What's behind the Coke-Disney talk

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By Jeff Jensen and Mark Gleason

Take your pick: the power of Michael Ovitz or the power of Mickey Mouse.

Executives familiar with Coca-Cola Co. and Walt Disney Co. broke into two camps last week after reports indicated the companies are considering an advertising joint venture. One camp thinks such a venture would simply be a bow by everyone involved to Mr. Ovitz, an entertainment power broker. The other camp thinks a broader co-marketing alliance would help Coca-Cola leverage the power of Disney and help Disney break new ground in relationships between advertisers and entertainment companies.

Neither would comment on reports they will form a company to take over creative responsibilities on Coca-Cola Classic, now handled by Creative Artists Agency, Beverly Hills, Calif., where Mr. Ovitz was chairman before joining Disney as president in August.

But several observers said such a limited joint venture could be little more than a short-term political move to help Mr. Ovitz save face in the wake of his job change. For Coca-Cola's part, keeping a relationship alive with Mr. Ovitz would be the objective.

In fact, there might be little new work on Coke Classic in the next 12 months, since CAA recently produced 11 spots for the brand and Coca-Cola will emphasize the Olympics in much of its 1996 advertising. Wieden & Kennedy, Portland, Ore., is creating most of the Olympics ads.

Coca-Cola has often said it is delighted with CAA, which took over the business in 1991 from McCann-Erickson Worldwide, New York, and said last month it is committed to staying with the talent agency despite Mr. Ovitz's departure. "The `Always Coca-Cola' campaign is building the brand's business around the globe," said a Coca-Cola spokesman, noting that the two people leading the Coca-Cola account at CAA, Len Fink and Shelly Hochron, are still there.

Speculation is that Mr. Fink and Ms. Hochron would follow the account to Disney, based in Burbank, Calif. But sources said Coca-Cola President-Chief Operating Officer M. Douglas Ivester is not a big fan of Mr. Ovitz.

Coca-Cola and Disney already are promotional partners in some ways, which is why some executives think a joint venture would expand this relationship, given the new media and entertainment products Disney is working on developing as it approaches a merger with Capital Cities/ABC.

"Disney will develop more partnerships with advertisers, because partnerships with advertisers are going to increasingly make sense for entertainment companies and for major advertisers who will need access to entertainment properties to drive the sales of their products," said Michael Wolf, a partner and head of the entertainment and media practice of Booz Allen Hamilton, New York.

Mr. Wolf said Disney will likely develop such alliances with marketers in "every major consumer product category."

There already are other examples of big advertisers linking with entertainment companies. One is Procter & Gamble, which is pumping $120 million into a three-year programming deal with Paramount Television Group.

Hollywood sources say there would be a downside for Coca-Cola in linking itself closely to Disney: a backlash by other movie studios. The company already has weak relationships with many studios, sources said, and a Disney deal would almost sever those, resulting in fewer promotional tie-ins and product placements.

For Disney's part, the Capital Cities/ABC merger raises some questions about co-marketing, since ABC isn't in a position to sign exclusive deals with advertisers. But there could be many ways around that, including keeping ABC out of any exclusive marketing agreements.

Agency executives doubt a Coca-Cola-Disney marketing unit would take over Disney's own advertising needs. It now uses several ad agencies, including Leo Burnett USA, Chicago; Hal Riney & Partners, San Francisco; and Rubin Postaer & Associates, Santa Monica, Calif.

If a Coca-Cola-Disney deal doesn't develop, but Coca-Cola still decides to leave CAA, it has many other options, with more than a dozen agencies on its roster. Those with a high profile with Coca-Cola recently include Wieden, with its Olympics work; Burnett, which reversed Coca-Cola's trend of giving new business to smaller shops by winning Fruitopia last spring; and Fallon McElligott, Minneapolis, and its sister shop, Fallon McElligott/Berlin, New York, which have won several smaller brand accounts and projects recently.

Contributing: Joe Mandese, Alice Z. Cuneo and Pat Sloan.

Copyright October 1995 Crain Communications Inc.

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