Disney may be poised for a Coca-Cola break

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ABC. Michael Ovitz. Rockefeller Center. Three American icons that, in a span of mere weeks, have been annointed for annexation to the Disney empire. What's next on Michael Eisner's shopping list, Coca-Cola?

Actually, that notion isn't all that ludicrous.

Walt Disney Co. and Coca-Cola Co. already have a strong marketing affinity and a common legacy as two of America's leading lifestyle exporters that would make them an ideal combination.

And newly anointed Disney president and Coca-Cola confidant Michael Ovitz could be just the matchmaker to make that marriage happen.

At the least, Mr. Ovitz's ascension at Disney will mean a deeper marketing alliance between the two venerable brands, which have always shown a strong marketing affinity.

"If you look at what Michael Ovitz has already delivered for Coca-Cola in terms of both awareness and sales, the company is going to continue turning to him for help," said Michael Wolf, partner and head of the media and entertainment practice of Booz Allen & Hamilton, New York. "The only difference is that Michael Ovitz now has a broader set of tools with which to help the Coca-Cola Co."

But Mr. Ovitz's departure as chairman of Creative Artists Agency--the Beverly Hills, Calif.-based talent agency he founded, and which he helped land the Coca-Cola Classic advertising account--raises questions for the future of the Coke business at CAA, as well as the agency itself.

Officially, both Coca-Cola and CAA say they see no imminent change in their relationship, but observers believe the Coke Classic account is now vulnerable.

"I think it may open the door just a crack for existing Coke agencies to get more work or for a non-Coke agency to get some work, but only a crack," said a high-ranking ad agency executive who asked for anonymity. "Mike Ovitz was the reason why they gave the business to CAA."

Mr. Ovitz's move from CAA also raises important questions about the marketing strategy and agency relationships at Disney. That, and its impending merger with Capital Cities/ABC, will likely lead to a reassessment of the company's corporate marketing strategy.

Executives familiar with Disney's structure said that even before the hiring of Mr. Ovitz, Disney had considered establishing a corporate marketing chief who would oversee all of the company's disparate marketing, as well as creative and media strategies.

Disney units currently manage their own marketing on a very decentralized basis, with many of the units--such as the movie studios--essentially acting as in-house agencies, subcontracting work out as needed.

One of the few Disney units to use a full-service agency is Walt Disney World, which recently hired Leo Burnett USA, Chicago.

Burnett is an interesting prospect for an increased Disney role, because it also is now a significant player on Coca-Cola's business.

Another interesting Disney account situation is Western International Media, Los Angeles, which handles all its media buying.

Recently, Disney conducted an internal assessment of Western's media services that concluded that the media account should not be opened up for a general review.

But the Western/Disney account also raises interesting relationship implications. Western is owned by Interpublic Group of Cos., also the owner of McCann-Erickson North America, which lost the Coke Classic account to Mr. Ovitz's CAA and which is said to have created bad blood between Mr. Ovitz and Interpublic Chairman Phil Geier.

Whether that tension could emerge as a conflict in the Western/Disney relationship remains to be seen, but executives close to the account believe Mr. Ovitz is relatively close to Western Chairman Dennis Holt. Moreover, they note that Western services Disney's media at a rate that would be hard for others to beat.

"Western, by and large, is the only corporatewide glue they have in marketing. Western buys media for all the divisions," observed an executive intimate with Disney's marketing organization.

The executive said it is unlikely Mr. Ovitz will make any immediate changes in marketing, but that once he has had time to absorb his new role and assess the blending of Disney's Cap Cities subsidiary, he will likely seek to re-evaluate its corporate marketing structure.

Interestingly, Cap Cities also has an extremely diffused marketing structure that delegates virtually all marketing and advertising decisions to individual operating units.

The Cap Cities approach, however, has kept the company from embracing the kind of big integrated marketing initiatives undertaken by CBS, NBC and Fox, that have leveraged those networks media assets into massive joint-promotions with major marketers.

At least that part is expected to change under Disney management, if only to more closely tie Disney's marketing to those ABC assets.

In the weeks following the announcement of its merger with Cap Cities, Disney has reached out to several network TV marketing executives about positions within Disney, including the vacant post of head of marketing of Disney Television.

All this merging and consolidation leads some observers to wonder if Mr. Ovitz won't seek to appoint a corporate marketing chieftain to manage the massive marketing organization.

"There's only one missing piece in this organization, a marketing, advertising and media czar," said an executive close to the situation. "One reason it's missing, is because no one has really focused on it . . . and now Cap Cities will be coming in and they will presumably continue to run that as a divisional thing."

Another reason for the lack of impetus is that most Disney units--as well as most Cap Cities operations--are doing very well with their current approach.

"It's hard to criticize what they're doing, when you look at the results," added the executive.

But the marketing and image oriented Mr. Ovitz may opt to appoint a key corporate marketing executive, if only to give him a firmer grasp on Disney's disparate marketing endeavors.

One likely candidate for that position could be Shelly Hochron, a CAA executive who along with CAA's Len Fink oversees the handling of the agency's Coca-Cola work. Ms. Hochron has a strong background in movie marketing.

At Disney, Dick Cook is president-worldwide marketing for Buena Vista Pictures, which handles most movies from Disney; he took over the marketing reins after Bob Levin left in June.

As for the future of CAA, its Coca-Cola account and its advertising executives, Ms. Hochran didn't return calls, and Mr. Fink referred all calls to a CAA spokeswoman, who also didn't return calls.

Jeff Jensen and Mark Gleason contributed to this story.

Copyright August 1995 Crain Communications Inc.

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