When someone gives you an extravagant gift -- like, say, $400 million -- what's the appropriate way to say "thank you"? An enormous box of chocolates? A really big Hallmark card?
That's the question that recently bedeviled executives at the Walt Disney Co. They wanted to show their appreciation to Compaq, the Houston-based computer corporation, which last April had agreed to put up $300 million to sponsor Epcot's "Mission: Space" pavilion. Moreover, last November, this Fortune Global 100 firm followed up by offering to buy $100 million worth of advertising on the floundering Disney Internet Group.
Mind you, both of those are in addition to the high-tech company's sponsorship of Disneyland's "Believe -- There's Magic in the Sky" show, which debuted this past September. This nighttime pyro pageant -- the most elaborate fireworks display ever presented in the Anaheim park -- is rumored to be bound for Orlando's Magic Kingdom, perhaps as the daily "grand finale" of the Florida resort's yearlong "100 Years of Disney" celebration that kicks off in October.
Compaq does all this, plus underwrites "Innoventions" exhibits at Disney theme parks on both coasts, as well as serves as a key sponsor of Disney Quest, Mickey's underperforming entertainment chain. But the relationship doesn't even end there: as part of its 10-year corporate alliance forged with the Mouse last spring, Compaq also agreed to provide the Disney Co. with all the servers, PCs and services it needs.
So what's the appropriate way to thank a corporation for this level of generosity? For agreeing to pour nearly a half-billion dollars into various Disney projects over the next decade? The Mouse just did what it usually does: It sent Compaq a bill.
You see, Mickey wanted Compaq to cough up still more cash, although the connection is a little more discreet. Last fall, when Disney announced the launch of its revamped Disney Club membership rewards program, Compaq employees were among those affected. Until that time, those employees previously were allowed to enroll for free in the "Magic Kingdom Club" program, which allowed members to book discounted vacation packages to Disneyland or Walt Disney World. With the change, Disney dropped the free memberships and told Compaq employees that they would now be charged $29.95 for the same privileges.
The folks in Compaq's human-resources department weren't too thrilled with Disney's decision, and said as much in a company-wide e-mail. In this broadly distributed message, Compaq's HR staff discussed the options they were considering. Among these were dropping Disney and going instead with a discount vacation program that Universal Studios had offered to extend to all company employees at no cost.
When word got back to Burbank that Compaq's people weren't happy, Mickey quickly tried to make nice. Though it refused to back down on that $29.95 enrollment fee, Disney did offer up a special, one-time-only 10 percent discount for all Compaq employees who were willing to spend $50 or more when they shopped at The Disney Store over the recent holiday season.
Rather than helping the situation, this gesture just seemed to make the folks in Houston even madder.
Compaq's displeasure with Disney deepened last week with the Mouse's surprise announcement that it was shuttering its Go.com Internet operation. One of the main reasons the computer giant had even agreed to become the "preferred technology provider" to Disney was the high visibility Compaq was supposed to gain from being associated with Disney and Go.com. Now that Go.com is gone as of March 1, that $100 million commitment to the Disney Internet Group doesn't seem like such a smart investment anymore.
What makes this particularly difficult for Disney is that they were actually looking to strengthen their corporate ties with Compaq -- i.e., get the Texas firm to dig even deeper into that wallet. Chief among these plans was getting the computer company to sponsor a major attraction at Hong Kong Disneyland, which is scheduled to open by 2005. Mickey was hoping that Compaq would pay big bucks for the privilege of exposing its brand name to all those Far East consumers.
Well, don't count on it.
Unfortunately, the Walt Disney Co. never seems to remember that it doesn't pay to continually gouge and abuse its corporate sponsors. Witness what happened after the long-delayed launch in Orlando of "Test Track." General Motors was so furious with how Disney handled this troubled Epcot attraction that it pulled out of a deal to sponsor an attraction at Disneyland. Without GM's money, the "Rocket Rods" ride in Anaheim was a complete disaster. Constantly plagued with technical problems, this thrill ride operated for only two years in Disneyland's Tomorrowland until it was shut down in September, apparently for good.
So Disney might want to consider carefully its next move when it comes to the Compaq corporation. For if they throw the computer giant yet another unexpected curve, it might not be just fireworks over Disneyland that explode. It could be the whole $400 million-plus sponsorship agreement with Compaq that blows up in Mickey's face.
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