• by Diane Mermigas , April 29, 2008

The uproar over suggestive photos of "Hannah Montana" star Miley Cyrus in Vanity Fair underscores the Walt Disney Co.'s ongoing struggle and success with the lucrative tween audience.

The endurance of its franchises is what company management has coined the "Disney Difference." However, catering to tweens and even the teen audience has proven to be a slippery slope that defies what Disney boasts as its tight controls. The age 10-12 tweens and the teen years are notorious for being as free-spirited as they are free-spending.

"High School Musical" star Vanessa Hudgens, 18, posed nude for her boyfriend--and the pix were posted on the Internet. Lindsay Lohan, a Disney veteran, posed nude as a Marilyn Monroe wannabe in Vanity Fair earlier this year. In the magazine, Cyrus, 15, poses solo and with her dad, country singer and actor Billy Ray Cyrus. Cyrus was even quoted in the accompanying story as saying she thought the photo of her alone and bareback, clutching silk fabric to her front, was "really natural...really artsy."

Like Hudgens, Cyrus immediately issued an apology to fans--even though both willingly engaged in the photo shoots. What isn't clear is: How much was face-saving and/or the orders of Disney. In the case of Cyrus' Vanity Fair photos, taken by famed photographer Annie Leibovitz, it's hard to imagine that Disney didn't know about it. A Disney Channel spokesperson has been quoted as saying "a situation was created to deliberately manipulate a 15-year-old in order to sell magazines."

Only time will tell how much the incident helps, rather than hurts, the "Hannah Montana" "good girl" brand as it positions itself to mature with its audience. Also at stake with every brand encounter--in whatever medium--is what Disney chairman and CEO Bob Iger says is the company's unique "ability to leverage success across all businesses and territories" around the world.

"Hannah," which began as a Disney Channel cable offering, is rapidly blossoming into a $1 billion franchise. Which is why Disney will not retreat from a little controversy that started to gain traction last week, thanks to an on-air tirade by Fox News' Bill O'Reilly.

But the tacit acceptance of Hannah undressed in Vanity Fair, at a time when the country is twisted over the abuse of children in Texas, is a bizarrely conflicted picture of values. That it involves Disney, which positions itself as a beacon for appropriate children's fare, makes it all the more troublesome. As Iger said in Disney's last earnings call: "The Disney name itself differentiates us as a brand that people seek out and trust. It opens doors to new platforms and markets and hence to new customers. It also greatly lengthens the potential lifespan and the value of our creative output."

The quandary for Disney is that it will hand off these big stars to another media company if it can't find a way to continue capitalizing on them in-house. Hannah Montana has thrived on cable, live concerts, CDs, products and a recent 3-D concert film that has grossed $60 million. "Hannah Montana" will soon be making the leap to the silver screen. It cuts a swath of revenue generation and profits across most of Disney's major business categories. So, if a franchise falters, it could hurt everywhere.

The tween constituents are increasingly more challenging to address. It is an irony that media players have contributed to how quickly kids grow up by reinforcing behavior and setting expectations in TV programs, movies, music and even video games--all of which generate mounds of merchandise.

The Hannah Montana concert tour is among the top 10 Internet pre-sales for events and movies, according to MovieTickets.com. When online brokers snatched up thousands of the $63 concert tickets, fans had to fork over $350 to $2,000 for a seat. The concert and the popular "Hannah Montana" series have been constructed around a chaste middle-school character. Rejected by peers by day, she's a pop star by night. "Hannah" soon will be have her own video game, theatrical film, and soundtrack album and clothing line. It is the same path to success traveled by "Lizzie McGuire" tween star Hilary Duff. Cyrus also has received $1 million to pen her autobiography for Disney-Hyperion Books.

Disney's unparalleled brand-licensing machine drove growth in calendar 2007, and could help weather the 2008 recession, analysts say. Nielsen Media says two-thirds of children age 6 to 14 are "Hannah Montana" fans--and parents support their passion.

At the heart of Disney's success is the proper cultivation and close protection of its brands into long-time profit centers. That is where its tween franchises are different. They are valuable for a brief period, during which its stars and audience are most vulnerable to changing values and external influences. The risk to Disney vis-à-vis Cyrus may ultimately be that it is happening on its turf, which it defines as one of the last bastions of carefully crafted entertainment for children and tweens.