestment deal with Disney. “Disney Target in Suit of Company Stockholder: Contracts for Compensation Under Attack; Accounting also Demanded in Complaint.” Los Angeles Times. Jun 18, 1953.

^[7] Before Pasadena, in 1938, Disney purchased 51 acres of land in Burbank, between Riverside and Alameda, to expand the studios. Chapter two highlights the development of WDP’s new studio, including designs intended for public access and small press tours. Additionally, the chapter focuses on the failure of Disney’s independent Pasadena project. “DISNEY STARTS WORK ON STUDIO: FOUNDATIONS LAID FOR $1,000,000 PROJECT.” Los Angeles Times (1923-1995), Mar 19, 1939., “Disney Erecting Preview Theater.” Los Angeles Times (1923-1995), Dec 17, 1939.

^[8] “Analysis of the fan mall received at the Disney studios addressed to the cast of ‘Snow White and the Seven Dwarfs’ indicates that little Dopey almost succeeded in stealing the show from Snow White, the heroine of Disney’s first feature length production. Management of the Carthay Circle Theater, where ‘Snow White’ is not in its eleventh week, has provided post cards for patrons to mail to out-of-town friends. But each week an increasingly large number of cards arrive at the Disney studio addressed to the characters of the production.” “Fan Mail Sent to Characters in Cartoon.” Los Angeles Times. Mar 11, 1938.