• by Wayne Friedman , July 28, 2005

Breaking with its long-standing marketing entertainment partner Walt Disney Co., McDonald's Corp. has struck a non-exclusive two-year worldwide marketing and promotional deal with rival DreamWorks SKG. Marketing executives say the deal could be worth some $100 million in paid media support for the studio.

This is a major marketing shift for the fast food restaurant's entertainment marketing efforts, say executives. It ends a 10-year exclusive deal with Walt Disney Co., which will expire at the end of 2006. The DreamWorks deal starts in 2007.

"Ten years is a very long time," said Larry Light, global chief marketing officer at McDonald's, in a press conference. "The world changes more than once in 10 years. I don't anticipate that we'll be making 10-year deals in the future with anybody."

Speculation surfaced last year that Disney would move to another studio, especially when Pixar Animation Studios--one of Disney's main producers of animated and family theatrical fare--was considering leaving its distribution deal with Disney. Pixar has provided many major hits for the studio, including "The Incredibles" and the "Toy Story" franchise.

For its part, Disney is still attempting to work out a deal with Pixar, an effort pushed by its new incoming chairman, Bob Iger. A McDonald's spokeswoman says talks are continuing with Disney for a possible non-exclusive deal, as well as discussions with other studios.

The first DreamWorks film for McDonald's will be a tie-in with "Shrek 3" slated for release in 2007. This will include using the longtime kids' promotional tool, McDonald's Happy Meals. McDonald's has committed to at least three theatrical movies over the course of the two-year deal.

Typically, McDonald's might spend as much as $20 million to $30 million or more in media for a major summer or holiday movie, usually the highest of any movie marketing partner. Marketing executives say McDonald's broke ground for other consumer product companies--autos, cell phones, technology companies, and packaged good companies--to also strike major theatrical marketing deals.

At the time the Disney/McDonald's deal was made in 1996,the agreement was rumored to be in the $500 million to $1 billion range. Disney was then the primary distributor of kids' and family movies--and was a natural fit for the fast food company whose big consumer base is primarily that of families and kids.

But other studios emerged in the late 1990s to compete with Disney for those kinds of movies, including Warner Bros., 20th Century Fox, and the newly formed DreamWorks. McDonald's rivals such as Burger King struck non-exclusive marketing deals with studios--which gave Burger King a greater variety of movies to chose from for its deals. One of those deals was with DreamWorks. DreamWorks Chief Executive Jeffrey Katzenberg was a long-time executive at Disney, steering the company into big-time animation hits such as "The Lion King" and other movies.