Pepsi, Coke to compete at box office

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Walt Disney Co. is planning a $100 million marketing program around "Monsters, Inc." ranking it among the largest-ever advertising tie-ins for a theatrical release in the U.S. A big chunk of the total is coming from a surprising new partner--PepsiCo.

The "Monsters" deal thrusts Pepsi and Disney in head-to-head competition with AOL Time Warner's Warner Bros. and Coca-Cola Co. for the blockbuster film "Harry Potter and the Sorcerer's Stone," marking the first time in many years the beverage giants have been pitted against each other for a major movie promotion. "Harry Potter" opens Nov. 16; "Monsters," from Disney's partner Pixar Animation Studios, which produces the "Toy Story" franchise, debuts Nov. 2.

Pepsi is expected to pour out $20 million or more in support of the holiday release, rivaling the expenditure of McDonald's Corp., which typically spends upward of $35 million to $40 million on an individual Disney movie. A Disney executive said the deal was "unprecedented;" a Pepsi spokesman confirmed that there was a deal for "Monsters," but said it's too early to discuss specific marketing plans.

The move presents an interesting plot twist for Disney. For years, Coca-Cola had an exclusive agreement with the studio, but the company never activated the partnership because Steve Koonin, then VP-president of presence marketing at Coca-Cola, was publicly in opposition to the idea. He has steadfastly maintained that consumer marketing and media deals mainly help the studio, and do little for the consumer tie-in company.

Not long after Mr. Koonin left to join the TNT cable channel (now owned by AOL Time Warner) as exec VP-general manager, Coca-Cola went Hollywood. It hired talent agency Creative Artists Agency, Beverly Hills, Calif., which inked the deal with "Harry Potter." Last year, the beverage giant also undertook a major promotion for Sprite with Vivendi-owned Universal Pictures for "Dr. Seuss' How the Grinch Stole Christmas." For that tie-in, the company spent $15 million in media.

"Monsters" would be Pepsi's biggest movie promotion since it hooked up with "Star Wars: Episode One-The Phantom Menace" two years ago. Many of that movie's promos, however, failed to generate new revenue for many of its partners, particularly Tricon Global Restaurants, which attempted to promote all its outlets-KFC, Pizza Hut and Taco Bell.

In linking up with Disney, Pepsi might have the upper hand-at least in terms of total consumer marketing support. For "Harry Potter," Coke is spending about $15 million on the movie, not a significant amount of consumer tie-in money for Warner Bros., considering that the film comes with a high expectation of becoming a major hit. "Harry Potter and the Sorcerer's Stone" will be the first in a film series; Coca-Cola is partner for two and has an option for the third.

Moreover, unlike "Monsters," which has major partners such as Kellogg Co., McDonald's and possibly a retail partner in Wal-Mart Stores, Coke will be on its own as the sole consumer tie-in partner for the "Harry Potter" series. Author J.K. Rowling put severe restrictions on Warner Bros. consumer-promotion partners, allowing the studio to link up with only one partner. And the beverage giant, according to executives, won't be able to put any images from the film directly on its products.

"Monsters" is forecast to top the tie-in total for other big movies of the recent past. "Phantom Menace" scored some $50 million in U.S. advertising dollars from Tricon. Most Disney films generally pull in about $60 million to $70 million in advertising dollars from consumer-products companies, mostly from its longtime partner McDonald's. This summer, Pepsi is also a major promotion partner on Viacom-owned Paramount Pictures' "Tomb Raider," based on the video game.

Contributing: Kate MacArthur and Hillary Chura

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