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Disney In Washington: The Mouse That Roars

By Alan K. Ota, CQ Staff Writer

On a recent Tuesday afternoon when the Senate halls were humming, Walt Disney Co. chairman Michael D. Eisner dropped in for an unpublicized chat with Senate Majority Leader Trent Lott. What did Eisner want? Plenty, it turned out.

At the top of his list that includes tax breaks, visas for animal trainers and transportation to Disney theme parks, was a request for Congress to help his company's highest priority: HR2589, a bill to extend the soon-to-expire copyright on Mickey Mouse -- Disney's most precious asset.

Before he left the spacious offices of the majority leader at the U.S. Capitol on June 9, Eisner was assured that his company's pet bill would get the help it needed.

"He was very much interested in seeing the copyright bill," Lott said of their brief conversation. "It's being considered. I think we need to do it. I agree with him."

The unheralded conversation between the Senate majority leader and the corporate executive with close Democratic ties demonstrated the bipartisan reach and the behind-the-scenes lobbying tactics of the nation's biggest entertainment company.

At stake are billions of dollars in revenue for the media giant. Critics -- including consumer groups, librarians and other entertainment companies -- question whether one company should get preferential treatment for sweeping legislation it wants to ensure that the company can continue charging premium prices for videos and other products featuring Mickey Mouse and a menagerie of other popular cartoon characters.

The bill would extend by 20 years the 75-year copyright that covers movies. It would grant Disney exclusive rights to the images for another generation and make it harder for them to be reproduced by other manufacturers when copyrights run out.

Disney's campaign, conducted almost entirely behind the scenes, is typical of what industry insiders say is a company that jealously guards its image as a marketer of family entertainment instead of a savvy business and political force.

In Hollywood, where partisanship reigns and Democrats have dominated, Disney strictly avoids tilting toward either party.

"Mickey Mouse is not a Republican or a Democrat," said Joe Shapiro, who oversaw Disney's Washington lobbying office in the early 1990s. "If you take a strong position either way, you are looking at offending roughly half of the people. Michael Eisner is very informed about public policy issues. But as a matter of personal style, he's not out front. I believe he doesn't think it's appropriate."

Nevertheless, the Disney empire opened an office and hired lobbyists in Washington in 1990, and it has become an influential force on legislation. Among its activities:

  1. It is one of the top media conglomerates contributing to political campaigns. Recipients of campaign money include members of key committees such as Sen. Patrick J. Leahy, D-Vt., a family friend of Eisner and ranking Democrat on the Judiciary Committee, and Rep. Howard Coble, R-N.C., chairman of the Judiciary Subcommittee on Arts and Intellectual Property, which oversees copyright issues. It has contributed nearly $800,000 to political campaigns in the 1997-98 cycle.

  1. It has courted members of the congressional delegations from California and Florida, where its theme parks pump billions of dollars a year into local economies in Orlando, Fla., and Anaheim, Calif.
  1. It has begun a major reorganization that will combine the lobbying firepower of Disney and its subsidiary ABC Inc., under Preston Padden, who left his job as president of ABC Television Network Inc. to take over the task of upgrading Disney's lobbying operation. Disney spent more than $1.5 million on lobbying last year.
  1. It took a leading role in Hollywood in promoting closer ties to Republican leaders to help move legislation. On June 29, three weeks after Eisner's meeting with Lott, Disney sent John F. Cooke, executive vice president for corporate affairs, to a meeting hosted by another major Hollywood company, Universal Studios, a subsidiary of The Seagram Co. Ltd., in Studio City, Calif., to discuss legislation with Speaker Newt Gingrich, R-Ga., and Reps. David Dreier and Mary Bono, both from California. (Story, p. 2170)

In February, the company paid $2,700 to host Gingrich and his wife, Marianne, for three days at Disney Institute, the company's educational facility in Orlando. Gingrich gave a speech and visited Disney's new Animal Kingdom theme park.

Low Profile

But Disney is discrete about its strategy. Eisner, Cooke and other Disney executives declined to be interviewed for this article about the company's activities on Capitol Hill.

"We regard our lobbying as proprietary to us. We don't wish to talk about it," said spokesman Thomas J. Deegan.

Shapiro, the company's former general counsel, links the company's reticence to a corporate culture built around protecting the company's image as a maker of family entertainment.

"We don't want to be obtrusive in making our point," said Shapiro, who left the company four years ago. "How does it enhance Disney value to shareholders to have the company perceived as a bunch of high-powered lobbyists? We want them to think of the people at Disney as clever filmmakers and theme park operators."

But Padden, 49, who is one of four executive vice presidents and who reports directly to Eisner, signaled that he is about to change some things. In an interview with Congressional Quarterly, he said he would be trying to formulate a new style and a new agenda for the Disney lobbying office.

And he made clear that Disney's policy of not discussing its lobbying operation with the media could change under his leadership.

"We're working out a style for the office and an agenda," he said. "The two companies [ABC and Disney] merged two years ago, but the lobbying offices were kept separate. Now we are looking at combining resources. We think we can help each other achieve our goals."

Disney's Agenda

Corporate mergers and acquisitions have transformed Disney from a specialist in children's entertainment into a media conglomerate with holdings in broadcast and cable television stations, theme parks, and professional hockey and baseball teams.

And with its empire growing, Disney is faced with a burgeoning array of legislative needs from Capitol Hill, forcing it to reorganize and broaden its lobbying base.

But Disney learned its lesson about Washington the hard way.

In 1994, the company suffered a stinging defeat when it belatedly came to Capitol Hill to build congressional support and overcome local opposition to the proposed Disney's America theme park near the Shenandoah National Park in Virginia. Eisner intervened personally to host a luncheon on Capitol Hill and a glamorous movie premiere for "The Lion King."

The movie showing backfired when picketers showed up with signs reading, "No Orlando in Virginia" and "Eisner the Lyin' King."

After a yearlong battle, Disney retreated. "We got a political campaign against us the likes of which I've never seen," Eisner said after announcing Disney's retreat. He said the company was "killed day in and day out" by opponents and local media stories.

Determined not to be blindsided again, Disney has regrouped under Eisner's direction. Three years ago, the company added a well-connected lobbyist, former Maine senator and Majority Leader George J. Mitchell (1980-95), a Democrat, to its board of directors.

And under Padden, Disney will likely move away from its near-exclusive reliance on an in-house lobbying operation.

Padden said he would consider bringing a more diverse approach that will rely on both in-house lobbyists and outsiders. In 1997, ABC paid $300,000 to Timmons and Co. Inc., a firm with close GOP ties, to help Disney make its case on Capitol Hill last year.

"Preston Padden is not a bashful person. He will give the Washington office a higher profile," said James B. Hedlund, president of the Association of Local Television Stations. Padden headed the association as president in the 1980s before becoming an executive first for Rupert Murdoch's News Corp., then for ABC.

The Copyright Extension Fight

Under Padden, the company's sharply honed lobbying operation has begun a final push to promote the copyright term extension bill (HR2589) on Capitol Hill this year.

Without copyright term extension, the company faces the potential nightmare of seeing its greatest treasures pass from corporate possession into the public domain.

The copyright for Disney's crown jewel, Mickey Mouse, will expire after 2003, 75 years after the appearance in 1928 of the Disney cartoon that launched Mickey's golden career, "Steamboat Willie."

In fast succession, copyrights will end for Pluto in 2006 and Goofy in 2008. Early in the next century, protections also will expire for Bambi, Dumbo, Donald Duck, Snow White and all the Seven Dwarfs.

Without copyright, Disney would collect no fees for the showing of classic movies such as "Fantasia," and other companies could freely use its characters in their movies and videos.

When he visited Capitol Hill in June, Eisner met personally with a number of lawmakers and insisted that the copyright term extension was vital to the company's future.

Despite the company's vaunted clout, Disney faces a tough fight in Congress, where a wide range of interests including consumer groups, libraries, restaurants and small businesses have raised questions about media companies' efforts to extend and toughen copyright protection.

Critics of the bill argue the companies already have earned plenty of money from classic movies and should now allow other companies to offer videos and other products based on these works when copyrights expire.

But Disney and Jack Valenti, president of the Motion Picture Association of America, say the copyright term must be extended by 20 years, to 95 years, to match a change adopted by the European Union.

That would allow American companies to maintain their stream of revenue by collecting premium prices for works and keeping up with European rivals that already are able to claim 95-year copyrights. American copyrights currently last for the life of the creator of an artistic work plus 50 years, or, if the work was produced by a company, for 75 years.

Consumer Opposition

Consumer groups oppose the extension, charging that the original purpose of copyrights -- to provide benefits to human creators of cultural works and nurture production of more works -- has been lost. They say the biggest benefits of copyright extension will flow to large companies and investors.

"The bill is moving because it is supported by big entertainment companies like Disney," said Jamie Love, director of the Consumer Project on Technology, an advocacy group opposed to tougher copyright laws.

Adam Eisgrau, a lobbyist for the American Library Association, contended the bill would merely preserve Disney's premium prices.

"After 75 years, these classic movies belong in the public domain like the works of Shakespeare and Mark Twain. Works in the public domain are more accessible to more people at lower prices," Eisgrau said.

Disney replied in a statement portraying copyright extension as a matter of giving American entertainment the same rights that the European Union gave to European companies.

"It is important that the United States and its artistic talent not be disadvantaged in the worldwide market for creative properties," the company said.

Coble, the bill's sponsor, agreed with Disney, adding that it was important to ensure the financial health of companies that create jobs.

His copyright extension bill passed the House by voice vote March 25. But it remains bottled up in the Senate Judiciary Committee by opponents of a controversial House floor amendment. The House voted 297-112 to adopt an amendment by F. James Sensenbrenner Jr., R-Wis., to exempt most restaurants, bars and other small businesses from paying annual music licensing fees for piping in broadcasts from television and radio stations. The fees typically range from $200 to more than $1,000 a year, depending on the size of the business.

The Sensenbrenner amendment would exempt most restaurants, if the rooms where sound speakers were located covered less than 3,500 square feet. Songwriters and music licensing societies want a narrower exemption covering restaurants with an entire floor space of less than 3,500 square feet.

Orrin G. Hatch, R-Utah, chairman of the Senate Judiciary Committee, said the bill will not move unless the exemption is removed or reduced. Sensenbrenner defended his amendment. "If they want to separate the two issues, it won't happen," Sensenbrenner said.

Public Sensitivities

Ronald G. Shaiko, a professor of government at American University who studies lobbying by companies, said Disney has had problems on Capitol Hill, such as the long delay in getting what it wants in copyright legislation, because the legislation lacks broad grass-roots support in many congressional districts.

"Disney has very important issues confronting it on Capitol Hill," Shaiko said. "And like other media conglomerates, it suffers from the lack of a large base of constituents, employees and consumers who could help win more support in Congress."

Disney faces an additional challenge in building political support because it is frequently a magnet for criticism from conservatives concerned about the company's portrayal of sex, violence and gay rights in its movies.

Recently, several members of Congress from New York criticized Disney for its comedy movie "Mafia!" which included crude portrayals of Italian-Americans.

"They peddle a crude, dirty, uneducated caricature to sell a movie, to make a buck," said Rep. Rick A. Lazio, R-N.Y. "It's time for them to be held accountable."

Eisner replied to a wide range of groups critical of particular Disney movies in a message to stockholders earlier this year. He said the criticism came from "groups that want to leverage our strength with the public for their own ends" and focus on Disney "because it is more effective than citing one of our competitors."

Shaiko said boycotts and angry special interest groups made it harder for Disney to win political backing for its causes.

But sheer size also draws attention to Disney. Sen. John McCain, R-Ariz., made Disney a target in 1997 when he took a jab at the company's policy of not subtracting the cost of stock options paid to Eisner from net income while listing them as a deductible expense on corporate tax returns.

He said the practice used by Disney was "exactly the kind of corporate benefit that makes the American people irate and must be eliminated."

The bill, S576, cosponsored by McCain and Carl Levin, D-Mich., would have required companies to count executive stock options as an expense in financial statements in order to claim them as a tax deduction. It would have provided an exemption for companies that have broad-based stock option programs for employees. The Senate approved a resolution calling for a hearing on S576.

S576 was strongly opposed by a small group of senators who signed a letter circulated by Sen. Connie Mack, R-Fla. The letter charged that the McCain bill was "economically counterproductive and will deprive employees of the opportunity to share in the wealth they create."

Mack said he opposed the bill to help small high-tech companies, not Disney.

"Stock options are extremely important to start-up companies," he said. "My opposition was rooted in a philosophical point of view, not a company's specific perspective."

McCain said he believed Disney and other companies had quietly lobbied to help kill the bill.

Disney, McCain said, is an "800-pound gorilla. They don't really have to say much publicly. You know what they want."

Theme Park Interests

While Disney pursues its national agenda, including defense of its stock options policy, the company also pushes special legislation to help its theme parks.

Sen. Bob Graham, D-Fla., said the company has a wide range of needs, including occasional legislation to obtain visas for animal trainers and other specialized employees for its theme parks.

The 1991 surface transportation law (PL 102-240) included $97.5 million in federal funding to construct a train powered by magnetic levitation from the Orlando International Airport to a busy intersection near the company's theme park and hotels in Orlando.

Disney was one of a group of local interests that supported the project, which was designed to zip tourists from the airport to Disney-owned businesses and other restaurants and hotels.

The plan was derailed, however, when the developers were unable to raise private financing for the project.

This year, the city of Orlando and civic groups won support for a light-rail train project. The 1998 surface transportation law (PL 105-178) provided $100 million for the project that will initially run in downtown Orlando.

Supporters of the project said Disney did not play a leading role in lobbying for it. But they said Disney had recently expressed interest in the project after it was included in the surface transportation law.

Looking to the Next Century

While trying to keep costs down at its theme parks and improving public transportation links for park patrons, Disney faces challenges on a broad range of other legislative issues.

Shaiko said entertainment and telecommunications companies will likely become lobbying powerhouses in the next century.

Love, the head of the Consumer Project on Technology, which opposes tougher copyright laws, said Disney was already in the first tier of companies lobbying on intellectual property issues.

"Intellectual property is where the big fortunes are going to be made in the next century. Pharmaceutical, entertainment and software companies will have the greatest stake in that new economy," Love said.

While the future of Mickey Mouse and his friends may be up in the air, it is unlikely that Congress will act this year to deal with the copyright extension problem.

That does not bother the world of Disney one bit. It is hard at work preparing for the next celluloid battlefront.

"They are extremely good," said Robert Raben, an aide to Rep. Barney Frank, D-Mass., the ranking Democrat on the Courts and Intellectual Property Subcommittee. "They are well-informed, thorough. They know what they are doing."

© 1998 Congressional Quarterly Inc. All Rights Reserved.
Congressional Quarterly This Week

August 10, 1998

Campaign Finance Gets Day In The Sun, But Senate's Shadow Is Looming
Disney In Washington: The Mouse That Roars
House Passes Protections Against Digital and On-Line Theft
Panel Steps Up Confrontation Over Campaign Finance Memos, Voting To Cite Reno For Contempt

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