Disney's Dinner Bell

Disney's new magic: licensing some pixie dust.
By Rick Aristotle Munarriz
Motley Fool

Updated: 9:34 a.m. ET June 21, 2006

There will be more pixie than dust in Disney's (NYSE: DIS) latest marketing initiative. At the Licensing 2006 International Show in New York this week, Disney unveiled its plan to turn Tinker Bell and her friends into its next big stars.

Until now, Fairies has been little more than an unassuming book line hoping to hook young girls with whimsical story lines. That will change. Disney has tapped Brittany Murphy to voice Peter Pan's spunky sprite in a direct-to-video animated feature next summer. Dolls and toys will follow.

The family entertainment giant has already had a few successful years with its Disney Princesses line. Marketing the heroines of its animated classics has turned into a $3 billion a year franchise. Going from Belle to Bell won't be as easy, especially since audiences know little about Tinker Bell and even less about her fellow fairies, but Disney could be well-served by going in this direction.

The Lord of the Rings, Harry Potter, and Narnia have all whetted the appetites of fantasy fans. Even if the audience for Fairies overlaps with the Disney Princesses crowd, Disney would rather hit them from both sides than let toy companies like Mattel(NYSE: MAT) win them over with Barbies and American Girl. Meanwhile, MGA Entertainment's Bratz and Build-A-Bear Workshop's (NYSE: BBW) personalized bears and friends 2B made lines are also gunning for the same audience.

Disney's consumer products division can use the attention. With strength at its theme parks and the resurgence in its media networks, the last time that Disney's consumer products made headlines was when it was partly bowing out of retail by handing over its Disney Stores to Children's Place(Nasdaq: PLCE). Last year, consumer products accounted for just a 7% slice of the company's revenue pie. The top line there has slipped 1% through the first six months of fiscal 2006, despite a 9% improvement in operating profits.

Scoring a hit with Fairies will help. Other recent homegrown successes, like the unlikely hit High School Musical, are already helping. So Tinker Bell, often relegated to gliding high in the sky before a fireworks show, will hopefully take flight for Disney again.

Pixie dust? Who needs it when you have shrewd merchandising at play?

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Longtime Fool contributor Rick Munarriz is still a kid at heart, smitten over the right kind of animation. He owns shares in Disney. The Fool has a disclosure policy. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.