PEPSICO BEAMS INTO `STAR WARS';$2 BIL DEAL OFFERS MODEL FOR FUTURE ALLIANCES TIED TO LUCASFILM FRANCHISE

Lucasfilm's global marketing alliance with PepsiCo for the 1997 re-release of the enhanced "Star Wars" trilogy is the model for the kind of big-bang promotion deals the production company is looking to cut. PepsiCo may wind up as the only promotion partner for the trilogy's re-release, but Lucasfilm is also looking for a select group of deep-pocketed partners for the three new films in the "Star Wars" franchise that will begin arriving in 1998 or '99. Pepsi's deal includes the first of the trio of prequels. "We don't want a situation where we have an overproliferation of marketers doing little or medium-sized promotions," said Howard Roffman, Lucasfilm's VP-licensing. "This is a larger-than-life franchise. We want big, impactful marketing programs that will do the movies justice." CEREAL PARTNER SOUGHT The cereal category is expected to yield a similar deal for Lucasfilm, with General Mills and Kellogg Co. battling for rights to the new and old films. Mr. Roffman wouldn't comment on rumors that Kellogg has the upper hand in negotiations. PepsiCo's three- to five-year deal binds the company exclusively to the "Star Wars" franchise during various periods. The first such window arrives next February, when "Star Wars," "The Empire Strikes Back" and "Return of the Jedi" hit theaters in re-release. The two other promotion windows cover the theatrical and home video releases of the first new film. DEAL WORTH $2 BIL PepsiCo said the deal is valued at $2 billion over the course of the alliance, a figure that includes worldwide advertising, point-of-purchase and on-package promotions, and branded merchandise. The deal marks the first time the company's beverage, restaurant and snack units have teamed up to back a single program. Pepsi-Cola, Mountain Dew, Kentucky Fried Chicken, Pizza Hut, Taco Bell and Frito-Lay all will run "Star Wars" marketing programs. PepsiCo's deal is a blow to McDonald's Corp., which was aggressively pursuing Lucasfilm. Hollywood observers said McDonald's pending 10- to 15-year promotion alliance with Walt Disney Co. was too rigid for Lucasfilm. In fact, the alliance, which would give McDonald's up to 17 Disney promotions per year, may even be too rigid for the No. 1 fast-feeder. Franchisees are said to be pressuring McDonald's executives to build more flexibility into the deal. The PepsiCo deal also hurts Burger King Corp., which is negotiating with DreamWorks SKG for exclusive ties on key event properties. BK was the original fast-food sponsor of the "Star Wars" films, and was looking to repeat that role. SOME QUESTIONS Some in Hollywood find it curious that PepsiCo would commit only to the first of the three prequels at this stage, speculating that it wants to protect itself in case the movie underperforms. Mr. Roffman denied PepsiCo was worried about the film's quality or performance. "It's a classic crystal ball situation. How can anyone know for sure right now where they're going to be and what they need five years from now," he said.

PEPSICO BEAMS INTO `STAR WARS';$2 BIL DEAL OFFERS MODEL FOR FUTURE ALLIANCES TIED TO LUCASFILM FRANCHISE

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